Thursday, July 01, 2010
Channelling Levi Strauss
I have long been a proponent of the Levi Strauss approach to most highly-sought-after though long-odds pursuits. Of course I do not mean the Structuralist-School member of the Academie Francaise, but the utiilitarian SF-based purveyor of dry-goods, who kitted out the miner-forty-niners searching for the motherlode out west. Most never found what they sought, but Mr Strauss (the retailer) did mighty-well supplying the essentials clothes and tools for them to dig for their dreams.
So as we remain amidst a modern-day financial gold rush, IF one is skittish about the utility of gold itself, the probability of hitting the proverbial home-run with the yellow metal already at multiples of its former price in less-stressed times, or if one is concerned about more practical aspects of converting it into usable bits come Orlovian outcomes, or if one be in the camp that believes eventually that inflation and fiscal yawn will be met with either tight money or market vigilantism - devil take the hindmost, it may be worth thinking about how to channel the spirit of Levi Strauss (the dry-goods retailer - not the philosopher).
One of the main challenges with bullion is where to keep it. The home is frequently not a safe place - not without the retrofitting by Diebold or such. Saftey-deposit boxes are better, but ownership is recorded and in a banking holiday, could be opened and seized by the State. The banks are capitalising by increasing their vault capacity to cater to the new owners, distrustful of keeping it ummm errrr anywhere.
One could open a a family of Gold ETFs. Although Mr Einhorn dumped his for the physical because he found it cheaper to store than the mgmt fee, there is no reason why a 10bp management fee ETF for physical Gold bullion isn't out there already. Heck with GLD now with a market cap of $50,000,000,000, 10bps is $50,000,000, a cool fee for a passively-managed investment Fund with a single yellow asset.
The late Mr Strauss would have appreciated a chain of Retail Gold Storage Vaults that provides storage, exchanging like quantities, assaying, market-making. It is obvious that a largegold bar would be useless at the town market, and even 1-oz eagles or Krugerrands are overkill for daily business. Hence the need for a real nationwide retail bullion bank that would exhcange local IOUs in claims on smaller quantities. Of course the Fed might have something to say about this... But here, the brand extension possiilities are large. For example what about Beretta Bullion Bank? One could deposit their bullion and withdraw some ammo? Free weapon with large deposits etc. Or Smith & Wesson Bullion Bank. Now, what idiot would tempt their fate trying to rob an institution guarded by heavily armed Sam Elliott-type (see photo right)?
There is room in the brave new world of Gold $5000++ for speciialized transportation services. Everyone knows that Brinks guards are fat, lazy and given their wages, are wholly not committed to their job. And why should they be?? In the world of Gold $5000, you want bad-ass motherfuckers like Blackwater (or rather XE Services as they are now known), with no qualms about shooting first and asking questions later, or queasiness regarding torture, guarding your hard-earned speculative savings. Indeed you may have to pay them more than Brinks, but as the rather pertinent saying goes: "Fifty percent of a Gldmine is better than one-hundred percent of nothing...".
If not a proper bullion bank, then perhaps a more Professional Retail Shop. At least make it look serious. Makle it LOOK more like a bank rather than a bad stamp collectors or used baseball card shoppe, in the low-rent dead-end section of the mall. With Gold $5000, this baby should have brand-new neon, and be front-and-center, next to the big fountain in the central plaza.
There are still other ways to ride the Gold $5000 bandwagon. You can start up your very own Canadian (or Australian) Junior mining company, where all you need is a piece of derelict land, a hole, a press release, a PO Box and a Vancouver listing. If ever you wanted to sell pennies for a dollar, this is the way. Or, you could broker mining machinery, trade/distribute heap-leaching chemicals, sell your own version of "Miracle Bullion Polish" on late night TV or QVC. Or better still, you could, like my old boss in my very first post-university job, hire a bunch boiler-room snake-oil hucksters to harass gullible senior citizens via telephone to part with their meagre savings by buying bullion from YOU at heavily-marked-up prices, and with exhorbitant storage contracts, something they did while riding exer-cycles in a windowless, furnitureless room in what was once known as The World Trade Center. Some people have no shame....