You're listening to Strictly Business Podcast with Lindsay Williams.
The JSC has closed its doors for another day and it's time therefore, as it's a
Wednesday, to speak to Skulk Lowe,
Portfolio Manager, PSG Wealth, Old Oak in Cape Town.
Had to happen Skulk, it had to happen and it has and don't panic.
We told you it would happen, we just didn't know when.
Correct.
I didn't know it was going to...
Well, there is two surprises.
I think that the pullback and as well as the magnitude of the run.
I mean, so people yesterday, I woke up and not yesterday, this morning,
woke up and the headlines.
And I'm going to say of the newspapers, because there's no such thing as a
newspaper, but over my website where I usually find my news.
And I think that I can recall the...
The headline said something,
largest drop in gold in decades and silver is the largest
one day drop since February 2021 or something like that.
And I look at the drop in my six odd percent drop in the gold price yesterday.
And I went like, yeah, it's really,
really bad to have a six odd percent drop.
Especially if you bought a gold investment month to date.
So as we sat on the 20th of October,
so basically the day before the big drop, the gold price was up
13.7%, close to 14% for the month alone and 67%
for 2025.
So, you know, When something, you know, sounds too good to be true, it often is.
That's the one saying I want to use.
But something that runs as hard as it can drop just as hard.
Okay, so let's get some percentages here because this interests me and I've always
tried to
get out of you the relationship between the dollar
gold price and the price of shares both in the United States or Australia or Canada,
wherever, whatever,
and South Africa.
So what happened?
And gold fell...
This is interesting because you know me and my reversals.
You know me.
I'm a reversals bloke,
which means that if a market goes in one direction and then suddenly immediately
goes in the other
direction and closes down on the day, for example, that's a reversal.
This is exactly what happened on Friday.
The gold price on Friday went to $4,391 an ounce and then closed down,
I think, something like...
A 42.50, 42.60, something like that.
A massive reversal.
New highs, new lows on the day and closing down.
So I said that's the reversal.
Monday, I thought reversals don't work anymore, Scout,
because the gold price went to 4,398, I think it was, today's high.
But then, then, today.
A very strange, but reversals work.
If you're patient and if you've got the guts to...
to ride out a few storms.
So we're going to set up a fund for horny punters who like a bit of
risk.
It's the reversal fund, but we'll talk about that off air.
But anyway, that's what happened.
Hard to make a small fortune as you've been a big one.
I've been a big one.
Don't be nasty.
It'll be patience.
You might only trade twice a year, but that twice a year will be lucrative.
Carry on.
So 6% down, you said, on gold.
And what were the shares doing?
I looked at the resi, and I know it's just not only gold price.
Because remember, we also saw massive retracements in the palladium, platinum,
those prices as well.
So it was funny enough, you're talking about,
Colby was a presenter the other day, referred to me as a data nerd.
So I don't know if I should.
I should take offense or say thank you very much, sir.
But, I mean, just for interest's sake, I mean,
yesterday we saw a drop in the RSI index, the JSE
RSI index, of 7.9%.
A one-day drop.
That's massive.
Why is it massive?
Because if you take over the past five years, and remember, the past five years
we had things like COVID.
There was a lot of action in the market.
weather massive retracement in 2022.
We had a massive war.
There was major things that happened in the markets over the past five years.
Over the past five years, We had the liberation day, and during that liberation
day,
we had a massive retracement in gold, something like 9% there in April.
But if you take that out, we haven't seen a 7%
drop in the RESE index over the past five years, ever.
And yesterday, it went like this.
So it was an aggressive, aggressive, aggressive move in all,
let's call it South African resources.
Those are precious metals.
resources.
And today, we on one stage thought we're going to see a repeat of yesterday,
but at least, it's still negative, make no mistake, because,
but I mean, it did the latter part of today,
you could see there was sort of a bit of consolidation and a bit of sanity that
moved back into the market.
Let's state The most important thing, that the investment case for the likes of gold
has not changed.
No, nothing's changed, apart from it got a little bit frothy.
And also, one other thing on a fundamental basis is that it was the beginning of
Diwali,
the celebration of Diwali.
And the gold buying up to the celebration had been fairly brisk from what I
understand,
the retail sales, particularly in India, obviously.
And then Diwali over, that's it.
gold buying stopped.
Did you hear that?
As a factor, we know about the incredible importance that gold has in Indian
culture.
But did you hear about the Diwali story?
No, no, no.
There's a lot of reasoning behind, you know,
why we've seen the movement that we've seen yesterday.
And to the extent we've seen it.
I'm going to explain to you literally in Half a sentence, why we've seen the
movement yesterday, easy.
Go on.
It was more sellers than buyers yesterday.
No, no.
And you work a long day anyway.
You're a poor wife and children.
Exactly.
It is.
I know it's technical.
So let me write this down.
More sellers than buyers.
Okay.
I'll put that through Grok and Copilot and DeepSeek and Perplexity and
see what they all come up with.
at its best i know people just couldn't pay that price people no one wanted to be
the first person to pay 4
400 so it got to 43 98 the buying simply stopped there was a vacuum and what the
only thing that can happen when
there's a vacuum of buyers is that the price falls and the sellers come in and
the bids are much lower and
much lower it can we never we nearly got to changing
our big figure from three to four on the gold today didn't i think went to 4 010 or
something
And there's still many hours to close this.
See, that's it.
Even after the aggressive, I think it's Peter Schiff,
that yesterday tweeted that he said,
even this massive, massive retracement,
I still left gold above the $4,000 mark.
And maybe it's going to go test that, like you said, that $4,000.
I seriously don't care.
I mean, if you told me.
a month ago a little bit more than a month ago that we will be sitting on the 22nd of
of october and gold is going to be higher
than four thousand dollars i would have told you you're mad anyway um if you told
me if you're going to be going
surpass the 4300 we actually retraced to 4000 i i would have said you bonkers you
know anyway so so i
think the business case for for gold has not changed i think and to be honest i do
believe and this is my personal
opinion that we've seen run a little bit too quickly, too aggressively.
And this is just bringing back some sanity, bringing back some sanity in the
market.
But I still believe that we're going to see it form a base again.
And most probably have a second stab at running towards the $5,000 mark.
And I don't believe it should be trading there.
It's just, well, it's just you could see the aggression that has moved to this
point.
I don't think you can stop an out-of-control train that quickly.
I will say to people listening that sometimes the market goes straight back,
and that's because the fall, because of an erroneous event, doesn't change the
fundamental picture.
The fundamental picture in the short term has changed because it simply means that
there are certain retail punters that came in at the end
that have been knocked out, and they're licking their wounds.
It's not going to be easy to plunge into the gold price to push it back to 4,400
again.
As I said, people must regroup and lick their wounds and then say, right, let's
wait.
Let it make a base, as you quite rightly said, and off we go.
But off we go again, we will.
I think the price has got the potential to go to 3,750, something like that,
3,800, and then start going again.
There's a big long-term trend line, Skullcane.
You've probably identified that as well.
Yeah, if you look at, you want to get technical now, I mean your 37,000,
38,000 level is pretty much the 50-day moving average.
I mean, that's a good call for it to sort of regroup in those levels.
If it breaks below those levels, it could even go and flirt with those,
let's call it 3,300, 3,400 levels.
I still very much believe that the trend is your friend on this one.
And back at the fundamentals, I mean, you and I have been having this conversation
many, many, many, many times.
I mean, about specifically the American economy.
When Powell came out last week and made it quite verbal that day,
he feels that nothing has really changed in terms of his stance on the U.S.
economy.
But the labor market...
That's a major, major concern currently.
So that's one tick.
So the moment you see a crack in the labor market and suddenly you start seeing your
unemployment kick
up, that's the one tick within the stagflation scenario.
I still got no doubt in my mind.
And when I say no doubt,
I feel so strongly about that the tariffs are going to create a major,
major inflation problem.
in the next few months.
I mean, so inflation, I still believe is there.
You're quite right when you say that, because at the moment, the early tariff
increases have been absorbed by the people,
by the importers, by the retailers.
So they've said, OK, we've made a lot of money out of this in the past couple of
years.
You can see that from our results.
We're not going to pass this on to the consumer.
But eventually, they're going to have to say, I'm sorry.
We've been the recipient of the higher tariffs now.
We've soaked it all up.
And now it's going to be down to you.
And that is when inflation does pick up.
So it could be three to six months, Skulk.
But pick up, it will.
And the labor market, I don't know.
I don't know about the labor market.
There's all sorts of instances of the small instances.
But if you spread that around the whole of America, you might say that, yeah,
we've got ourselves into an employment recession.
Yeah.
No, 100%.
100%.
I still don't think.
The recession is off the cards.
I know people were advocating calling a recession for the past two years already
on the US.
That hasn't happened.
But I still believe it can happen.
And if you look at this, again, back to the inflation.
We've seen the inflation data coming out from South Africa.
That's sort of a case in point as well.
3.4%.
I thought that was, well, we know that was a...
definite definite win so um if if the the salt and its members are listening
um you know if we looked at the fushini groups uh but uh results
yesterday we can see the retailers are struggling i mean you could see the
furnishing group and i think what was it two weeks ago uh
three
weeks ago we had truers as well that had a major major crack the day the results were
released yesterday what was what the fushini group was down something like 13
or something like that in one day um the the
we the economy is still struggling um and in the 20th november that's uh the next
uh meeting i think we
need to look re-look at this again and say we should be decreasing interest rates
especially with the rent
strong certainly against the us dollar exactly yeah exactly but Back to
inflation, I just want to quickly finish up the inflation.
With inflation, you were talking about a base forming in certain classes.
Inflation formed a wonderful base globally over the past two years with being very,
very low.
The worry currently about that is when you get something like tariffs and that kicks
in, suddenly,
if you're let's take, for example, oil price.
That's a very simple one.
We had oil two years ago.
running very, very quickly from the $70 to the $90 mark, very quickly.
Currently, oil is trading at $60 mark.
If that, for instance, just for hypothetically, run from $60 to $90,
that's a 50%
increase in the oil price, which is the largest portion of the inflation bucket,
which is going to have a massive, massive, massive effect on, I would say,
the global economy and decision-making coming from the US.
Yeah, so I'm still very, very comfortable having my gold.
But I do think that if you got in now and you bet the farm, just...
Be careful.
We could see, and that's what you said as well, Lindsay, we could see a further
retracement.
This drop might not be over for now.
It's a tiny blip on a chart.
And don't forget the gold price has been in a bull market for years.
And we're talking about days now, so I wouldn't worry about it at all.
Lick your wounds, as I've said.
I think it's the third time I've said that.
But they will heal and gold will go up again.
I won't.
you to briefly have a look at a couple of shares on the JSC today.
Runnet, Famous Brands and Hulamin.
Any of those catch your eye?
Let's take one or two of them.
Famous Brands, that had the interim financial results.
Very similar, I want to say very similar to the Pashini Group because then would
have made a major drop.
And this is out there that don't know famous brands.
This is very well-known, very well-known brands.
I mean, it's Steers, Debonairs, and what's that fish away?
Fish away, yeah.
But, I mean, it's maybe appropriate.
I mean, we've got this 5 o'clock shadow on a Wednesday, and we're talking about
famous brands.
We should maybe call it Wacky Wednesday because that's what Steers are more famous
for.
You know the best burger?
I like Whopper.
I'm talking about brands here.
I like Whopper.
I've gone off McDonald's.
I used to love a Big Mac or a quarter pounder with cheese.
But now Whopper is my favorite of the mass market brands.
But a Steers Burger, a Steers King Burger.
Oh, God.
Skulk.
World class.
It's just a benchmark.
It's, it's, uh, It's always such a just a comforting thing to either buy yourself a
Steers with those Steers chips.
Oh, you know what I feel like now?
Anyway, we'll be digressing.
No, what do you feel like now?
A Steers burger?
I feel like a Steers burger.
You're going to get one, aren't you?
I'm going to be honest.
I most probably am.
Anyway, famous brand.
It's also known for its disastrous expansion when it got too cocky and it
bought something called the Gourmet Burger Company, GBK.
uh gbc in the in the uk i went to one of their shops and quite honestly they were
no different to anywhere else and
that's what it was they overpaid and that set them back enormously so they're famous
for that but they're also famous
for some really good brands and would
you be looking at this one after having seen the results skulk um it's it's with
all due respect it's
it's it's a smallish company and it's.
It is cyclical.
But, I mean, you're right.
They did get it totally wrong.
But they're still struggling with the UK businesses, just for interest's sake.
They're still struggling with that.
I think that was down something like 6%.
But it's such a small portion.
I thought I forgot the dot in front of me.
No.
So, if you look at their restaurants, they've got in total 3,008 restaurants
across 20 countries.
So, Africa, by far the largest component, 2,666.
of this 3,008 restaurants.
UK, only 58.
So it's such a small portion now.
When I look at it,
so things that stood out for me that I think they can be positive on, I mean,
they've got very little debt.
They've actually managed to reduce the debt over this, let's call it, past year.
They're sitting with, it's got 300 odd million in cash.
and I've got a bit of cash on the balance sheet.
It's still growing their dividends, that's positive.
Revenue was neither here nor there.
When you grow your revenue by let's go 6%, you know it's been a market that hasn't
been,
it's been a tough market in South Africa.
People, when you've got 33 out of the third of your official people in a country
sitting without jobs,
unemployment, And they called it unofficially much probably closer to 60%.
Then the likes, people are going to struggle to go and shop at the Pashini
Group and they're
going to struggle to buy at places like Steers and Debonairs.
But still, I think they've been able to manage this environment very, very well.
And considering the return on equity of 41%, like I said, sort of cash plow,
I thought they managed this really well.
I know you love your outlooks.
I know, know you love your outlooks.
when I look at the outlook of the financial report,
they mentioned the word they're cautiously optimistic for financial 2026.
So they still believe that they feel stronger.
So let's see.
It's something that I'll monitor, but not something I'll be invested in.
I just put up my Steers burger screen to have a look at and see what the menu was.
And it's frozen and it's frozen everything else on my.
I can't turn my laptop on and off again because I'm recording on it.
So you're going to have to do some numbers for me.
Anyway, I mentioned two other names, and that was Renit and also Hulamin.
Go ahead with, as I say, briefly with those two, please, if you can.
Renit, I'll touch on Renit.
I think that looked really good.
I mean, they're sitting also with a massive, massive cash pile.
when you look at the Their discount to NAV is around about 38% now.
We know they've been unlocking value for investors quite aggressively over the past
two, three years.
And I think they've been doing it, doing successful.
So when I look at this one, I do feel positive.
I think they've been doing well.
And at a 38% discount to NAV, I don't own it, just by the way.
I don't own it.
34% discount to NAV currently.
3 billion euros in cash, which is 80% of NAV, just for interest.
If you tell me what am I doing, you may not hold this.
You either need to buy or sell.
I will buy this in a blink.
It's looking good.
Target prices on Bloomberg, they've got it currently at 632 rand.
There's still some upside if the analysts are 100% correct.
So, yeah, it's looking good.
I don't look at the elements.
So, yeah, those two we'll need to do.
Okay.
Interesting company and interesting shareholder list as well, if you have a
look at it.
Skulk, you're going to have to tell me some prices now.
I'll call them out and you've got them.
Have you got them to handle on a screen where you can easily do it without
changing screens?
Because normally I'll start with the currencies, the dollar against the, sorry,
the dollar round,
euro round, British pound against the round.
Have you got those three?
If I can get them, just hold them for a second.
There we go.
Open this screen.
I know that this is going to cause me problems later on.
This whole screen business.
I can't open anything.
It's a virus on steers, everybody.
Not in the burgers, but on the website.
Oh, where would I go?
Do you want the rest?
No, we don't have to do it.
Do you know what we should do?
Because it's a technical problem on my side, why don't we go to the ups and downs
on the JSC?
I know the downside, mostly the diggers, the gold miners.
Go through the downside first, and then the upside, because I see Sasol's in
there.
So off you go with the downside, please.
They're all, you're 100% right.
That's all diggers.
It's been a bad day for the diggers.
On the downside, you've got 5.88% down by Durban River, deep 5.34% down by Harmony,
Anglo Gold down 5.34%.
Then we've got Cash Build in there.
I don't know when did they start digging.
They most probably sell stuff to be digging, but they were down 4.2%, and then
just shortly after that,
3.1% down for Goldfield.
So, yeah, it's been a bad day.
Just for interest's sake, I mean...
I just had a quick look while we did this.
It's actually crazy.
If you look at the top performers for year-to-date, it's still very much all
these diggers.
Despite the massive pullback, we've still got Sabanya Stillwater up year-to-date
over 200%,
Agner Gold 194%, Goldfields 186%.
So even with this massive pullback,
it's still dominating the top of the pops for 2025.
far.
But if you look at October.
Suddenly in October, if you look at the top 20 worst performing stocks, you know,
all of them are in there.
You have Altera, Impala Platinum, Sabania Stillwater, Goldfields, Durban, the Red
Airport.
And just for interest sake, I think a week or two ago, we actually threw in two extra
stocks.
as companies you couldn't do without in your portfolio, namely NASPAS and Proces,
they also end there.
They're also one of the worst performing stocks in October.
So, yeah, you could see all the darlings are taking a bit of a breather.
That's it.
Ready for the Christmas boom.
Okay, so we got that.
What was it?
Upside now.
Let's end on a cheery note.
So, René, after the great update, René, up 8.1% for today.
So great, great results.
Market are buying into it.
One of the worst performing stocks in October, namely Sassel, that had a
wonderful day, 4.5% up.
Sapi, 4% after the news that we heard yesterday that
Coronation is up their stake in Sapi.
Just for interest sake, that had a positive effect on Sapi's share price
today, up 4%.
Ronit, up 3.5%.
And ending the top five, Alt Mutual, 3.2% up for today.
Very good.
Gold price, please, before we go.
Before we go to the indices, give me the gold price.
Let's quickly just open my eyes.
See, I'm not prepared today to read you the commercial price.
You sound very discombobulated.
I can do it actually before you because I can do it.
That's a beautiful word.
What's that word, discombobulated?
Discombobulated.
That'll throw people, if you ever want to throw something in.
Gold price 4,044.94 at the moment, down 1.56%,
or $64.40 on my screen.
Flashing away.
Investing.com is also very good.
It's not a plug for them.
I've got no affiliation with them.
It's just a really, really good service.
Silver, though, holding.
It's slightly up on the day.
Another big story that I get from investing.com, which pops up on my screen
all the time.
is beyond meat.
Don't know if you ever followed that company.
It was one that made plant-based burgers.
And everyone was excited about it.
It's not a steers burger.
Of course it's not.
I know that.
You know that.
Blind tasting.
I know a plant from a cow.
I'm a kid.
Yeah.
Um.
They were in the doldrums, nobody wanted it, it was just a fad and then suddenly
Walmart came out and said yeah we're gonna
take all your stuff we're gonna distribute it 150%
on Monday I think it was yesterday 100 today another 100% people just can't buy
enough of this stuff.
Interesting the way that the way that markets work.
Imagine having phoned a client up ages ago and saying where it's 80 cents now there's
nothing we can do saying it's
three dollars 62.
What a lovely thing sometimes to be a fund manager.
Skulk, JSE Indices, please, and Value Traded.
So JSE today closed at 108,837 points,
literally just being negative, down 65 points, down six basis points.
Resources, as expected, that was down 2.4%, while the rest of the indices were
all in the green.
The Industrial Index up 0.6%, Financials up 1.2%.
to 1% and the asset property index also up 1.2%.
So a solid day.
When you look at the value trade in the market, not a slow day at all.
Just remember yesterday we had a $38 billion and usually when you've got such a
large trading day, you sort of get a bit of a breather today,
but that was not the case today.
Today another $37 billion traded through the JSC.
That's fantastic news.
What a day.
Really good.
Skulk, thank you very much for your time as always.
We won't be speaking next week.
We'll speak the week after.
Skulk Lowe is Portfolio Manager at PSG Wealth Old Oak in Cape Town.
And that was the five o'clock shadow.
The views and opinions expressed in these podcasts are those of Lindsay Williams and
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