You're listening to Strictly Business Podcast with Lindsay Williams.
The JSC has closed its doors for another day, so it's time for the 5 o'clock
shadow.
And as always on a Wednesday, I speak to Skulk Lowe, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
Has it really been a week, Skulk?
Seems to me like six months or something.
The amount of stuff that's happened in the past week, quite extraordinary.
No, no, no.
Let's start.
Let's get the elephant out of the room, man.
Massive applause.
I mean, we sat here exactly a week ago.
You called a top more beautiful than,
yeah.
And you told me not to.
You said there was a graveyard with people that called tops in it exclusively.
And you said, don't do it.
And I felt so strongly about this gap theory that I have, which is actually very
well known.
The exhaustion gap was, in fact, on the Thursday about...
About 16 hours after I called the top in the gold market.
But goodness me, it worked spectacularly well, Skunk.
And I want to take this further because listeners don't know this.
We actually had a conversation.
I complimented Lindsay. I think it was Monday or yesterday morning.
Complimented him and he said, I feel this is overdone.
Sort of feels like the peg is pegged in again.
And I went like, well, you...
Gold, gold, you top so well.
Why not do the buttons as well?
And here we sit.
Here we sit.
What actually happened was I looked at the gold field's longer term share price
action.
And it was down 11.6% at the time.
And I think that was Monday, Monday morning.
And it was on a long term trend line support.
And it was a simple analysis.
I just said it's done enough.
And whether that's a buy or a...
a do-nothing recommendation, I don't know.
But from then on, it's rallied quite sharply.
Yeah.
No, that was a great call.
Great, great call.
And now we see, because this is massive movements.
I mean, we've had a few things happen.
I mean, like you said, we've had that massive retracement and people are
actually extremely nervous
about this retracement.
But, you know...
I tend to feel why.
I mean, yes, we saw a 10% or 20% in silver.
We saw a massive retracement in these best metals on Friday.
But I mean, when I did my update on markets on the 1st of February,
it still showed that even with that, let's call it 10% retracement in the gold price,
the gold price still did more than 16%
in dollar terms in January alone.
So, come on.
If you're going to be nervous about a 10% retracement, why not ask the question,
why did it run way over 20% and still more than 30%
over the previous few days?
This is volatility.
And that's why they're saying, I can't remember who coined it.
I mean, you told me the story.
It was like gold, gold, it's making me old.
That's most probably why.
Well, it's made you old in a good way in the last year, and it will continue to do
so.
One thing that a technical analyst spoke to me about after the run-up and then the
spectacular fall in 48
hours, it fell nearly $1,200 an ounce, unprecedented stuff in dollar terms.
But he said, okay, we've had the A, we'll get the B, which is the recovery, and then
the C leg is down again.
So whether that C leg, if he's correct, is lower.
A lower low than the 44.50 or whatever it was that we got last week?
I don't know.
But it's interesting.
I've just completed an interview with somebody much cleverer than me.
He's probably as clever as you.
And he's from 91 in London.
You know 91 very well.
And he's a gold mining investor.
And he talked to me about why gold had done it, what he thinks is going to
happen, and why the gold shares are going to continue to go.
He said the gold shares...
are up three times, sometimes four times internationally, but their margins have
gone up fivefold.
So he feels the shares are still lagging.
Yeah, we had this conversation last week.
I'm just going to talk about the profit margins again.
I mean, it's true.
I mean, at these $5,000 levels, these mines are, well,
they've been printing money for the past three, four years.
They're just, every day they're printing more.
But it is important.
thing to note i mean i did that uh cobe or chicago board of exchange gold
volatility index on friday and that's an interesting one i mean it's just this
shows us you need to be you just
need to be careful um and when volatility starts there's a good
reason why something like a uh uh uh warren buffett often referred to to
volatility
where he likes to buy uh at certain volatility levels and and we'll we'll get
nervous at certain other
volatility levels not to go into his strategy but you know when you look at the
the cobe
gold volatility index, it's been been hovering around that has got 15 odd levels
for the past
20 years.
And it kicked up in COVID, during COVID.
We remember that we had that massive spike.
It kicked up over 30, which basically over 30% during COVID.
But the highest it's actually been was that time where everybody thought that the
US is...
It's actually, it's bankrupt.
They actually, the volatility index went over 50.
And for good reason.
I mean, there was a really, really good reason why that happened.
Now, on Friday, that was the closest the gold volatility index got to that 50 mark,
you know,
since 2008.
Does it tell us something?
I'm not going to say it's going to tell us something about the future.
All that I'm saying is that things were pretty cracked back in 2008 for it to have
such a massive volatility spike.
If we're going to start seeing these type of volatility spikes,
I would just tell people to just be very, very careful.
Be very careful.
And this is where we're going to get to the behavioral science part of the
podcast.
And it would be a real example of investor behavior because you're going to tell me
now
what happened on Thursday and Friday.
What happened to your telephone?
Well, I had a few nervous calls.
I'm not going to be lying to you.
I mean, luckily, I always want to.
I mean, we always have this conversation on gold and Lindsay and myself talk about
it.
And I've been in gold fairly early and I haven't really sold.
But I just want to make it.
very clear, I've never been a bet the farm type of guy.
I've always been managing the risk part of the portfolio,
not just the performance side of the portfolio.
Even after massive retracement on Friday,
portfolios were still fairly stable.
It's just I had a long conversation with my dad last night.
You know him as well.
He's also...
a well-known individual in the financial industry or investment industry.
And we had a long conversation and sort of debating both
sides.
And I think the one thing that we got to is this could go either side.
When you have a specific commodity or investment, that has gone from
$1,000-odd levels and went over $5,000 levels.
You need to be careful.
But the problem is when you got something like that, if it's called gold, or called
silver,
or called something like a Bitcoin, if something make those type movement,
you suddenly attract the interest of people that's not always knowledgeable.
Yes.
And they look at that and they've got a thing with the kids usually called FOMO.
They've got the fear of missing out.
And that's a very, very dangerous thing to be doing.
in environments where something has gone up as it did.
I still believe as an investment,
gold and silver and other precious metals like platinum, palladium, rhodium,
it's definitely looking attractive.
I think these underlying mines are really, really profitable.
And I think if the, let's call it these precious metals stay at these current
levels.
it's going to yield a really, really good return for investors.
I can't see it going much below 4,500.
I don't think that a market after the extraordinary 48-hour period that it
suffered is going to recover.
You can have a nasty injury, for example, and go to hospital and get it bandaged up,
and the doctor says everything's fine now.
It doesn't mean to say you're going to go out running again.
So it's the same with a market like this.
We did see a V-shaped recovery.
after Liberation Day in the stock market.
So there are V-shaped exceptions to the rule.
But I think that we get the people that didn't get out the first time because it
was too quick, if it rallies again,
which it has done.
I mean, it was 5,050 when I was conducting an interview with that chap from 91.
That was only 45 minutes ago.
It's now 49.93, the gold price.
It's already $50 down.
It's very volatile.
So be careful.
I think let it consolidate and then take it from there.
Do you agree with me?
I'm being rather sensible.
Yeah, I think definitely, undoubtedly.
But I think today we need to talk about other things.
Because I think there's this...
You know, over the past few days,
we've also started seeing little cracks in these tech companies.
Very much so.
Yeah, and that's also a very,
very interesting play because that's sort of an area in the market that's been
keeping global markets,
so to speak, positive.
I looked at a fund the other day.
Yeah, I wonder if I should I'd rather not call out the fund manager's name.
It's not a local fund manager, but a well-known international one.
Don't do it anyway.
Someone might be listening.
Yeah, yeah, yeah.
No, no, no, exactly.
But it's not a, it's not a brain dump.
They've got a, it's, the fund's name is
Global Brands or Well-Known Brands or something.
That's the fund's name.
And it is.
When you look at the companies that they're holding in this fund, It is the
best of the best.
This is the likes of, yes, they've got the Microsoft,
but they're not really just focused on tech stocks.
They've got the likes of the Nike and really, really well-known, the strongest
brands in the world.
What is interesting when you look at their performances over the past, I think it was
three years,
the annual performances in dollar.
for the mci all country world in it which is their which is their benchmark yield a
return of just over 21 percent per
annum this specific fund only did seven percent per annum so so underperformed
their benchmark by 14
percent per annum and by no means can you look at these these the the the companies
that they're holding inside the
fund and think man this is a bad fund because i look at the fund and I said,
this is great companies.
Strong, well-run.
profitable companies but they were just not the flavor the flavor was if you
didn't have some
ai or you know something like that you underperformed and and that's that's
interesting and i
don't know if you've seen that that thing about that the software companies are over
the forest yes i've noticed i've noticed that this a
software company is not going to become obsolete but getting their getting their
products shunted
aside because of AI, AI replacements.
And your software companies have had a horrible time.
And the other thing is you're getting to the point now where there's so many new
entrants to the market that it's sort of diluting
the trade a little bit.
And people say, right, this is the new thing.
And taking money out of a traditional, if there is such a thing, a traditional AI
company, maybe a bit of that is happening.
But also when you I had this conversation with a couple of chaps on a Thursday
podcast.
and I said there seems to be now a royalty of AI companies emerging.
In other words, the AI equivalent of, say, Microsoft coming to the fore.
And you think of NVIDIA.
And so I always look at NVIDIA first on my tech board.
And it's done nothing for a while.
It went shooting up to 205.
I think that was post-results.
And it's now messing around at, what is it, about 180, something like that, Skalk,
at the moment.
It's really going nowhere.
And I honestly believe that the amount of capex that's going into these companies
that is consistently announced at
their results presentations eventually is going to be a bit of a drag on those
companies.
And the easy money has been made by investors.
So at best, the good ones go flat to slightly higher.
At worst, they get replaced by newcomers.
I don't know.
It's just a simple analysis again.
But I agree with you entirely.
It's well worth watching what happens to the NASDAQ this year.
Correct.
I mean,
you had a few points and really interesting ones about AI and software
companies.
Because you tend to think, and this way, the user got the same, that not all tech
companies are created equal.
You would think you've got a portfolio of great software companies.
I'm not going to mention, again, names because there's so many.
But if you just look at the S&P North American Software Index,
this is the, let's call it major software.
I mean, if somebody tells you, are you invested in tech?
Yes, I'm invested in the S&P North American Software Index.
That's my benchmark.
When you look at the S&P 500 over the past 12 months, that's done close to 19%.
That's until the 2nd of February.
19% in dollar terms.
Over the same period, this index did minus 10.2%.
Again, look at the discrepancy.
We're looking at close to 30% underperformances.
You were invested in tech, but man, you weren't invested.
Then secondly, you've got the likes of the NVIDIA.
I was looking at upgrading one or two of my home,
which I'm now talking to you on, my home PC, which I run my microphones and those
kind of things off.
Yes.
And I went to my tech friend or tech specialist.
and ask him we need to upgrade a few things on my my computer i need a bit more
hard drive more space
um and and maybe looking at a at a video card because maybe that's time to upgrade
and this
would look and when when when
your mechanic or your doctor or any of those people go like or a sharpie and take
a breath through their
teeth that's the other one Ooh.
I realized, okay, this is going to be big.
And he went like, Scott, I mean, literally, October, he said September,
October-ish, he wanted a quote for a specific hard drive.
And he got a quote, and that quote was a thousand rand for that specific hard
drive.
And nobody should quote me.
I may be using the wrong analogy.
It could be an SSD or something like that.
I'm still calling it a hard drive.
But it was a thousand rand.
He says, Skog, I kid you not, that exact same hard drive will cost you 3,000 Rand
now.
And that's the thing.
There was such a massive, people, or at least, they're selling,
there's such a massive demand for these hard drives because of cloud space,
these cloud computers, which the AI will need to run.
Also, you can't run AI without having a proper...
video card or graphics card and that's just when the likes and the videos and
those people i'm coming but what's going to be interesting when we
see the result wait a second what are you doing you're making films at home or
something i thought you were what are you using ai for why why do you
you're not saying you need one of these video cards are you
no no no i need i need video cards because if some things on on your computer tend
when your computer
starts running slower i've I actually found out back in the days when computers
started running slow.
I'll get the tech guy out and say, well, you just need more RAM or you need some
more memory or something like that.
You need a stronger computer.
And then it's like, okay, get me a stronger computer.
Nowadays, it's not just about the computer strength or, hey, now I'm going to sound
CPU. It also needs to look at the GPU, which is the graphics side.
But I'm not going to go into the IT side.
What I'm going to get to is...
And what I'm going to be focusing on when NVIDIA reports,
because I think that's to a certain extent why we haven't seen any movement in NVIDIA
since the last
report.
Because the one thing that stood out was the inventories.
The inventories were showing an increase since the last time reported.
Why are your inventories increasing when you're telling the whole world there's
such a massive
demand that there's not enough stock?
for us to deliver and that's why my hard drive will go up from a thousand rand to
three thousand rand i i think
um i think we're sitting with something in in this let's call it global market that's
that's also about to
break that's the one thing i'm massively worried about on
the i.t side that this this this called ai demand sort of created an artificial or or
artificial, or sort of a manipulation of prices.
Very good.
Yes, it has run a bit too far.
And the other thing about it is, just like Bitcoin, you say to someone, why are you
buying Bitcoin?
And they say, well, because it's going up.
And it's the same thing with many investors when it comes to AI.
No one really understands the deeper side of AI.
I just saw one piece of, for example,
legal software that has become obsolete because of AI analysis of legal matters.
That was links to how you introduced this AI theme, you know, software companies
coming under pressure.
But there's a lot of misunderstanding.
Same with cryptocurrencies.
And we'll come to that in a second as well.
It is the five o'clock shadow.
We've got to look at the JSC.
Fish and chickens doing well today.
Vodacom doing nothing as usual as its utility.
Give us a roundup of companies on the JSC that made announcements, if you've looked
at them, if you've had time.
Yeah, I did.
I did.
I mean, and actually, I mean, chickens, you're referring to rainbow chickens.
Yeah, solid set of results, or let's call it a trading statement,
stating that the headline earnings per share is going to be up anything between
69.46 cents to 76.5.
Now this is massive numbers, we're looking at 95% or under 15%.
Now,
I think nobody should be focused too much on those major numbers because when you
look at chickens,
the major cost input is naturally the food.
And when you look at the yellow maize prices, that was trading, well, it's
literally trading at about,
let's call it 65, 70% of the levels it was trading, let's call it last year,
this time around.
So we've had a massive retracement in the food, so the input cost decreased.
So it went from a perfect storm to a much better and a better environment.
So that's just a great recovery.
but also they did mention that
the local demand for their products did increase as well.
They call it robust demand.
So that's looking good and that's a great, great...
Good because it's been such a dog.
I mean, it really has.
I haven't looked at it for quite a while, but I remember the days when you couldn't
give away those shares.
So nice to see that recovering.
Sea Harvest also doing well.
You don't need to go into that, but also nice to see that one after a trading
update.
Vodacom trading update.
Gosh, I don't know.
When I think of Vodacom, and I can't even be bothered to read the results, it sounds
nasty and dismissive, but it's really boring.
Yeah, I think we've had, it was Vodacom,
and also RCL Foods.
How can we put this politely?
It was a bitter, bitter, bitter update.
Because, yeah, they say they're really struggling with the sugar market.
It's giving them gray hair.
And that saw a major retracement in the share price of the trading update.
They're really struggling.
And they said that the sugar tariffs didn't adequately shield them in local
market currently with
these imports.
So the Vodacom one is an interesting one, Lindsay.
Yeah, it's...
It's interesting in the sense that it's also a company that's not really
attracting my
interest.
I'm really worried.
We've often had this conversation.
They're selling a product, and not just Vodacom, I mean these telcos.
They're selling a product in essence that people want for free.
And I think and believe that eventually we'll get for free.
I mean, that's just the harsh reality.
I mean, they're selling things like...
call, airtime, which people don't really often buy anymore,
and they're selling data, which people want for free.
And they get for free in certain instances, don't they?
Exactly, exactly, exactly.
And then also, you're sitting in an environment where we're sitting with a few
providers.
I mean, in a smallish country like South Africa, compared to the world,
we've got quite a few providers.
The competition in that market, I think, is going to be a tough one.
I said this is going to be sort of a sweet and sour conversation.
The sweet side is when we think of 2025,
we tend to be focused on, oh, it was the year for gold.
It was the year for the PGMs.
But when you look at the top 15...
you tend to forget that MTN was in the top 15, Telcom was in the top 15,
Vodacom was in the top 15.
So, yes, these companies did really, really well because they came from very,
very distressed and called it deep, deep value levels.
And they just did the basics right, got a few things right,
and that saw them...
actually improved.
When you look at the likes of Vodacom, they're still trading at a forward P of 13
times.
So they're not really expensive.
And when you look at this, it's called a trading update from them,
it does sort of support why we've seen the recovery in the share price.
So it's quietly going about its business when everyone else is focused on what
we've been focused on for ages, and that is precious metals, other commodities,
and also artificial intelligence and other associated tech companies.
So well done.
to those telcos that have quietly, well, certainly not been on my radar at all, and
I must start looking at it again.
I mustn't be so myopic, Skull, and I blame you in a certain sense for this.
Exactly.
I'm always talking about gold.
I never focus on the important stuff of the other JSC companies.
I just want to end off with a comment.
I think the one thing that stood out for me, and I've often said this,
there's selling a product which people don't want to pay for.
We've already said that.
And that's why when you look at the likes of I think it was David Shapiro today that
mentioned it.
When you look at the likes of a Pepco, they're selling products that people do
like.
They add in these telco products as well.
So the problem is with Vodacom is they're selling a product eventually people want
to get for free.
What are they going to focus on?
Now, this is where I actually like the trading up topic.
So I already mentioned that the financial services side within Vodacom is now
contributing
13% of the group's revenue.
It's showing you that those fintech type of products which… the likes of the
Vodacom's, the MTN's, even Telcom's offer is now starting to kick in.
Will it kick in quick enough while you've got a product that will eventually lose
its profit margins?
That'll be the big question.
As I mentioned, it's not a company that I own, and most probably not a company that
I will own anytime soon.
Scott, let's have a look at some numbers now.
The dollar round is 16.01.
The British pound against the round, 21.90.
The euro round, 18.90.
Euro dollar.
Again, they've cut off those last two numbers on my screen, but it's 1.18 and a
bit, let's call it.
Gold price now 49.56, which is up on the day, $17.
But as the JSC closes, on its lows of the day, more or less, because it was 5,050,
as I said,
about an hour ago now.
So it's fallen $100.
But we're used to that.
The platinum price is 2240, which is up 6.5%.
Well done.
Palladium 1791, which is up 5%.
Gong for that one as well.
Let's have a look at the other commodities.
Looking at that CRB index the other day, we were talking about the all-time record
high.
Got close to it.
Got to about 405, 406.
No, closer, 407 actually, a couple of days ago.
Now back down to 390.
The oil price, a lot to do with that.
Oil price now up 0.5% for West Texas at $63.54.
And the Brent crude oil price, $67.66, up 0.5%.
Copper is $5.98 per pound, and that's down 1.8%.
Suddenly started to fall, as gold has started to fall as well.
Silver, though, still up for $88.61 per barrel, up 4.2%.
OK, what else have we got here?
I want to go to the US 10-year Treasury bond yield, quietly doing its thing as I
told you last year.
Scalp 4.282% was 4.30 yesterday.
The South African 10-year bond just couldn't get through 8% today, 8.055 on
the close.
S&P 500 futures 69.32, down very slightly, reversing earlier gains.
And here's the one that has interested me, another call of ours, Scalp.
Bitcoin, 74,800, down another 4.3% today.
And it's now 40% lower than its peak in October.
So a proper bear market for Bitcoin, Ethereum, Doge, the whole lot.
Across the board, crypto is having a torrid time.
Sorry, Donald.
I won't get political about it, but I'd love to.
Do we buy when it gets back to $6,000 this time around?
It would be nice.
I mean, even I could probably afford to, you know, with a couple of mates to buy
one and just put it on the wall or something.
And people would say, what is that there?
Bit what?
I'd say Bitcoin.
That was a big thing when I was still a podcaster.
Obsolete now, of course.
Right.
Now, what else have we got?
Okay.
The moves on the JSC today.
I'll start with the uppers.
Sasol.
It was looking horrible a few days ago.
Now up 6% on the day.
114, round 75.
South 32, up 4.2%.
Anglo Gold, 4.2% as well.
Alphamin up 4.4%.
And Mondi coming in with a 4% gain.
We didn't talk about Sappy's numbers today, Skulk, but don't worry about that.
Process on the downside by 4.6%. Bytes a 4% loser.
NASPERS down 3.2%.
Italtile 3.2% as well.
And three and a third percent down is Sun.
Any others?
Scott?
No, not, not.
It's just, while you were talking about the gold price now retracing,
it's become sort of a common trend where you see the east in the morning.
They sort of push these precious metals upward.
And then you see as soon as the US starts opening, it starts dwindling downwards.
It's definitely, definitely some east and west.
competition here on trying to see who's going to keep the gold price and silver
price up and who's going to be smashing it down
with.
Yeah, it's crazy times.
But one of the things I'm not going to do, by the way, is predict anything else for
the rest of the year.
Not unless it's clear.
If you go to a drinks party or something, Skulk, this is my tip here.
And what happens at drinks parties is you get sort of groups of people, don't you?
You get three or four standing around talking nonsense.
They may be doctors, and then over there you've got the financial people like
yourself all talking.
If you make a joke and make people laugh uproariously, Skulk, just immediately,
Say,
I'm going to go to the bathroom and leave.
Don't try and make another joke.
It's the same with tipping markets.
I'm not picking.
You're not a comedian.
You got lucky.
I'm not picking exactly.
I'm out of here.
Just like my gold call.
I'm going to take that tip.
Well, that's a funny one.
Skulklo is a portfolio manager at...
PSG Wealth Old Oak in Cape Town and that was the five o'clock shadow.
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