Adrian Ash, Head of Research at London gold-trading site BullionVault, writes:

“One key requirement of money is that it doesn't drop 27% of its value inside 4 days, only to regain half that drop in the next 36 hours. Hyper-volatility signaled the death of the German Reichmark following World War I. (Ed: actually in was the printing press which doesn't mean that huge upward and downward moves don't hurt the appeal of the crypto-currency.)

“Bitcoin: Money of the future? asks this neat little video which just won a competition run by the European Central Bank. "Nope," comes the video's answer, [given] Bitcoin's huge volatility to date. While failing to find monetary use outside the trade in illicit stuff online (for which they are perfect), they will no doubt play some role in our legal monetary future. Coins began replacing unwritten debts in the 7th Century BC. Paper notes acted as a receipt for a gold coin from the Middle Ages. Today's contact-less cards make both coins and paper redundant [for] the vast majority of shoppers... Whatever the social, economic, and political risks of choosing to abolish cash like this, money is a tool which humanity has constantly changed and re-invented. Indeed, the blockchain technology underpinning today's crypto-currencies... with separate systems all processing and recording each transaction rather than a licensed bank getting in the middle with its fees is showing strong appeal to central banks like the ECB.

BullionVault seeks to help people get out of currency, into gold or silver or platinum, as a secure cost-effective store of value. Liquidity on the way out is paramount, back into cash that's ready for spending or converting into other assets elsewhere as you choose. Building new payment mechanisms, or enabling customers to store the value in currencies different from the four funding and trading currencies we offer is not what we do. If you want to sell your gold to buy shares or a new house, BullionVault will enable the first leg of that trade at the very lowest costs. For the second part, you will want to find the best value process for yourself. That's why we don't offer Swiss Francs as a funding or trading currency, despite frequent requests over the years. We don't accept equities, bonds, seashells, cigarettes or 5-ton lumps of stone either.

“The Swiss central bank has worked to destroy the Franc's reputation for stability. Like every other monetary authority, it wants cheap money to juice the economy no matter the cost to wage-earners, savers, and the country's international standing. But Dollars, Euros, Sterling, and Yen are the currencies quoted and dealt by the professional wholesale bullion market. It's the deep liquidity and low costs of that market, free from costly FX transactions,.to which BullionVault seeks to give its users access. Outside the 3 major currencies we've accepted since launching in 2005, only the Japanese Yen has been added because it has the depth and liquidity we need to ensure low friction and low costs for ourselves and our users. So, while we haven't missed the interest, excitement and innovation building around Bitcoin since its invention in 2009, we still don't believe it currently offers BullionVault any commercial opportunity. BullionVault's ambition [is] to be the best in physical precious metals which makes us the largest provider to private investors anywhere on the internet.

“This latest bubble (and bubble it is) also maps the boom-bust seen at the birth of other revolutionary technologies and tools in history. Think of listed shares and government bond markets (the French Mississippi and then South Sea Bubble 1720), .railways (the British bubble of the 1840s),.investment trusts (Wall Street's bubble and then Great Crash 1929), and of course the internet (the DotCom Bubble and crash of 1996-2003). Which is it for Bitcoin? Tulips or railways? Useless tulips and very useful railways both destroyed herd investors who bought too late into the initial hype and didn't get out before it burst.”

BullionVault is sponsored by the World Gold Council as is the gold investment vehicle we recommend to our paid subscribers. Our gold play is SPDR Gold, GLD, an ETF sponsored by the mining companies in the WGC. We used to run ads for bullionvault.com which failed to get enough readers to sign up. Gold buyers are mostly older men who believe that the government is out to debase the currency, Our advice is to invest internationally rather than to put all your shekels into the barbaric relic, gold. So we lost the ad revenues, which doesn't mean that I don't listen to Adrian.

I recommend that every portfolio include some gold to offset sell-offs in stocks and bonds. It's happening on worries about US tax reform, problems with Brexit, and GE halving its dividend from 4.69% to 2.34% The Brexit news is that Foreign Secy, who doesn't often accept blame, has had to apologize for remarks that put a British prisoner in Iran at risk. There is a rebellion against the Teresia May team which may further frighten British industry and the government now promises that there will be a second parliamentary vote on any deal it strikes with the EU. The US hit a new high budget deficit in Oct, up 38% y/y to $63 bn, presumably because of disasters. This makes a tax rewrite less likely because it has to keep the deficit from rising more than $1.5 trillion. Sept. actually saw a surplus.

Natch gold is up. And natch the stock market is not.

Quarterlies

*Brazil again defeated the global investing community with an own-goal. At 9 a.m. I carefully phoned into the conference call by Cosan and after 3 tries there gave up. The NY IR number did not answer. The wire services seem to have had the same experience. However, the Nasdaq blog reports that Cosan Friday night reported that its Q3 net profit hit reais 499.7 mn ($152.45 mn), up 53% y/y. It also reported “increases in the sales of fuels, lubricants, and natural gas” in the quarter. CZZ also said cash-flow (earnings before interest, taxes, depreciation, and amortization) was Rs 1.43 bn reais, flat on last year but up 3% on Q2. It plans to transfer 5% of its shares plus reais 1.16 bn to Shell to take back its 16.8% stake in their jv Cia de Gas de Sao Paulo, a total of Rs 1.16 bn. It will pay the equivalent of $215. mn in 2019. CZZ produces ethanol from sugar cane as well as sugar. It reported over the weekend which may be why it fell between the cracks despite a cc on Monday. Its results were unaudited.

*Atlantica Yield reported premarket on Monday which helped our Algonquin Power of Canada which did a deal to take a 25% in AY last week. AQN reported yesterday after the close. It rose on the news.

*Magal Security Systems of Israel will report before markets open on Nov. 16. Just telling us that boosted the share price of MAGS 1.1%.

Healthcare

*Israeli Mazor Robotics dropped by 3.33% from profit-taking.

*J.P. Morgan on Monday, put a rare underweight rating on Teva which duly lost traction. Its target price was cut to $11.78. Citigroup put out a $13 TP and rates the Israeli generics giant neutral. We sold half our shares a week ago.

*Israeli Compugen fell another 2.9%. It is becoming tempting. CGEN uses databases to find cancer checkpoints worth looking at for the drug industry and is focusing more on the USA.

*GlaxoSmithKline received EU permission to market pre-filled syringes or pens of benlysta, its lupus treatment. It also reported insider buying to our SEC for Patrick Vallance, its new chief scientific officer.

*Irish Shire Pharma got Committee on Human Health Products approval for its hemophilia A drug Adeynovi for adults and adolescents but not yet full EU okay. SHPG.

*Valeant's crash took down lots of small-caps in the drug discovery area. This too shall pass. VRX is not a drug-discover.

Telcos and Tech

*Telco BCE, Canada's largest operator of household landlines, will buy AlarmForce Industries, a maker of home security, monitoring, and alarm services for BCE shares worth C$166 mn.

*Vodafone reported on its Q3 in yesterday's pre-market but its shares should have risen on news that American Tower will buy the Indian cellular towers (or masts) it owns with its future partner there, Idea Cellular for 78.5 bn rupees, about $1.2 bn. VOD will get just under half the total. They hope to complete the paperwork by H1 next year. Instead in the market sell-off, its shares fell 1.9%.

*Deutsche Bank's ADR conference yesterday, featured Vodacom, VOD-Johannesburg, VDMCY here, which our VOD had to divest control of for regulatory reasons.

*Tower Semiconductor of Israel is up 1.3% to $34. TSEM was among the few tech stocks to rise on Monday.

Heavy Industry

*Another UK exporter BAE Systems was hurt because in Dubai where a military jamboree is taking place, experts said it could not launch a 5^th generation fighter plane alone, but would need European partners.

*Greek Energean is aiming to list in London to raise $1.5 bn in order to develop gas fields off the coast of Israel and is being advised by JP Morgan and Citigroup which disagree about how bad things are for Teva. The only Greek oil producer's plans have boosted the price of Delek Group which divested the Tanin and Kalish sites to work on Leviathan to Energeam and Kerogan Capital, a private equity outfit, for up-front payments of $40 mn and contingent payments late last year. DGRLY had to sell for Israeli anti-trust rules. The Greek firm expects to sell the output of the two fields in Israel in competition with Delek, but both are winning from higher oil prices now.The news came from Reuters in Athens.

*Energy Fuels is buying Excalibur Industries for $3.5 mn worth of its shares, gaining royalties and some operations in Wyoming, the only US uranium facility. The ultimate operator is Power Resources, itself a wholly owned sub of Cameco, CCJ, of Canada.

*Irish CRH may buy PPC Ltd (PPCLY), a South African cement works, issuing a non-binding expression of interest. Afrisam and LafargeHolcim are also interested, but CRH gets first dibs for due diligence. PPCLY fell presumably because there is stuff it is hiding. CRH fell because it is ex-div.

*Ecopetrol dropped 2.6% in London trading earlier this week to $11.73. It is now down 3.03% in US trading. Colombian.

*While nickel continues its rise GMK Norilsky Nikel (NILSY) is down. It seems to have a new name for its ADR which is based on its UK share, but I don't think that explains the drop. It is probably worry about Oleg Deripaska's transactions over EN+.

*Orocobre reported to our SEC that 76% of its shares are held by owners of at least 1 million of them. OROCF is Australian but mines lithium in Argentina.

Food and Drink

*Anhaeuser Busch InBev (BUD) is not doing well in its US Bud business and it will replace its head of North American operations, Joao Castro Neves, with chief sales officer Michel Doukeris at the end of the year. Neither is from St. Louis. It also redeemed its US$ NYSE-listed 6.5% notes due in 2018 earlyand trading was halted.

*Greencore was up 3.3% on Monday as a dollar earner. The Irish firm, listed in London, sells ready meals.

*Input Capital which funds Canada colza harvesting and logistics, gained 1.44% on Monday. 

Finance

*Banco Santander and its subs reported over $6 bn in US share positions which included its US-listed subs for Latin American banking, and closed-end funds, plus $3.24 mn in Santander Consumer USA holdings shares.

*Tencent is up a modest 1.75% on the success of singles day on Sat. TCTZF is up less than AIA of Hong Kong, 1299. which rose 6% on Monday. I can't believe it is because of singles day, because singles don't buy life insurance. 11/11 fell on Sat. and was a big success for Chinese web commerce.

*Foreign bank preferreds are up on fear that there will be no tax cut after all. Safe money beckons.

Fund Fun

*Asset management is a tough way to make money. Now that I have the details of the Allianz SE report on its Q3 last week I can figure out what the impact of Pimco's brilliant performance record has been—and it is negative, mostly because of currencies but not only. Oimco AUM bell 1.6% YTD to eruos 62.6 bn which may reflect the strong euro. But costs rose just under 106% which should have been offset by the euro's strength. And profits from asset management fell by euros 16 mn in Q3 despite the brilliant performance by the California Team Ivascyn, lowered carried interest, and what AZSEY called “stable managers”, perhaps a reference to Bill Gross. In current currencies operating profits were “mostly table: while in constant currencies they rose 3.5%--almost all, I think, from the European asset management side.

Meanwhile Bank of NY-Mellon plans to combine its 3 investment management business into one, for both institutions and intermediaries with the public, and add passive index-tracking to the mix. Since BoNY is one of the leading ADR depositaries this means more liquidity in our bailiwick. The trio of firms to merge are former Mellon Capital Mgm., Standish Mellon Asset Mgm., and The Boston Company Asset Mgm. (Source: Citywire.) AZSEY was downrated to neutral from buy by Citigroup earlier this week.

*Separately Citigroup announced it would launch an instant real on-line system to vote proxies which will also cover ADRs.

*A reader who used to manage a closed-end fund sent me some research from UBS which helps clear up the way Aberdeen is consolidating its US-listed CEFs. It initially announced plans to merge ABE, LAQ, ISL, SGF, and GCH early next yea r into Chile Fund pending shareholder approvals. It will also launch a buyback under a standstill accord with City of London Group the UK fund of funds if the discount from NAV is over 19% or a tender offer if it is over 11%. CoLG in return will tender its share and vote for the merger. Separately, Asia Tiger Fund, GRR, also opted to join in the takeover.

*Citigroup has informed the SEC that this week it is selling 10,000 shares of Advent Global Convertible Fund, AGC it bought in late Aug. Earlier Barry Olliff's group forced The Thai Fund to seek a vote to liquidate. So this is probably a better outcome for shareholders in Standard Life which took over Aberdeen, the fund manager, last summer. CH rose 0.4% on Monday. Chile opened talks to update its EU free trade agreement which also helped Soquimich.

*Brookfield Asset Mgm, the Canada parent of BIP, the Brookfield Renewables Fund incorporated in Bermuda which we own will take over from a rival fund, Center Coast Capital Holdings, CEN, management of the Center Coast MLP and Infrastructure Fund after a shareholder vote. Price was not given.

 *It may take 2 to 4 weeks for broker Charles Schwab to disgorge the funds received for the merger of Kennedy Wilson Europe REIT(KWERF) with parent NYSE-KW.

 *Investor A/B fell 2% earlier this week. It is not immune to Euro-jitters even though Sweden is not in the Eurozone. This despite its Wartsilea key holding winning bids for two new power plants in Michigan from WEC Energy Group.