Reckoning today from Lisbon, Portugal…
“It’s called a Jewish chorizo,” our waiter declared, with a wry smile.
“But didn’t you say it was made from pork?”
“Yes indeed. And it most definitely is,” he replied, “a very fine grey pork, which we get from the northern farms…and yes, there’s a story behind it.”
More below, but first…
Gold is off to the races!
The ultimate dollar hedge was up US$15 last we checked, to a 4-month high of near USD$1,670 an ounce. To be sure, that’s still a ways off its nominal record, a peak it climbed shortly after credit rating agency Standard & Poor’s downgraded US debt last year.
Nevertheless, it still looks pretty good on a one-month chart, up about USD$90. On a 5-year chart, which shows a near USD$1,000 increase, it looks spectacular. And on a 10-year chart, it positively glistens.
We were thinking about our favourite unproductive asset while wandering around the Igreja de São Francisco (Church of Saint Francis), in the Portuguese city of Porto. The building is the most prominent Gothic monument in the city, but it is perhaps most renowned for its outstanding Baroque interior decoration.
Ornate wood carvings cover the walls…and gold leaf covers the carvings. There is supposedly around 450 kilograms of gold in the building, “from the days of plenty,” our host told us, no doubt referring to the 300 years when Portugal extracted Brazilwood (16th century), sugar (16th to 18th centuries) and finally gold and diamonds (18th century) from her colonial jewel in South America.
Though not exactly reversed, the roles of Brazil and Portugal are very different today than they were during the colonial days. While Brazil’s GDP chart has a distinct “hockey stick” look about it, Portugal’s more closely resembles a flaccid (non-denominational) chorizo. At roughly 6%, Brazil’s unemployment rate is flirting with record lows…while Portugal’s rate, at 15.4%, is at a record high.
At one time, Portugal was a great place to be a banker. And maybe it will be again one day. But that day is not today. Right now, it’s a great place to be a tourist.
As we’ve been saying, investing is all about cycles…both long and short. When Reckoner-in-Chief, Bill Bonner, announced his “Trade of the Decade” – sell stocks; buy gold – back in 2000, gold was languishing around the Brown Bottom…about $250 per ounce. Stocks, meanwhile, were all the rage. If you didn’t have a Pets.com-type performer in your portfolio, people looked at you askance, as if you’d just confessed to disliking the popular “music” group, Creed.
And yet, those who followed Bill’s “hunch” would have done very well at the close of the decade…when stocks had gone nowhere and gold was still very much on the up and up. (Creed, by the way, still sucks…)
“About the ‘Jewish’ chorizo, sir…which we call alheiras. It’s true we make it from pork, a very fine grey pork we get from the northern farms. As the story goes, the Jewish population began making similar sausages during the Inquisition as a way to disguise themselves amongst the Christians, for whom the chorizo was, and still is, a traditional meal…
“Of course, they made them from other ingredients…duck, chicken or rabbit, usually. And they mixed the meat with bread. We don’t do that here. Anyway, they would consume the sausages alongside the Christians, making it difficult for their would-be captors to tell one from the other.”
“But these ones are made with pork?”
“Of course, sir…very fine grey pork, which we…”
“Source from the northern farms?”
“So why call them ‘Jewish’ chorizos?”
“Well, it’s a very fine pork. As the story goes, one day a Jewish man ate, by accident, one of the pork sausages. So enchanted was he by the taste that he decided to start making his own chorizos with pork, smoking them in the traditional fumeiros, the smokehouses, alongside the Christians.”
“Yes. It was. My family is full of mad men.”
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From the Archives…
Staring Down the Barrel of Bad Debt
17-08-2012 – Greg Canavan
Taking Over From the US Dollar With Organic Finance
16-08-2012 – Greg Canavan
Australian Banks on the Run
15-08-2012 – Bill Bonner
The Secret Investment to Buy When GDP Falls
14-08-2012 – Nick Hubble
Will the Latest Data From China Cause a Rally in Aussie Stocks?
13-08-2012 – Dan Denning