To the editors at Enterprise Press in Egypt, thanks for the great reporting. There are important things happening in Egypt now and a vibrant press is valuable. Follow them online,

One story to watch is government policy on press freedom. Apparently there is talk of "fake news" in Egyptian policy? I'm certainly interested in the politics of that! Wise policy is needed in times of drastic change.  Another story to watch is #EgyptMining, where Wood Mackenzie is advising the country on what next. A third story is the #EgyptFund. 

Did you know the country of Canada is listed as having the 24th-largest Sovereign Wealth Fund (SWF) globally? Or that Egypt proposed an $11B fund earlier this year that would position it as the 25th-largest SWF globally?

The good news is the Egyptian SWF is meant to be wide-open. As in the Reuters article, Egypt's statement is clear: the SWF will be eligible to participate in all economic and investment activities. That's a pretty broad investment universe!

It's fun to think of the "Portfolio Problem" facing a SWF like that -- how to invest it -- but it's more important to know where money is coming from first! Look to wisdom from the J. Paul Getty book, How to Be Rich ( 

Getty's 3rd principle is to find the money first,

"A sense of thrift is essential for success in business. The businessman must discipline himself to practice economy wherever possible, in his personal life as well as his business affairs. “Make your money first, then think about spending it,” is the best of all credos for the man wishing to succeed."

Think of that focus on finding the money first in relation to the fact that Canada's listed as the 24th-largest SWF globally, with assets of US$13.4 billion from "Oil / Non-commodity" origin. Wikipedia names the entity, too. It is the Alberta Heritage Savings Trust Fund.

As I understand it, the money for this Alberta Fund came from oil. The Province of Alberta created this entity, which put the entire nation of Canada on the list of the world's largest SWF. It took bold foresight to start the fund. The focus on finding the money first would have surely intrigued the legendary wildcatter J. Paul Getty.

Oil booms have provided a great source of taxes for Alberta, but have raised questions. How much should be taken from industry? One estimate is less than 5% of all government revenue from oil over a 9 year period went into the Alberta Fund, which sounds low ( For more relevant facts, we can look to Norway.

Norway has taxed their oil and gas industry and managed to accumulate over US$1 trillion in assets. They own over 1% of all publicly-listed stocks, globally. What a shocking statistic! They are the world’s largest sovereign wealth fund that we know of.

Again, the question is: how much should they tax? How exactly should they tax? There are many things to consider and the details are beyond me here, but I wonder about the potential for Whittle Consulting to help with national engagement (

Political volatility presents opportunity. 

Egypt has a chance to set the foundation for a mining industry with change happening now. There is a lot at stake, as the closest comparable Ecuador is talking about doubling mining contribution to GDP in a few short years ( Under what conditions does mining benefit a country? When does it hurt?

And what about SWF, generally. Do they ever help provide currency stability? See a chart of the Norwegian Kroner against the USD for 20 years before and after the Norwegian Fund started in 1990.

Look specifically at the post-2010 period, where oil prices collapsed. The NOK was down from 0.18 to 0.12, which was a 1/3 decline. The CAD down from 1 to 0.70, which meant CAD lost slightly less value than NOK relative to USD. The NOK may not be a petrodollar, but it does have large beta to oil prices despite their large SWF.

Apparently a SWF is no panacea to variation in currency rates, even for a rich country like Norway. Not that a pegged exchange rate to USD is a good goal, anyway. Surely a strong SWF can contribute to a healthy exchange rate, but there's lots of debate around what exactly a healthy exchange rate looks like. I have one simple suggestion: avoid the Triffin Dilemma.

Imagine if a country committed to opening the capital account, floating the currency, and running independent monetary policy. If it followed that policy, then it would avoid the Triffin Dilemma ( It would also expose itself to forces of global financial markets with unknown consequences. In face of such volatility, a solid base for public finance would be essential.

Could the gold mining industry help contribute to such finance?

Consider one thing about the gold mining industry: You always know you will be able to sell the gold you mine, but you don't know what price you'll get for it. It's great to have a buyer, but if you don't know what they will pay then you have uncertainty. You better have enough margin to cover some variation in your costs! In fact, some people deal with this uncertainty by calculating their costs differently: as gold-equivalent costs, rather than dollar costs.

If the miners can think in terms of gold-equivalent costs, can the government think in terms of gold-equivalent taxes? What if Egypt had a "special tax program" for gold mining companies, where they took 10% of all the gold produced from the mine as physical bullion? Could the Egyptian government use the proceeds of a gold-miner tax like that to fund a SWF, however modest it might be in the beginning?

It's a treat to be able to ask the question!