Connect with us


Buy a gold bar – help save a rhino



In the middle of February, as the coronavirus crisis was gathering force, a Canadian gold-mining company made an unusual announcement. B2Gold said it was donating 1,000 ounces of gold to help save what it called a “critically endangered global treasure”: the black rhinoceros in the southern African country of Namibia.

It was an eye-catching move in the world of philanthropy. It would also prove a canny investment for those who backed it. The gold was worth close to US$1.5m at the time of B2Gold’s announcement and it was turned into 1,000 bars of varying sizes, each embossed with a black rhino mother and calf. The idea was to sell each bar for the prevailing market price, plus a 15 per cent “conservation premium”. Proceeds would be reinvested in long-term, sustainable conservation funding, as well as community-backed efforts to protect the black rhino from the relentless threat of poachers, who slaughter it for its horns – a commodity worth more than its weight in gold in some Asian countries, where it is mistakenly touted as a treatment for hangovers and even cancer.

A mother and calf black rhino
A mother and calf black rhino © Dave Hamman/SRT

There were more than 100,000 black rhinos in Africa as recently as the 1960s, experts estimate, and though their numbers have risen from a low point in the 1990s, it is thought that fewer than 5,700 are now left in the wild. In north-west Namibia, the creatures roam across a vast stretch of remote land with few roads that is hard for rangers to patrol.

The gold bars came from B2Gold’s Namibia mine, and the campaign to sell them took off with a bang. Ten half-kilo bars were sold within days at two launch events, one in Namibia’s capital of Windhoek and another at a big mining conference in Cape Town, South Africa.

“It was massive,” said Ginger Mauney, the US-born, Windhoek-based wildlife filmmaker and conservationist who came up with the gold-bar idea. Mauney is on the board of the Save the Rhino Trust Namibia, which B2Gold had been supporting with cash grants for several years. When the company invited her to visit its Vancouver headquarters in late 2018, she began to think of ways to extend that backing “in a way that made sense to them as a company too”.

Over lunch with B2Gold CEO Clive Johnson, Mauney says she suddenly had an idea. “I just looked at Clive and said, ‘You’ve got gold, so why don’t we sell gold bars in a way that creates long-term sustainable funding to protect rhinos?’ He looked at me and said, ‘Well, yes, I think we can explore that.’” The project came to life just over a year later, when gold was trading at around US$1,500 an ounce. That made the first gold-bar sales a good investment. But as the coronavirus crisis deepened, investors rushed to the safety of gold. The price soared to $2,000 an ounce for the first time in August. Even with the 15 per cent conservation premium, any buyer who sold would have made a tidy profit.

One of B2Gold’s bars of “rhino gold”
One of B2Gold’s bars of “rhino gold”

But the early sales were also timely. They came as the pandemic was beginning to devastate wildlife tourism, a vital source of income in Namibia and an important factor in rhino conservation. The physical presence of tourists makes it harder for poachers to operate. Tourism revenues also help to fund rangers and other wildlife protection measures. At the same time, conservation groups in Namibia had their budgets slashed by up to 30 per cent as international donors passed on their own funding cuts. 

As the gold-bar money began to flow, it was used to help plug the gaps. Ranger salaries were paid to keep people in the field. A vehicle was purchased to help track poachers. Within four months of the launch, 3.5m Namibian dollars, or more than US$200,000, had been disbursed. 

This shows the importance of finding fresh ways to finance wildlife protection, says Richard Diggle, business adviser for community conservation at WWF in Namibia. “Covid-19 has highlighted that financing conservation needs to be rethought,” he says. “We cannot depend constantly on conventional donor cycles and tourism. We need to be more innovative and here’s a fantastic example.”

B2Gold sold 600 gold bars in Africa and has now extended its campaign to North America, where B2Gold’s Clive Johnson said he was confident the remaining 400 bars would sell well, despite the higher price of gold. People are prepared to pay a premium to help save an animal that’s been roaming the planet for 50m years, he said. “And we’re using some gold that was deposited 6bn years ago by an exploding star that ended up in Namibia.

“I like the historical context of using something as natural and ancient as gold to help save an ancient animal.”;

Pilita Clark is an FT columnist

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


Gensler raises concern about market influence of Citadel Securities




Gary Gensler, new chair of the Securities and Exchange Commission, has expressed concern about the prominent role Citadel Securities and other big trading firms are playing in US equity markets, warning that “healthy competition” could be at risk.

In testimony released ahead of his appearance before the House financial services committee on Thursday, Gensler said he had directed his staff to look into whether policies were needed to deal with the small number of market makers that are taking a growing share of retail trading volume.

“One firm, Citadel Securities, has publicly stated that it executes about 47 per cent of all retail volume. In January, two firms executed more volume than all but one exchange, Nasdaq,” Gensler said.

“History and economics tell us that when markets are concentrated, those firms with the greatest market share tend to have the ability to profit from that concentration,” he said. “Market concentration can also lead to fragility, deter healthy competition, and limit innovation.”

Gensler is scheduled to appear at the third hearing into the explosive trading in GameStop and other so-called meme stocks in January.

Trading volumes in the US surged that month as retail investors flocked into markets, prompting brokers such as Robinhood to introduce trading restrictions that angered investors and drew the attention of lawmakers.

The market activity galvanised policymakers in Washington and investors. Lawmakers have focused much of their attention on “payment for order flow”, in which brokers such as Robinhood are paid to route orders to market makers like Citadel Securities and Virtu.

That practice has been a boon for brokers. It generated nearly $1bn for Robinhood, Charles Schwab and ETrade in the first quarter, according to Piper Sandler.

Gensler noted that other countries, including the UK and Canada, do not allow payment for order flow.

“Higher volumes of trades generate more payments for order flow,” he said. “This brings to mind a number of questions: do broker-dealers have inherent conflicts of interest? If so, are customers getting best execution in the context of that conflict?”

Gensler also said he had directed his staff to consider recommendations for greater disclosure on total return swaps, the derivatives used by the family office Archegos. The vehicle, run by the trader Bill Hwang, collapsed in March after several concentrated bets moved against the group, and banks have sustained more than $10bn of losses as a result.

Market watchdogs have expressed concerns that regulators had little or no view of the huge trades being made by Archegos.

“Whenever there are major market events, it’s a good idea to consider what risks they might have placed on the entire financial system, even when the system holds,” Gensler said.

“Issues of concentration, whether among market makers or brokers at the clearinghouse, may increase potential system-wide risks, should any single incumbent with significant size or market share fail.”

Source link

Continue Reading


European markets recover after tech stock fall




European equities rebounded from falls in the previous session, when fears of a US interest rate rise sent shares tumbling in a broad decline led by technology stocks.

The Stoxx 600 index gained 1.3 per cent in early dealings, almost erasing losses incurred on Tuesday. The UK’s FTSE 100 gained 1 per cent.

Treasury secretary Janet Yellen said at an event on Tuesday that rock-bottom US interest rates might have to rise to stop the rapidly recovering economy overheating, causing markets to fall.

Yellen then clarified her remarks later in the day, saying she did not think there was “going to be an inflationary problem” and that she appreciated the independence of the US central bank.

Investors had also banked gains from technology shares on Tuesday, after a strong run of quarterly results from the sector underscored how it had benefited from coronavirus lockdowns. Apple fell by 3.5 per cent, the most since January, losing another 0.2 per cent in after-hours trading.

Didier Rabattu, head of equities at Lombard Odier, said that while investors were cooling on the tech sector, a rebound in global growth at the same time as the cost of capital remained ultra-low would continue to support stock markets in general.

“I’m seeing a healthy correction [in tech] and people taking their profits,” he said. “Investors want to be much more exposed to reflation and the reopening trades, so they are getting out of lockdown stocks and into companies that benefit from normal life resuming.”

Basic materials and energy businesses were the best performers on the Stoxx on Tuesday morning, while investors continued to sell out of pandemic winners such as online food providers Delivery Hero and HelloFresh.

Futures markets signalled technology shares were unlikely to recover when New York trading begins on Wednesday. Contracts that bet on the direction of the top 100 stocks on the technology and growth-focused Nasdaq Composite added 0.2 per cent.

Those on the broader S&P 500 index, which also has a large concentration of tech shares, gained 0.3 per cent.

Franziska Palmas, of Capital Economics, argued that European stock markets would probably do better than the US counterparts this year as eurozone governments expand their vaccination drives.

“While a lot of good news on the economy appears to be already discounted in the US, we suspect this may not be the case in the eurozone,” she said.

Brent crude, the international oil benchmark, was on course for its third day of gains, adding 0.7 per cent to $69.34 a barrel.

Despite surging coronavirus infections in India, the world’s third-largest oil importer, “oil prices have moved higher on growing vaccination numbers in developed markets”, said Bank of America commodity strategist Francisco Blanch.

Government debt markets were subdued on Wednesday morning as investors weighed up Yellen’s comments with a pledge last week by Federal Reserve chair Jay Powell that the central bank was a long way from withdrawing its support for financial markets.

The yield on the 10-year US Treasury bond, which moves inversely to its price, added 0.01 of a percentage point to 1.605 per cent.

The dollar, as measured against a basket of trading partners’ currencies, gained 0.2 per cent to its strongest in almost a month.

The euro lost 0.2 per cent against the dollar to purchase $1.199.

Source link

Continue Reading


Yellen says rates may have to rise to prevent ‘overheating’




US Treasury secretary Janet Yellen warned on Tuesday that interest rates may need to rise to keep the US economy from overheating, comments that exacerbated a sell-off in technology stocks.

The former Federal Reserve chair made the remarks in the context of the Biden administration’s plans for $4tn of infrastructure and welfare spending, on top of several rounds of economic stimulus because of the pandemic.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said at an event hosted by The Atlantic magazine.

“So it could cause some very modest increases in interest rates to get that reallocation. But these are investments our economy needs to be competitive and to be productive.”

Investors and economists have been hotly debating whether the trillions of dollars of extra federal spending, combined with the rapid vaccination rollout, will cause a jolt of inflation. The debate comes as stimulus cheques sent to consumers contribute to a market rally that has lifted equities to record levels.

Jay Powell, the Fed chair, has said that he believes inflation will only be “transitory”; the central bank has promised to stick firmly to an ultra-loose monetary policy until substantially more progress has been made in the economic recovery.

The possibility of interest rates rising has been a risk flagged by many investors since Joe Biden’s US presidential victory, even as markets have continued to rally.

Yellen’s comments added extra pressure to shares of high-growth companies, whose future earnings look relatively less valuable when rates are higher and which had already fallen sharply early in Tuesday’s trading session. The tech-heavy Nasdaq Composite was down 2.8 per cent at noon in New York, while the benchmark S&P 500 was 1.4 per cent lower.

Market interest rates, however, were little changed after the remarks, with the yield on the 10-year Treasury at 1.59 per cent. Yellen recently insisted that the US stimulus bill and plans for more massive government investment in the economy were unlikely to trigger an unhealthy jump in inflation. The US treasury secretary also expressed confidence that if inflation were to rise more persistently than expected, the Federal Reserve had the “tools” to deal with it.

Treasury secretaries generally do not opine on specific monetary policy actions, which are the purview of the Fed. The Fed chair generally refrains from commenting on US policy towards the dollar, which is considered the prerogative of the Treasury secretary.

Yellen’s comments at the Atlantic event were taped on Monday — and she used the opportunity to make the case that Biden’s spending plans would address structural deficiencies that have afflicted the US economy for a long time.

Biden plans to pump more government investment into infrastructure, child care spending, manufacturing subsidies and green energy, to tackle a swath of issues ranging from climate change to income and racial disparities.

“We’ve gone for way too long letting long-term problems fester in our economy,” she said.

Source link

Continue Reading