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The 5 o' Clock Shadow with Schalk Louw · Strictly Business

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You're listening to Strictly Business Podcast with Lindsay Williams.
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The JSC has closed its doors for another day so it's time for the 5 o'clock shadow
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and for the first time on a Wednesday in 2026,
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it's the 5 o'clock shadow with Skalk Lowe, Portfolio Manager at PSG Wealth in Cape
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Town, Old Oak Division.
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Now Skalk, I think about you every day and it's not because of you taking up golf or
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other matters which need not detain us, is because every time I look at my screen or
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I get a message from someone,
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it's always to do with commodities.
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And it's literally every single day.
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And I'm looking at a graph of the CRB index, but I don't want to start with the
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overall picture.
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I wanna start with what was our favorite last year, and that is gold.
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Incredible, 4,667, I think was the high that printed intraday
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since we've last spoken.
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Who can believe it?
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I mean, I don't want to say I would not believe it,
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because naturally you and I had this conversation, and I've been positive on
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gold for many moons, and I haven't lost that,
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let's call it, somebody asked me this morning, have you started selling any of
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your gold positions?
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And the answer is no.
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And we'll get back to that.
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But as you mentioned, gold, 72% year-on-year.
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I mean, the poor man's gold, silver, 192%, close to being a two-bagger.
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And then we went into 2025.
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It took up to April for the ugly stepsisters.
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And when we turned back the clock 17 years or 16 years ago,
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it was definitely not the ugly stepsisters because you would have paid more than
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double, double the gold
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to get platinum.
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And then platinum took the pattern in April and just started running.
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And year on year, that's what?
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153% up as well.
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But when you look at palladium, palladium is also, what was it?
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108, 109% rhodium up
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113%. And why I'm mentioning these commodities because it's very important
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because...
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All of these commodities,
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we'd be either the top producer in the world or the second largest producer in
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the world or in
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gold's case, the eighth largest producer in the world.
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Hence the fact where a lot of people say, well, Rand 1640 odd levels.
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I went, why?
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Isn't that way too strong?
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Hell no.
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Hell no.
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No, it's on a run.
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This is, to me, it's a secular bull market.
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But anyway, and you didn't mention copper or did you mention copper because you were
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rattling off the metals,
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but copper going as well and coinciding or not so much coinciding, but along with
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Anglo-American reinventing itself.
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It's been doing it over the years, but it suddenly reinvented itself as a copper
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company, I suppose, with the tech corporate activity.
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Yeah, but spare a thought for them.
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I mean, when did they get rid of Volterra?
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Oh, Volterra, yeah.
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They...
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*laughter* A class half fun story, isn't it?
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Isn't it great that we've got copper?
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Yeah.
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Isn't it horrible that we don't have white metals?
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Yeah When did they get rid of it?
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It was February last year, we just mentioned.
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At the bottom.
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Platinum did absolutely nothing.
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It was actually quite underprecious.
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Stayed at these $900 per ounce levels and then they got rid of Volterra
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the platinum miners just went like, "Okay, thank you very much.
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There we go." That was a sign.
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But it's very interesting and it's so good for South Africa because no matter what
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fancy economists say that we
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diversified our portfolio of economic activity in South Africa, the fact is
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South Africa is still a commodity-based economy.
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And if this run continues then the round will be 1450 not 1650, don't you think?
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I love that you say 1450 because a lot of people say, Oh, we could see 15 Rand
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levels.
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So let's just do a quick economics 101.
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I'm not going to give the full purchasing power lesson because then this is going to
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be a typical 5 o'clock shadow,
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45 minute thing again.
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But purchasing power parity since 1994 and I've used May 1994 for the specific reason
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that
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is the month that we've become a democracy again and it's open to the world properly
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and there we go.
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So that's the base state that I use.
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And said, well when you use inflation differentials, in this case South Africa
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and the US,
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up to now, end of December,
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then you get what the purchasing power parity should be.
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But a lot of people said, well, you can't do that because South Africa went onto the
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gray list.
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They had the Zondo Commission.
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They had so many other things.
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So that's why you've always had a premium.
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So I took the average premium over this let's call it 32 years and I added it to
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this purchasing power parity
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levels, 14 Rand to the dollar.
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And a lot of people say it won't happen, won't ever happen.
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Well, when you look at it over the past 20 years
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It's happened quite a few times where it actually dipped below this, let's call it
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fair value mark.
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So I'm not going to be one of those people.
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I can't remember.
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I think it was Irvin Ruud or somebody that coined the phrase, I think 20 years ago.
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If you know where the RAND is going, you don't know what the question is.
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So I'm not going to try and forecast the RAND.
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Although I'm saying when you look at the current RAND.
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values at 1640,
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the RAND is by no means overvalued or let's call it undervalued currently.
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It's definitely still looking that it's got some value.
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And when you get an environment where because just look at our imports and
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exports.
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I don't know the exact figure, but I think it was something like 30 billion more
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exported.
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And this is mostly commodities in November.
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When you've got that and you're running such a you know, large trade surplus,
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then I mean naturally your RAND should be improving.
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And also it doesn't do it any harm to see that the US dollar, although it's stalled
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a little bit,
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the US dollar is to me in the early stages of a bear market, Skulk.
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I mean the RAND doesn't just trade against the dollar of course, notably the euro as
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well, but the
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The fact is that the weaker dollar will help the RAND strength.
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It's all set fair, I think.
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And let commodities carry on.
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And as I said earlier on, looking at my CRB index, that's the Commodity Research
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Bureau Index,
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which is a basket of every single type of commodity you can imagine, from palladium
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to eggs,
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from timber to bauxite to whatever you want.
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It's all in this index in various degrees of importance, energy, of course, being
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the most important.
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I'm looking at this thing and it's breaking out, Skull.
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There's an upward sloping wedge if you're a person that looks at graphs and it's at
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all-time record highs almost as we speak
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now.
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If it breaks out from these tops that it's formed over the last year or so, then the
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sky's the limit.
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In fact, there's blue sky.
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It's just extraordinary.
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And just before I stopped rabbiting on, I sent out a tweet in I think around about
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mid-October.
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That was when Silver first went through 50%.
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And it went straight to 51 and I said, "No, this is too quick." And I said on X,
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I said,
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"Is it time to ring the bell for silver?" In other words saying that's it now.
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Because it had gone from just around about Liberation Day time below $30 an ounce.
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It nearly doubled in the space of a few months.
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Now it's nearly doubled again since mid-October to now to $91 per ounce.
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Astonishing stuff.
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I mean, the late Dr.
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Clive Ruffer used to tell me it would go to 50 within his lifetime.
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Sadly, he didn't live to see it.
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But goodness me, the punters love silver.
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I would have loved to see his face in this book.
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This is absolutely just for listeners that haven't learned or just go and find some
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of his books.
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I mean, he was one of the biggest gold lovers or gold advocates.
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I mean, yeah, it's… Sorry they couldn't have seen this environment.
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Yeah, okay.
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Now, I haven't really been following gold shares very much.
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I need South African and international gold shares.
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Have they mirrored the performance of the yellow metal?
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Yeah, yeah, yeah.
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Naturally, we actually did save it somewhere.
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But most of these gold miners in 2025 did over 200%.
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When you look at Anglo Gold, that gold fields did.
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So, yeah.
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didn't just double up your money, you tripled up your money in 2000.
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And I just want to get back one step because I think it's very important that
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you mentioned, I mean,
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you said South Africa is still very much of a commodity country.
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And you also mentioned that the S&P or US market is in a,
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which you think could be a sort of a bear mark.
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Now there's two things on that.
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The first thing is I had a look earlier today where I, physically went and just
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say, well, what is this?
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Because back in the days,
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you actually had the resource index made up close to 50% of the
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of the JSE All Share.
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And it dropped down, I can't remember where, but I can recall something like 17
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or 18% levels six,
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seven years ago.
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That was when NASPERS process were in their pump, as they say.
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Yeah, over 20% of the total index.
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Today, I went and had a look.
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It's getting close to 36 or 37%, getting close to the 40% mark again.
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That's the resource index.
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And why that is important, you know, as we sit here, and I'm not going to give it
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away yet, but
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The JSE All Share ended 2025 over 38% up for the year,
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which was fantastic.
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Here we're sitting 14 days in.
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And again, the JSE is up over 4% year to date.
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But very important when you look at the JSE Resi, the resource index,
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as we sit here, they are now up Over 13% year to date.
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And like I mentioned, that's close to 40%
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of the index is driven by these commodities that is now running.
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And this is not the first time it's happened.
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I love the word where you said it's a secular bull market for the JSU.
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I love that word because we had a similar trend.
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Because one thing that I've heard a lot from some of my Leonard colleagues over
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the past few days is how
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many...
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of them are calling tops on gold.
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They're calling tops on the JSC saying, "Well, JSC has done 38%.
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We shouldn't be seeing the same performance again this year."
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And if you're gambling, man, most probably right.
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But this wouldn't be the first time.
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When you look at that period beginning of 2000, I often refer to that.
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This is the period where we've had a massive IT bubble very similar to the AA
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bubble now.
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or let's call it a run we have this massive run the s p 500 did phenomenal and
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then then literally from 2000 onwards i mean that period between um let's call it
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december december 1999 up to
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december
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2009 the the s p 500 yield a net negative return over a 10-year period not
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A real return, we're talking about an absolute return, negative return over a
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10-year period.
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But over that same 10-year period, South Africa enjoyed two things.
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Firstly, they had one of the best bull markets ever.
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Secondly, we also saw, like you just mentioned, a massive, massive commodity
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run.
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We did very, very bad in 2003.
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We totally forgot about that.
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And then 2004, we recovered.
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Suddenly did 20%.
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In 2005, we did another 20% and everybody said, "Ah, we shouldn't be doing that
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again in 2006."
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And then Mr.
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Marketers went like, "Hold my beer." It went up 50% that year.
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And the following year, another 38%.
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So I think to the listeners out there, be careful calling tops,
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calling bottoms in this market, thinking the gold is finished.
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There's a reason why the gold is running.
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There's a reason why most of the… And a new reason every day.
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I mean, that's an exaggeration, but Iran is the latest reason.
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Exactly.
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It's quite astonishing.
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I have missed you, Skanko, I must say, because you're the only person.
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I've only just got back from the kitchen to make myself a cup of tea, and there you
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are.
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I didn't miss a thing.
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Some lovely statistics, and I can come in with the Iran comment,
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having not listened to a word you just said for the last three and a half
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minutes.
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Yeah.
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No, seriously.
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But you've got that button and you just run with it as well.
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That's brilliant.
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It's exciting because in a year or two's time we'll be talking about, I don't know,
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small and mid caps or something like that.
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Nothing as exciting as this.
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Speaking of which, I'm not going to get into the other side of the South African
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market.
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You talk about nearly 40% being the resi.
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I want to talk about other companies or other sectors that we might want to look
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at.
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But we'll do that next week.
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What's happening with this stock exchange news service so far in 2026?
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Any announcements, any corporate activity, any results coming out, any trading
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statements or is it too early?
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Yeah, it's a bit too early.
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It's a little bit light on data yet, but we should be increasing.
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Yeah, there's going to be a few things we're going to talk about besides resis.
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I think we should have a look at our local retailers, but we'll have that discussion
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next week.
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Banks is going to have a massive, massive And you're going to remind me next week
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because hopefully we'll have more
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information on this whole thing about,
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let's call it government or SOAP that want to re-evaluate the way they calculate
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prime.
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the prime rate.
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I saw that, Stuart Theobald said something about that on LinkedIn today and he says
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it's got
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nothing if you think it's going to mean that interest rates are going to come down
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or
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your prime rate is going to come down if you're a borrower think again but I
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haven't read the full article so do you tell me your
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version of it?
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Let me I mean again we need to look at history so grab yourself another cup of
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tea this is going to be a really
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quick one and you'll remember it back in prior to 2001 I think it was in the
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Cristals days.
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I mean, the prime rate was set by the swap going to the banks and say, you need to
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be.
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You need to be for this, let's call it so effectively for the listeners that don't
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understand prime,
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prime is effectively only the amount that they earn.
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That's they cut.
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They rebate.
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They kick back if you can sort of say.
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And that's been set at 3.5% since 2001.
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And why?
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Purely because prior to that, the banks, the theory was the banks will put in a bit
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and say, well,
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I'll do 3%, I'll do 3.5%.
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And then eventually they will set that difference, the prime rate.
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But the banks, there's so few banks in South Africa.
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It's not like the U.S.
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where we've got a there's so many banks.
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The banks will literally just get together, and this is me speculating.
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They will just get together and say, what are you going to say?
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I'm going to do three and a half.
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Yeah, let's do three and a half." And then they realized, well, let's just fix it.
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Let's just fix it at three and a half percent because that's it.
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And all the government is saying is why are we still set at three and a half
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percent?
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Back in 2001, interest rates were trading close to double at the current levels.
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You know, inflation rate at 2001 was struggling to get to the six percent
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levels.
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Now we've, we've, we're, fix the inflation.
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So, well, we're going to aim to keep inflation at the 3% level.
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Now, you know, 3.5%,
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and I just did a quick calculation.
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If you look at last year, when the repo rate, that's called beginning of last
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year,
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the repo rate was 8.25%.
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If you add that 3.5%, the banks just call it profit margin, and I'm putting it
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inverted commas, were 42%.
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Now the interest rates dropped down to refer rate 6.75%.
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So the cut, that 3.5% is now 52%.
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The margins have compressed, haven't they?
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Is that what you're saying here?
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Yes.
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Yeah, exactly.
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Other way around.
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No, it's increased.
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Margin's increased.
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And I agree to a certain extent that we should re-evaluate this because if we're
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going to
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have a lower inflationary environment, because this is what we aim.
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This is the utopia for the SOP.
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If we're going to have...
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And let's say they manage to keep inflation around about the 3% level for
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the next 10 years.
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Then one should say that interest rates will remain very, very low for the next 10
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years.
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Why should if interest rates are going to be this low, why should that 3.5% still be
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that large?
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Okay.
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So they're taking action with this.
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It's going to be one of those debates like inflation targeting.
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I can feel it coming.
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It's going to be one of those stories.
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crack on here and I've got to give you some prices because the first five o'clock
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shadow with you shows of
18:26
2026 shows the dollar round at 1639 the British pound against the round is 2204
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and the euro around
18:33
1909 euro dollar 116.50 British pound against the US dollar
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is 134.50 now let's have a look at the all important commodities starting with gold
18:43
Up $29 according to my screen.
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I don't know where they measure it from, up from when, but anyway, it's $4,616 per
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ounce.
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The Platinum price: $2,387 which is up a couple of percent or $48 an ounce.
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Palladium though spoiling the party somewhat with a $20 fall or 1%
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to $1895 an ounce.
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Now looking at my CRB index page, it's not dominated by crude oil, but crude's having
19:12
a bit of a go.
19:14
It's broken out of its sort of 60 to 65 range.
19:15
Brent crude, that is $66.19 at 1.1%.
19:19
And then we've got West Texas, $61.72, which is up just under 1%. The copper
19:26
price,
19:26
$6 at 6.0473.
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That's $6.048 per pound.
19:33
It's much easier looking at the London Metal Exchange.
19:36
Maybe I'll start doing that next week.
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But anyway, copper price up around about half a percent.
19:42
uh bitcoin has broken out as well people are loving this one suddenly nearly 97 000
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up nearly four percent on the day the
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s p 500 now the bank season in the united states banks earning season uh not
19:56
particularly good
19:58
so the s p today is down by 0.6 percent the futures the march futures six thousand
20:03
nine hundred and sixty one the us 10-year treasury bond went to 4.21 this is
20:08
tips for the year actually personal tips is you know sell the bonds by the yield uh
20:15
4.14 percent though people have
20:17
been buying the bonds uh last 48 hours or so but i'm sticking with it and skulk will
20:21
remember when it was
20:23
399 four percent that i called that one so i'm still in the green on this one at the
20:26
south african 10-year
20:26
8.295 percent and i think that's it actually skulk what were the movers on the
20:33
jsc up and down
20:35
individual stocks wise today please tell yeah so again
20:37
Pretty much dominated by the commodities.
20:42
We had a large movement in Tiger Brands, 11.5%.
20:47
Do not?
20:48
No, no, no.
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This is basically, if you take the special dividend, then it was pretty much
20:57
unchanged for today.
20:59
So then for the downside, you had Pepco that was done 5.1%,
21:04
Bytes 4.25%.
21:07
Astral down 3.54 and then Harmony 3.37.
21:12
Some of the golds definitely took a bit of a breather here.
21:16
When you look at it on the upside, you just mentioned the oil making a bit of a
21:22
turn.
21:23
Here comes your sassle.
21:27
Here we go.
21:28
Look at it.
21:29
Sassle.
21:29
I mean, I thought I gave it the kiss of death end of last year by buying in it.
21:32
But today, close just south, 122 rent up 5.63%.
21:36
percent cash built up 4.15 percent glencore 3.71 we know there's a there's a
21:43
there's a whole thing
21:45
between glencore and rio so there's some some corporate actions going there and as
21:50
a bush one that's uh been been fairly
21:52
lackluster the past uh it's got a few months 3.13 percent up for today and then
21:57
here comes the the
21:59
the pgms impala three two point seven percent and northern platinum 2.5
22:04
percent When you look at the JSE, as I mentioned, JSE pretty much unchanged for
22:10
today.
22:11
Down nine basis points, closed the day at 120,857 points.
22:16
Resources again having a great day, up close to 1%, closed at 140,084 points.
22:23
Then from there on all red industrials, they were down 0.66%.
22:29
Financials down 0.36% and the asset property index that was down 1.3%.
22:35
Three, six percent.
22:36
Beautifully done.
22:37
Thank you very much, Scout.
22:38
And it's great to have you back.
22:39
I would like to talk about a game show that I've just thought of in my head,
22:43
and it'll be all to do with the financial markets and the participants in those
22:48
markets.
22:50
And the question would be, for example, it comes up on the screen, which particular
22:53
successful,
22:55
well-known fund manager has a favorite pastime, hobby or subject?
23:01
His name is Mark.
23:02
Skullclo, what is the subject?
23:04
And it gives you the first two letters of the word.
23:08
Skullclo from PSG Wealth Old Oak.
23:12
The subject and the hobby is G-O. And you've got to put the next two letters in.
23:18
And most people will of course say, Ah, it's easy L-D, gold.
23:22
No, apparently not.
23:25
Soon to be L-F, golf.
23:29
Well done, Lindsay.
23:31
I mean, that was a strong cup of tea, man.
23:34
That is sharp as a menorah blade.
23:36
Yes.
23:38
I acquired myself.
23:39
I don't want to call myself a golfer yet.
23:41
I just acquired myself a golf set.
23:44
So 2026, here we go, baby.
23:48
God help us.
23:51
That was the five o'clock shadow.
23:53
The views and opinions expressed in these podcasts are those of Lindsay Williams, an
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entity other than the speaker or the author,
24:18
and since we are critically thinking human beings, these views are always subject to
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change,
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revision and rethinking at any time.
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Please do not hold us to them.
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in perpetuity.