Made in Chelsea’s Francis Boulle: We face a currency crisis ‘on a truly unprecedented scale’
Francis Boulle
Francis Boulle in Ghana
Viewers of Channel 4′s “Made in Chelsea” will know 27-year-old Francis Boulle as a popular member of West London’s rich and partying jet set.
But the reality TV star has spent the past three years mining for gold in Ghana – far away from SW3 – and has big plans for other projects, including a huge agricultural operation in the country.
Boulle sat down with Business Insider to discuss his extremely bullish view on the gold and silver market, the future of currencies and how his television profile has affected his ability to raise capital.
Below is a transcript of the interview, edited for clarity:
Business Insider’s Ben Moshinsky: Could you talk about your fascination with gold? What are you doing in that industry?
Francis Boulle: I really started to become interested in gold when I was at school studying for my economics A-level. I suppose it was then that I began to understand the place of gold in society, as a store of value and as this natural hedge against the government the sanctioned debasement of currencies – I was actually also studying the collapse of the Weimar republic at the time, so the inevitable consequences of governments trying to print their way out of debt was pretty very fresh in my mind.
I was actually also studying the collapse of the Weimar republic at the time, so the inevitable consequences of governments trying to print their way out of debt was pretty very fresh in my mind.
And I think when you learn more about the history of gold in international trade and its roots as this amazingly elegant solution to “the problem of the coincidence of needs” in the barter system you begin to understand how important gold really has been to mankind.
Gold is the original money, as it facilitated the indirect exchange of goods via this non-perishable, fungible, and homogeneous metal which doesn’t lose any value regardless of how many times you divide it.
All of these commodities were competing for the crown of being the most suitable thing to be considered money and gold was the clear winner.
After finishing my A-levels I went to Edinburgh University to study philosophy and economics in 2007, just as the sub-prime mortgage crisis hit and we saw the credit-based system collapse. This caused one of the biggest bull runs in gold and silver in my lifetime and I began to pay close attention.
I started to become a bit obsessed and began studying economic history in great depth and slowly got to grips with the mechanics and history of our banking and monetary systems. It was ultimately through this study that I began to truly understand the gravity of the systemic flaws in our current system and how vulnerable it really is to collapse – but I was also kind of amazed when I started to speak to people in the economic, political and financial spheres, how unaware most of them were about this.
Francis Boulle
Boulle’s gold
BM: What is the most concerning thing about that?
FB: Just looking at fiat currencies for example and their significance in our current financial system. Fiat currencies – like the Dollar or Sterling – created by governments and central banks and are backed by absolutely nothing, they are ultimately worthless but are attributed a type of illusory value based on the blind faith in them by the masses and through government taxation.
But throughout history there have been thousands and thousands of these fiat currencies and all of them, every single one, has collapsed to absolute zero and became totally worthless. Not a single fiat currency has survived, and there is nothing special or uniquely different about the fiat currencies that we use today.
But what’s really poignant is that for the first time in history, the entire world is now using fiat currencies. When these types fiat currencies have collapsed throughout history, all the way back to collapse of the Roman Denarius which ultimately led to the fall of the Roman Empire, people have always reverted back to things that hold value, and ultimately they go back to using gold and silver as money.
I think there is a genuine probability that we will, in our lifetime, see some kind of global currency crisis on a truly unprecedented scale.
Unless governments start acknowledging this, which is doubtful, I think there is a genuine probability that we will, in our lifetime, see some kind of global currency crisis on a truly unprecedented scale. Unprecedented because the whole world is using fiat currency but also largely because we’ve never before seen this level of global public and private debt.
Before Nixon reneged on the Bretton Woods system in 1971, gold had acted as a kind of hand break on credit expansion in an economy, prohibiting wasteful governments from printing money to their hearts’ content. Since the Nixon shock however, we have been living in a totally fiat world, and governments have been able to accumulate colossal levels of debt.
Just look at the USA for example, which I think is now the greatest debtor nation in the history of the world with a national debt of over $20 trillion dollars and the UK with national debt of £8.6 trillion at the end of last year. But also the private debt levels are arguably the biggest problem, if you look through history to major economic collapses, they are often preceded by a period of boom time that are often perceived to be some kind of economic miracle. But they are all characterised by soaring private debt levels relative to GDP, the Roaring Twenties for example or the Japanese Miracle in the 80s.
It’s almost like these soaring levels of private debt act as a drag on the economy tipping it in to crisis. I think the private debt to GDP ratio in the USA is around 150% now but it’s even higher in China at around 200%. When the US financial crisis hit in 2008 private debt to GDP ratio was at around 170%, so I think it’s very possible we will see a crisis in China in the near future.
But we are also in this situation where our banks are insolvent and are being bailed out by central banks, who are also insolvent, and then who is going to bail out the central banks? The Bank for International Settlements (BIS)? It can’t really carry on like this – it has to come to a crunch point.
It’s a bit like a game of musical chairs, if you don’t protect yourself by holding some hard assets, you could end up sitting on the floor.
And once faith is lost again in fiat currencies, I think we will essentially see a major a transfer of value and purchasing power from those that are holding the collapsing currencies to those holding hard assets, be it gold or silver or other hard assets. It’s a bit like a game of musical chairs, if you don’t protect yourself by holding some hard assets, you could end up sitting on the floor.
But I think as much as something like this would cause significant global disorder, it should also be understood for the huge opportunity that it represents to those who educate and prepare themselves. If you have aligned yourself with it and your timing is right, you can absorb a lot of that value lost from the failing currencies and become very rich.
BM: But in that world, what’s the point of being wealthy if the dollar becomes worthless?
FB: To be wealthy just means to own things of value, be it land, commodities, jewellery, antiques, classical art or indeed gold and silver. Currency is just a means of exchange. I’m not necessarily suggesting the dollar is suddenly going to become worthless next week. I think most likely things will come to a crunch point and the powers that be, the Bank for International Settlements for example, will meet in secret and we will all wake up one morning to gold having been repriced significantly higher, perhaps they will even begin to issue some type of new global reserve currency combining special drawing rights.
Maybe they will even involve gold somehow. It’s difficult to predict exactly how it will play out, but what I do think one can confidently predict is that in these types of scenarios gold and silver will positively benefit.
So I guess in light of all this and a number of other quite compelling reasons, I decided to align myself with what I saw as the significant upside potential in precious metals and sought to become an expert in the processes of gold exploration and extraction.
I went out to Ghana four years ago with the idea of packaging up some gold properties to begin to structure a West African gold play for an eventual IPO. I had options on three prospective ‘greenfield’ licences or licences with no geological work on them, put together a good team of advisors and exploration geologists and came back to London to do a bit of a road show presenting to various mining investors, but I found there was not much appetite at that time for these types of less-developed assets.
Francis Boulle
They were much more interested in production and more developed properties, so I ended up mothballing the exploration and focusing on extraction. We bought some excavators and built some processing plants and started large scale alluvial mining in Ghana.
So that’s what I have been doing for the past three years.
Obviously the gold price has taken a battering and this has led to me having to be very hands-on and having to run a very lean, efficient mining operation. Pretty much anyone can run a mining operation in a boom time, but when there’s a downturn you really have to cut back and tighten the belts operationally and personally to survive.
The reality is that it has been a game of survival rather than victory for most miners these past few years and I very nearly lost my shirt several times.
The reality is that it has been a game of survival rather than victory for most miners these past few years and I very nearly lost my shirt several times. But I hope that, coming out of the tough downturn, having had to be extremely efficient and lean to survive, you can take those lessons forward when the price comes back and pass back that value to your shareholders.
In the long term, I’m obviously very bullish on gold and silver. I think there are some incredible opportunities in gold and silver going forward. If you look at the fundamentals, it’s a no brainer. But also looking at historic bull markets in gold and silver, from technical analytical perspective, these things go on for years and we’re really just at the beginning. If you look at the 50 and 200 daily-moving-average (DMA) for example, which act as kind of supports in the bull market, we still haven’t broken below the 200 DMA and I think this is going to go on for years to come, I think the dips below the 50 DMA should be bought.
BM: Do you have an end price for gold?
FB: Well gold is currently priced in dollars. In theory if a dollar becomes worthless then continuing to price gold in dollars would be an exercise in futility, so I don’t think we will be pricing in dollars when that happens. I can’t give you an end price for gold in dollars, I think we need to think in terms of purchasing power. What will an ounce of gold buy you? What will be its real purchasing power? Who can say exactly but I think it has to be many multiples to its current purchasing power.
BM: In that scenario, there’s still going to have to be something other than gold that’s exchangeable as money…
FB: I think financial technology and innovation will present some viable solutions to these problems, be it bitcoin or some sort of blockchain ledger system involving gold perhaps.
BM: What other stuff are you looking at from a business angle?
FB: I’ve been focusing on gold but the recent downturn has led me to explore other sectors. One of the most exciting to me is the African agriculture sector. Africa has huge potential for agricultural development. It has the largest amount of unexploited arable land in the world, which is still incredibly cheap to acquire. I’m currently conducting a feasibility study for a 2,000 hectare agricultural project in Ghana, I’m very excited about how this is progressing.
I think in many cases especially with institutional investors, my media profile has been seen with some distaste.
I have also been working on some solar projects, in Ghana but also other parts of Africa. I think there is huge potential for African renewables particularly solar. So I suppose to speak in general terms I’m most focused on agriculture, gold and renewables.
I also think Bauxite has got some way to go up as well. There’s shrinking supply and demand still seems to be quite buoyant from Chinese alumina producers. No-one really knows what’s happening with oil. Eventually it will have to go up. I think we’ve had something like the lowest level of new discoveries in 70 years, something like a tenth of the average. So we will have a rally sooner or later but I think new opportunities in oil and gas will begin to reveal themselves in the next few years.
BM: What sort of investor appetite have you had for those projects?
FB: There is a huge amount of appetite from investors for agriculture in Africa but the feasibility studies and plans need to be bankable. But I think there is huge potential here and I am very excited about our project in particular. The potential for renewables in Africa is massive, but the current issue here is the integrity of the PPA’s (Power Purchase Agreements) and the ability of the off-takers/utility companies to pay you for the power produced.
There’s a lot of money to be raised for good quality mining and gold properties. As we see gold continue to rally, we’ll see more capital come into less developed assets and greenfield exploration, which has been nascent for some time now. But I think more likely in the short term we will see rollups or consolidation of distressed assets that the juniors have been unable to maintain in the downturn.
BM: How does your television profile help or hinder what you do in business?
FB: I think ultimately in business, maybe more particularly in mining, it doesn’t really matter who you are as long as you deliver and create value for your shareholders. As long as you find that gold in the ground and you can perform, it’s not going to be hard to find investors. But I think in many cases, especially with institutional investors, my media profile has been seen with some distaste. So I think the reality is this just makes it all the more important for me to prove myself and what I know.
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