Canary Compass

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.

28/08/2025

Key Take-aways

1. Simplicity beats bureaucracy: flat, neutral tax codes attract capital and free citizens from red tape.
- Estonia leads the world for eleven straight years because its tax code is flat, neutral, and easy to administer. It avoids wealth and inheritance taxes altogether, while property taxes remain local to limit distortions. This simplicity reduces compliance costs and makes the system highly attractive to entrepreneurs and foreign investors.
- Principle: Complexity is bureaucracy’s weapon. Simplicity is freedom’s shield.

2. Reinvestment fuels prosperity: taxing only distributed profits encourages growth and resilience.
- Estonia only taxes profits when they are distributed. This policy rewards reinvestment, fuels startup growth, and draws steady foreign capital inflows. By letting compounding capital grow untaxed until it is consumed, Estonia has created a model where long-term wealth outweighs short-term extraction.
- Principle: Reinvestment multiplies wealth, consumption depletes it.

3. Small nations can lead: discipline and clarity outperform the size of bloated economies.
- Latvia and Lithuania join Estonia in the top five. Together, the Baltic states outperform economic giants such as Germany, France, and the United States. Larger economies often burden themselves with surcharges, payroll taxes, and targeted deductions that reduce efficiency. Scale conceals waste, but discipline exposes strength.
- Principle: Discipline and clarity matter more than scale or status.

4, Neutral rules protect fairness: carve-outs and privileges distort competition and feed lobbying.
- The most competitive systems avoid selective privileges and carve-outs. By contrast, many advanced economies build in special breaks and targeted deductions that fuel lobbying and entrench inequality of access. International institutions label this “distortionary taxation,” but in plain terms it is state favoritism/cronyism.
- Principle: The fairest rule is the one applied equally.

5. Mobility is the ultimate check: people, capital, and ideas always move to freer systems.
- Capital, businesses, and talent move where they are treated best. Estonia thrives because it eases cross-border rules, while the United States penalises citizens abroad with a citizenship-based tax system. France and Italy repel inflows with rigid, heavy structures. Mobility ensures that bad policy cannot hold people captive.
- Principle: Mobility is the ultimate check on bad policy.

According to the Tax Foundation, Estonia has the best tax code in the OECD for the 11th consecutive year...

26/08/2025

Great article from FT Alphaville.

"If these turnover orders aren’t reversed on appeal, they could have a significant effect on the willingness of governments to issue bonds governed by New York law.

After all, why would a government choose New York law if the consequence is to expose the country’s foreign property to turnover orders by US courts? Even if the US court lacks the ability to enforce such an order, treating the directive with contempt may cause diplomatic, political or trade friction for the sovereign defendant."

My take:
1. Judicial activism destabilises debt markets. Contracts need predictability, not reinterpretation after the fact.

2. Sovereign debt works best when restructurings are anchored in voluntary collective action, not forced asset seizures. Citizens pay the highest price when restructurings drag on, so efficiency matters.

3. The balance is not perfect, but it is pragmatic: sovereigns cannot default casually, and creditors cannot easily enforce abroad. That tension disciplines both sides while preserving some sovereignty.

4. Preserving credibility matters more than perfection. New York law remains central only if courts respect the rules of the game. “This is one of the reasons why the US government filed a brief in favour of Argentina’s position and helped secure a temporary stay on Judge Preska’s order from the US Court of Appeals.”

5. In the end, this is about sovereignty as much as market stability. States must face the cost of their contracts, but sovereignty cannot be eroded by judges stretching rules beyond what was agreed.

Default leads to lawsuit; lawsuit leads to precedent; precedent leads to suffering.