Canary Compass

03/10/2025

Michael raised an important point on persistent surpluses. Germany, Japan, China, and others entrenched the global imbalance by recycling excess savings into US assets instead of adjusting their domestic economies. That insulated them at home but concentrated risk globally.

What I added in response is that this only held because the system made the dollar the adjustment anchor. Every imbalance flowed back into US assets. Surplus countries sterilised internally. Deficit countries carried IMF discipline. Washington alone escaped the symmetry Keynes intended. This is why Bretton Woods II was always fragile, and why the Triffin dilemma has now returned in full force.

The arithmetic is unavoidable. In 2024, US net interest costs reached $ 949 billion, surpassing the $ 816 billion defence budget. Debt service is no longer marginal; it is central. Central banks purchased over 1,000 tonnes of gold in 2024, bringing official reserves to roughly 35,000 tonnes worldwide. That accumulation is one of the clearest markers of the monetary reset already underway.

This is why I argued in From Insurance to Extraction that the US order delivered liquidity and safety, but it also imposed extraction. It lasted for decades, but at the cost of debt crises in Latin America, Asia and Africa, and rising inequality within the United States.

This is why I believe it is not simply debasement, but the slower move toward a monetary reset. The outcome could resemble a collapse if unmanaged, but properly framed, it is a correction that restores sovereignty and shares costs more symmetrically.

Link to article: https://canarycompass.substack.com/p/from-insurance-to-extraction-rethinking

01/10/2025

Africa’s external debt has always come with hidden costs: terms that tighten, rules that arrive from outside, and sovereignty that narrows with every negotiation. At the same time, our diaspora sends home over USD 100 billion each year in remittances and holds as much as USD 500 billion in savings abroad. Yet very little of that wealth compounds as ownership on the continent. That is not a failure of effort. It is a failure of design.

This piece argues for a new design. One that protects family remittances, but channels diaspora savings into bankable African assets through digital rails, strict governance, and African institutions at the centre. This is not theory. Diaspora bonds have been tried before, and tokenisation pilots are already live in Kenya and South Africa. The difference here is integration: combining tested tools with sequencing rules that only qualify projects with hard-currency revenues or sufficient hedges, and placing African-owned institutions in the lead while global partners play a supporting role.

The goal is simple: remittances become capital, and capital becomes sovereignty. The rails of global finance are shifting fast. The question is whether African assets will be ready to ride them.

Picture from Business Insider Africa

27/09/2025

Following the outbreak of the Ukraine war and the dollar's use as a sanctions tool, central banks significantly increased their gold purchases to diversify their reserves and mitigate exposure to dollar settlement risk. Buying has been concentrated in emerging markets, with China, Turkey, Poland, and India among the most active. Their demand set a strong price floor and carried gold to record highs, even as high prices reduced jewellery consumption in markets such as China and India.

The second phase is now visible. Institutional investors and retail funds are contributing to the trend, with physically backed gold ETFs experiencing the most significant inflows in years. For roughly twelve months, central bank demand dominated. ETF flows then caught up, confirming that broader market demand is now reinforcing the trend.

Several macro forces explain why investor demand has strengthened. The Federal Reserve began a rate-cutting cycle in 2025, lowering the opportunity cost of holding non-yielding gold. Concerns about stagflation, which combines weak growth with persistent inflation, have increased, and gold has a long history of performing well in such conditions. Many investors also believe that Western governments are now more focused on supporting growth and managing debt than on strict inflation control, which adds to the case for gold as a store of value. Large institutions, such as Morgan Stanley, have highlighted gold as an anti-fragile asset and are recommending sizable allocations as a hedge that is more effective than Treasuries in this environment.

ETF structures show how this new demand is expressed. Physically backed funds such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) match outstanding shares with allocated bullion held in audited vaults. Synthetic or derivative products operate differently, using futures or swaps, but the major funds cited above are physical. Even so, investors hold trust units rather than specific bars, and physical redemption is limited to large institutional blocks. The risk lies not in missing gold but in holding a financial claim that depends on custody and legal structures.

Together, these forces show a clear sequence. Central banks laid the foundation, and private investors have built on it. The combination of sovereign diversification and private portfolio hedging is driving gold’s sustained rise, pointing to more than a temporary inflation hedge. It reflects weakening confidence in the current dollar-based monetary system and supports the view that the world may be entering the early stages of a new monetary regime.

This commentary is for information and analysis only and does not constitute investment advice or a recommendation to buy or sell any security or commodity.

25/09/2025

History shows what is lost when we refuse hard speech. Socrates was condemned for impiety and for corrupting the youth, yet his questioning tradition became a pillar of Western inquiry. Martin Luther King Jr was branded an extremist and told to wait, yet his Letter from Birmingham Jail turned that label into a moral summons and moved a nation toward civil rights. Uncomfortable words often carry the seed of reform long before they are popular.

There should always be a space that allows our truths to be analysed side by side.

25/09/2025

There should always be a space that allows our truths to be analysed side by side. That is the essence of debate. However, today, people often label conversations that challenge long-held habits as divisive before weighing them. When we rush to stereotype the speaker because the facts unsettle us, we do not defend truth; we block it.

There should always be a space that allows our truths to be analysed side by side.

24/09/2025

As per the chart and narration, the G10 are drifting into a fiscal posture long associated with emerging markets. The chart shows developed market real 10-year yields rising into positive territory and moving higher toward the low single digits, while large emerging markets, such as Brazil, Mexico, and South Africa, remain higher but closer than before. The premium that once separated developed market bonds from the rest is narrowing. Populism, heavy deficits and central banks pulled into debt management are driving that convergence.

Central banks see the risk. They are buying gold at a record pace while barely adding to any major currency reserve, including the renminbi. That behaviour points to a deeper fiat story. It is not only the dollar under question. The loss of fiscal discipline is becoming a phenomenon in developed markets.

If everyone moves into the same basket of weak policy, only a few options remain. Gold stands out as the neutral reserve asset. A handful of hard currency niches, such as the Swiss franc or Singapore dollar, may keep a safe haven role, but they cannot carry global scale. The dollar still offers unmatched liquidity and legal depth, but with a rising risk premium.

If this drift crystallises without a decisive policy correction, the debate moves from currency choice to the nature of money itself. Hard alternative assets, including gold, strategic commodities and credible digital protocols, become more than hedges. They evolve into parallel stores of value and, in time, parallel means of settlement. The longer fiscal slippage persists, the more these non-fiat rails shift from peripheral to core.

This is the real pivot. The hierarchy of money is flattening, and the world is quietly repricing what safe means.

This analysis is for informational purposes only and does not constitute investment advice.

Original post: https://x.com/InfinitelyDean/status/1970859803401507242

17/09/2025

Great post from Andrew Chibuye (https://www.linkedin.com/posts/andrewchibuye_zambiaeconomy-economicrecovery-developmentmadesimple-activity-7373958899298762752-dt8_?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAfTCnIBvkZRdXZmXStvXnDU_RR28GZI2jM)

I agree that Zambia's economy is stabilising. However, we still need micro signals that prove it is lifting households. Headline inflation has begun to edge lower but remains well above the Bank of Zambia’s target. It must fall back within that range and ideally run below the lower band of 6 per cent for a sustained period to recover lost purchasing power, given that the kwacha is still worth roughly half its 2019 value after years of elevated inflation.

Families still feel no relief when access to credit remains narrow, power is unreliable and moving goods to market stays costly. The credit problem is not primarily the cost of credit, but rather the ability of ordinary households and small firms to access productive credit at all. Some village banking and table banking groups demonstrate how peer guarantees, savings discipline, and community oversight can achieve low default rates and broaden opportunities, even when the cost of that credit is far above average bank lending rates.

Formally linking these community-based lenders to the regulated financial system could be an additional step toward creating a comprehensive national credit map and strengthening what is often called 360-degree credit mapping. Such integration would show where communal capital actually flows, improve credit risk visibility and help widen genuine access. Kenya offers a partial precedent: savings and credit cooperatives are legally regulated under the SACCO Societies Regulatory Authority, many are deposit-taking, and the Cooperatives Bill 2024 seeks to tighten registration and oversight. The Kenyan experience also demonstrates that as cooperatives scale and meet compliance standards, supportive policies and digital tools can help offset regulatory costs and enable these community lenders to grow without compromising their grassroots strengths.

With macro stability showing signs of holding, even with looming risks in 2026, Zambia now needs time bound, credible public micro targets that citizens can track in one place. The first priority is credit access. SME and household credit volumes should move from today’s backward looking, delayed publication to near real time reporting, supported by approval rates, turnaround times for first time borrowers, and household micro loan pe*******on. Additional targets should include a quarterly real wage index, formal job creation and youth employment reported with minimal lag, a household savings rate, electricity reliability measured by average outage frequency and total outage hours per household, an essential food basket affordability index paired with median wages, and farm to market time and cost for key staples. Stabilisation is only the base. True reform means enabling private initiative and strong community networks to build durable household wealth so that macro gains endure across generations.

Finally, where are we with the newly adjusted CPI basket?

Original post:
https://www.linkedin.com/posts/dean-n-onyambu_zambiaeconomy-economicrecovery-developmentmadesimple-activity-7374023141074956290-BuVq?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAfTCnIBvkZRdXZmXStvXnDU_RR28GZI2jM

13/09/2025

https://open.substack.com/pub/canarycompass/p/from-nairobi-with-one-eye-closed?r=3baj6e&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true

Picture from The Guardian

12/09/2025

What often gets overlooked is that decline rarely begins with collapse itself, but with the slow replacement of structural disciplines by comforting illusions. Europe’s embrace of energy radicalism, the weakening of family continuity, the erosion of borders, and the rise of tribal politics are not random crises. They are symptoms of a deeper problem: the belief that prosperity and stability are permanent entitlements rather than outcomes that must be renewed through discipline, resilience, and accountability.

When energy security is traded for utopian targets, when families are dismissed as outdated, when assimilation is abandoned for sentiment, and when meritocracy yields to tribalism, the scaffolding of civilisation is dismantled piece by piece. The consequences do not arrive overnight, but they always arrive.

For Africa, the lesson is that strength does not come from rhetoric or ideology but from the plumbing that holds societies together. Structure, sovereignty, and continuity create the conditions in which innovation and ideas can flourish. Without that foundation, even the brightest genius or the boldest policy cannot survive the weight of reality.

Europe faces four self-inflicted crises - radical green mandates, collapsing families, unchecked immigration, and rising tribalism - that now threaten Western civilization itself...

10/09/2025

Law drew the line. Ethics set the cost. Zambia’s High Court judgment in Nkombo v Standard Chartered is more than a case outcome—it is a precedent that defines distributor versus adviser, restores trust in documentation, and places responsibility where it belongs. Here are my reflections on why this matters for Zambia’s capital markets.

For clarity, in this article, distribution and ''execution-only' mean the same thing. The Bank executed trades but did not provide a personalised advisory service. It carried out a compliance suitability check to confirm access to the product, but the Court confirmed this did not create an advisory duty. The Bank acted solely as a distributor, commonly defined in industry practice as 'execution-only'.

Why banks (and wealth managers) won in Zambia’s Court

29/08/2025

Viceroy’s KCM report deserves attention, but it is not authoritative. Viceroy, led by Fraser Perring, is an activist short seller with a mixed track record. They have exposed genuine problems in past cases, but they have also overstated claims in others. The report warrants review, yet it cannot be relied upon without independent verification.

KCM’s history underscores the gravity of the issues. The Zambian government seized the mine for lack of investment and only returned it to Vedanta after a protracted legal dispute. The report’s core assertions are stark. Production has collapsed. Plants remain idle or run at minimal capacity. Operations depend on reprocessing old dumps rather than extracting fresh ore. Losses are substantial, capital expenditure is thin, and a scheme of arrangement channels any future cash flow into priority claims. Political risk remains elevated.

The governance lapse is equally troubling. ZCCM IH Plc holds a twenty percent stake and sits on the KCM board. Oversight should have flagged falling output, smelting constraints that forced concentrate exports, mounting liabilities, and the steady advance of legal claims by counterparties. While accountability does not rest solely with ZCCM IH, as the primary custodian of Zambian citizens’ interests in KCM, its responsibility is undeniable. Vedanta, as majority owner, must also answer for these failures if the claims are validated.

This analysis is provided for informational purposes only and does not constitute investment advice.

August 29, 2025 – Konkola Copper Mines (KCM), an 80% subsidiary of Vedanta Resources Limited...

29/08/2025

The decline of Manchester United is not about transfers or tactics. It is a masterclass in how organisational culture, more than resources, dictates success. The Harvard Business School case study on Sir Alex Ferguson makes this plain. Ferguson did not merely win trophies; he built a culture of excellence that has since collapsed.

Sir Alex Ferguson’s genius lay in discipline, vision, and authority. The case details how he built not just a team but a club, embedding youth development and a culture of continuity at the heart of Manchester United. He revolutionised the academy, insisting that young players trained alongside seniors to foster a one-club mentality. He promoted players whom others dismissed as too inexperienced, turning them into a generation of leaders.

The decline of Manchester United is not about transfers or tactics.