You're listening to Strictly Business Podcast with Lindsay Williams.
JSC has closed its doors for another day, so it's time for the five o'clock shadow.
And as it's a Wednesday, it of course is Skullclo,
Portfolio Manager at PSG Wealth Old Oak in Cape Town.
Skullclo, talk about gold later.
And I know you get very excited when I talk about it.
No, we'll do it later.
Calm down.
Okay.
Let's talk about the...
the uh sends news on the on the jsc eoh and famous brands are either of any
interest to you
can you comment briefly on either of them no i mean i i really can't um comment on
either
because they're fairly small companies like
both i mean we've we've we've chatted about um both companies over the time eoh
been uh the the
darling let's call it um of the 2000s and then went from an
absolute zero to an absolute zero.
Since then, they've had a change of guard.
And it does seem like they've sort of had a bit of a
180, not making losses anymore.
We can see there's some progress.
And yeah, today, I think that the progress sort of paid off.
Share price up 9%.
And then Faber's Brands, man, what a...
And this is a company that's been in specifically social media.
I know there's quite a few commentators that's been talking about it, talking
famous brands up,
saying that this is maybe something to have a look at.
For listeners out there that don't know them, I mean, they've got, as the name
implies, famous brands like
Wimpy, Steers, Debonairs, those types of companies.
I like Steers.
I really like Steers.
I must admit, of those ones, Steers is the one that really stands out.
a really good burger skulk definitely and as as it's uh as it wednesday today i'm
usually on on a wednesday
we'll we'll just call it the the wacky wednesday show today because uh i think
that's what they're known for i mean
the the results six month results not a lot of guidance as mentioned it's not a
company that's really
really that well covered um uh but but but in general i don't think it looked too bad
you know
headlines and especially it increased by nine
9.5% up from 1 rand 99 to 2 rand 18.
That looked good.
Revenue up 2%.
In an environment where interest rates is high, we tend to think this is a company
that would be under pressure,
and they didn't.
Yes, the revenue didn't really grow.
That is showing you the environment we're in.
But the fact that they still managed to grow their earnings per share just shows
that management really did a few things right.
in a wrong environment and then lastly the dividend per share also increased nine
nine percent that's what we as a shell this
year you want to see uh one round 38 last year this year it's going to be you know
this time around it's going to be one round 50 so in general i thought
not too bad not too bad uh results for both both sides not something that
interests you not it's going to be sg
wealth radar at all no i mean i'm sorry yeah okay in that case i had a really
interesting chat with a
chap who'd just been to the denver Gold Forum, or whatever the name of it was.
Anyway, it's an annual gold conference.
Most of the commodity conferences cover everything, like the mining in Darbar in
Cape Town and the diggers and dealers in Australia.
This one is purely gold.
They're thinking of diversifying it to include other commodities, but for now
it's just gold.
And it was very interesting because he said last year he went and there were
1,500 delegates.
This year, last year 1,500, this year only 900.
And I thought, well, this is a bit odd.
And he said there was a sort of note of caution.
And I suppose when you see the gold price above 2700, you think to yourself,
maybe now is not the time to be in there.
Maybe this is telling us something, that the price is now getting a little bit too
frothy.
And when you see a gold chart on CNN or CNBC or something, you think, wait a
second, that's a little bit too much.
What is your view now?
Are you starting to get cautious yourself?
and putting in some protection skunk no i i think i'm not um because remember
you know some of my main drivers you know for including um gold into my portfolio
is still very much at play uh you know we're still sitting with a um
with a dixie or let's call it u.s dollar index now high hell on last week you know
104. so the dollar is still looking you know fairly strong i would say and a lot
of people say it's not your
114s 118s but but i still believe that the dollar um could be under
pressure i mean if you look at you know lately the the debt levels that's been
released from the us and a lot of people
you know still now starting to ask the question how will they be able to to
service this debt going forward you know in the future and then
a lot of this this debt are now going to be rolling over a lot of these
uh world financial crisis uh debt that they they back then created not going to
roll over and they will need to
to um let's call it what do you call it free debt or they'll need to
um refinance refinance these debt again and they'll have to do it at much higher
levels I can go on I just said the dollar firstly
secondly I mean I don't know what your feeling is regarding the the due political
unrest but
I mean, I'm getting the feeling when I look at every...
Exactly.
It's just every day, it feels like it's small things, but it's sort of escalating.
And again,
gold would most probably be one of your best hedges against any further
geopolitical
escalation.
Something that really struck me yesterday is that, actually it was two days ago,
it was first announced that North Korea has sent 12,000...
of its military personnel to Russia to fight in the Ukraine war.
And South Korea took exception to this and said, we are now going to send weapons to
Ukraine.
So now we've got North Korea against South Korea because of Russia versus Ukraine. As
you quite rightly say,
that was the actual trigger for me getting even more scared than I was before, Skulk.
I don't like it.
And with the US election coming up...
as i said to you off air i'm looking forward to christmas and you said we got
to get through november
1st and it's going to be difficult it's going to be a tough one it's going to be a
tough one
um i don't think i don't i mean i i don't want to call this the the start of world
war iii because i i surely hope and
believe that you know sanity will eventually prevail but as
we sit here i mean israel uh iran um that whole Palestine area,
it's really, really very, very nervous around that area.
As you just mentioned, more countries are getting involved now in the Ukraine-Russia
war.
Now, do I feel that gold is finished?
No.
What I see, I mean, let's be honest.
I mean, a lot of people, you know, ask me this question.
So we're sitting $2,700 at the beginning of the year.
if you told me um you know we're going to see 2
700 i said i'll take it i mean definitely i'll take it but now as i sit here
i i don't see a massive retracement in gold and by saying that you're looking at
these
gold miners that is currently uh
mining this this gold at way lower levels when we're talking some some of the
international mines are mining at
1600 1700
dollars per ounce so they're making a heap load of cash and if you say this this this
let's call it due political
unrest this um economical worry because we still we're still having a debate are we
going to see a hard landing soft
landing you know while we we're still talking about landings um i would just
very much hold on to my gold
And, you know, while the gold prices stay at these levels, the miners are definitely
going to high-five each other.
Be very careful with the central bank situation because the buyers of gold and
the reason that the gold price is 2,700 plus
is because mainly of big, big buying from central banks.
And in May, China said we can't buy any more at these levels.
So, and that was what, six months ago?
It was May six months ago, four, five months ago?
Anyway, a few months ago.
So be very careful.
that the central banks suddenly say, that's enough now.
We've stocked up.
We're not selling, but we're not buying anymore.
And that could create a little bit of a sell-off,
should geopolitics and should US politics play ball.
So that's all I would say.
And if you were, and be honest now,
if you were the head of the Treasury Department of a major gold mining company,
and they said 2,700, we're producing at 1,600.
you'd say, okay, let's put in 20, 30% hedge for the future,
collar and cuff option strategy or something.
You would do it.
It would be imprudent of you not to, Skulk.
Yeah, okay, so there's two answers to that.
Number one.
You would most probably, you know, if you have that view and you say, well, I do
think we're calling tops,
we're calling tops on current levels, you would most probably do that.
But remember, gold fields in England, gold found in the top,
I think top eight or top seven largest mines in the world, gold mines in the
world.
and both these companies over the past two months what did they announce they didn't
announce that they're hedging their gold
which they weren't announced by the way but they announced that they announced you
know two of the largest transactions these
companies made in many years mergers
so so when i look at a i can't remember i think i think what was it um
1.5 billion dollar
deal and and gold feels slightly less but i mean if you look at if if they were
skeptical
on the gold price being at elevated levels i can promise you they would not be doing
you know these
sizable mergers at current gold levels unless
they feel wait a minute yeah i don't think the gold price is coming back anytime soon
in actual fact there's quite a
few Big investment houses, that's calling to $3,000 now and $3,500.
Oh, that's got to be interesting.
My response to that is that the commodity companies are terrible investors.
They buy at the top and they sell at the bottom.
They buy when everything's going well.
They buy when lithium is going well.
They open a lithium mine and it collapses.
And if there are mergers going on in the gold market, then to me as a cynic,
There is, that's a red flag, but that's just me.
I mean, it could go to $10,000 an ounce if something nasty happens.
But $3,000 is perfectly reasonable.
But you're staying in, Skulk.
That's the bottom line.
Yeah, no, no, I'm definitely staying in.
And just to, I mean, for listeners out there, you know, thinking I'm currently
betting the farm, because I am a, I mean,
I've been a verbal gold bull for many, many moons, actually for many years.
And I haven't always been one, just by the way.
So I've sort of been one of late.
But I did an analysis many, many years ago.
And I think we chatted about it.
And I think it was done, a report that I've done in 2020, 2021.
We're just sure that if you take a, let's call it a 20,
80% investment in the FTSE All share.
and a 20% position in gold.
Over the school of the past 15 years to that point, just by the way, I think now
it would be much, much better.
But to that point, which was run about 2021, over a 15-year period,
which included the COVID scenario and also included the massive,
massive world financial crisis crash in 2008, what it showed you, sorry, it was 20
years.
Over that 20-year period,
If you had an Aussie position and an 80% Aussie and a 20% gold,
you would have yielded exactly the same return.
Exactly.
Not bad.
But, yeah, exactly.
And a lot of people would say, but gold had a tarot time there in the early
2000s, and then again after 2012.
But what was beautiful was that same, let's call it return,
did from a risk point of view.
you'll a much lower volatility and also the drawdown and for again for the
listeners out there every time we had a
massive pullback because you had this gold that that sort of uh combat the pullback
in the market
saw that you didn't lose
the amount of uh capital over those those big retracements so i just i just love
using it as
an hedge it's one of those extra you know pieces of ammunition you can put put in
your portfolio and i use it
Very good.
You've made a convincing argument.
Let's have a look at some markets now.
Dollar ran 1785.
British pound against the ran 2311.
And the euro ran 1925.
Euro dollar 107.85, which is a euro that's weaker by about a third of a percent.
British pound 129.50.
Gold price, which I think we may have mentioned already, 2713, which is down
$31.
But, you know, it's got to take a breather occasionally.
The platinum price is down a fiver to $1,028.
And the palladium price, also in four figures, $1,061, which is also down
$13.50. But commodities were the precious metals anyway.
Doing rather well, thank you very much.
What about other commodities?
Let's have a look at...
crude oil uh brent crude is down 0.6 percent to 75.57 the west texas
variety 71.28 also around about 0.6 percent weaker s p
500 futures 5 868 which is no 5
853 now down two thirds of a percent so
a little bit of nervousness coming in there which is completely understandable
US 10-year Treasury bond yield 4.25%.
The South African 10-year hasn't had a great time recently, 9.64%.
It was below 9% not so long ago.
And what else have we got?
That's about it.
What about the JSE today?
Not looking so great, Scout.
Before we go to the indices, any shares that stood out for you?
No, it was just one of those days where we didn't have a...
a lot a lot of movements i mean you mentioned it you know gold gold um
retraced today um that was the gold
price so so within the let's call it losers column you had your your likes of
your harmonies and and pan-african
resources also some some retracement and some of your some of your goals where
there was some
gold fields were trading i think one percent up uh once that this
morning and eventually ended down uh quite a bit the one that stood out for me and
that's not only today um
But of late, it's Sassl.
I mean, every time you think Sassl can't go any lower.
Down it goes.
There we go.
It's like, how low can you go?
And it seems like it's going to be Sassl low.
And one of my colleagues made the comment this morning and also yesterday.
He said, I mean, we're now slowly approaching the levels that we've seen,
the stress levels that we've seen in COVID.
But not.
I know a lot of listeners will jump at me and say, well, we saw 30 Rand levels back
then.
But that was the worst case scenario.
I mean, the oil tankers were sitting all over the world.
Yeah, that was an anomaly.
It was a moment in time.
Exactly.
But if you take that out, if you take out the top 10% and the bottom 10% and average
the Sassell price out,
you're quite right.
We are approaching lows here.
And, you know, it's a hundred and four.
It's threatening to go from three figures to two figures, which I'll come to in a
moment.
But now, but now I'm asking you, and this is what this colleague of mine said,
he asked the question, said when I mean, we're talking about a company that's now
valued most probably under four billion
dollars.
And when when are we going to see one of these big world companies, the likes of
the shells, the BP's?
Those companies come out and say, well, we can pay this with the cash on hand.
I mean, we can go out and ask us.
Yeah, easy.
There we go.
So, I mean, listeners out there that's currently so, firstly, I'm holding
Sussall.
So, again, one of those not betting the farm moments.
But I'm definitely one of those companies where it's
it's not a nice company to have in your portfolio when every day you open your uh
your portfolio and you see well today's hustle
is down 3.88 yesterday it was down six percent or seven percent but just note
that somewhere
along this company is going to attract uh
the interest of large international oil players and that could be really really
interesting so just one two If they've got the sort of assets that they desire,
but I don't know if they have.
I mean, look what they've done.
They've been disastrous at the boardroom level.
And hopefully no one from the board is listening.
But they really have mismanaged, in my opinion.
But then what do I know?
I'm just looking at the top five today.
And it's Carew and it's Bytes and it's Sirius and it's Redefined.
The more interesting is the downside.
African Rainbow Minerals down 4%, Harmony down nearly 4%.
Sassell down nearly 4%, Anglo-American Platinum 3.2% weaker, and 91 down 2.5%.
Very much skewed to the bigger companies going down, Skull.
Yeah, yeah, yeah.
No, it's a big day.
And it's also very interesting when you look at the amount of winners and losers.
When there's this few losers than winners,
then it's also a bit worrying.
As I mentioned, one of those days we'll be seeing some nervousness, not only in South
Africa, but we're seeing it currently in the West,
we're seeing it in the US.
And this is the time of the year where you usually find nervousness.
There's a reason why they call it every year the October ghost.
And we're now ending the latter part of October.
And as you rightfully mentioned earlier, we need to get through November now.
yeah we really do skunk you and i will always get through any testing month we
know that because we know there's light at the
end of the tunnel no matter how dark it seems on whatever day week or month it is
skull just give us the closing jsc
indices and the value traded please so
at the jsc closed today at uh let's uh let's grab that
86 464 points it's down 33 basis points the The JEC top 40,
down 29 basis points.
The only sector being in the green.
Oh, wait a minute.
We've got two sectors in the green.
I mean, I saw one of the biggest winners today.
Yeah, exactly.
Really fun.
I know you and I have been chatting about properties.
Property, they just do not.
We had a little bit of a retracement after some of these public counters knocked off
their interest slash dividends.
But, yeah, lately they've been looking quite attractive again.
So property sector today, 70 basis points up.
Industrious up 17 basis points.
And resources, as you mentioned, a horrible day.
1.6% down, while the financials were down only 0.1%.
We'll look at the value trade for today.
Just shoved $20 billion, 19.8 value traded for today.
So in general, it's just one of those days where we've seen the market take a bit of
a breather.
Yeah, I think just to end off, and you mentioned it, I'm an...
we'll have good days and we've got bad days, but I still believe that Africa, as
we sit here, now the
23rd of October, still no load shedding, still a few things going in the right
direction.
Maybe just not a bad idea to look at some of these weaknesses in terms of what
you've got
invested locally and what you do have invested offshore.
Ever the optimist, and this time...
which hasn't been the case always during our conversation.
This time, I think, entirely justified.
Skulk, thank you very much for your time, as always.
Skulk Lowe is a portfolio manager at PSG Wealth Old Oak in Cape Town, and that was
the 5 o'clock shadow.
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