saveyourassetsfirst3 |
- Canada Jobs Clocks U.S.A. , Silver Clocks New Shorts
- Reducing the Risk of Gold Exposure in a Portfolio Through Options
- India Markets Friday Wrap-Up: Indian Indices Under Pressure
- Is the Dollar Turn at Hand?
- Is it Time to Sell Gold and Silver ?
- Fed can keep most gold secrets but must yield one, judge rules
- The Bullion Bulls Basket
- Global Silver Exploration
- One of the most important ways to prepare for the "End of America"
- This startling Chinese gold development has "stunned" precious metals traders
- Two unbelievable ways China will change the world as we know it
- You must diversify now before it's too late
- SIR #15: Opportunities in Oil Sands
- Not Just a River in Egypt
- Newmont pays 37% premium to acquire Fronteer Gold
- Gold Mining Acquisitions to Continue in 2011 & 2012
- China to raise gold, silver reserves in 2011
- Pensions Need Gold, the Currency of Hard Assets
- The Real Reason for Rising Commodity Prices
- Madoff Trustee Finds JPM Was Complicit in Ponzi Fraud
- Two Huge No-No’s for Gold Investors
- Do I See Lipstick On A Pig? Or Is The Stock Market and Gold Still Going Up?
- Energy? No Thanks. Miners, Yes.
- Euro-Gold Spikes Higher as ECB Stays "Accommodative"…
- Can the US return to a Gold Standard ? (Alan Greenspan 1981)
- Pissed Off!: 67 Percent Of Americans Are Dissatisfied With The Size And Influence Of Major Corporations
- More Withdrawals of Silver at the COMEX, what's new.
- The Hyperinflationary End Game
- TheDailyGold Podcast 2/2/2011
- gold and silver rise/extreme chaos in Egypt
- Chinese Silver Buying Just Beginning
- Newmont Takes Out Fronteer
- Why You Should Be Buying Gold As the Fed Prints Money
- Inflation’s First Phase
- Do I See Lipstick On A Pig?
- Expect the Unexpected
- Why Food Prices Must Go Up
- Scotia Mocatta Sells Out Of All Silver Bars
- What do you think of the NIA
- Gold Mining Stocks Trendpower
| Canada Jobs Clocks U.S.A. , Silver Clocks New Shorts Posted: 04 Feb 2011 06:04 AM PST HOUSTON – The U.S. non-farm payroll headline number disappoints at plus 36,000 but Canada is humming with a gain of 69,200 jobs according to Stats-Canada. As of January, Canada clocks the U.S. in one department – Canada has now regained all of the jobs lost in the 2008-9 recession. |
| Reducing the Risk of Gold Exposure in a Portfolio Through Options Posted: 04 Feb 2011 05:55 AM PST There are many opinions on the direction of the price of gold. Some believe gold is in a bubble and will be below $1000 soon. Others think gold is the only true store of value and will be surging past $1500 in the not too distant future. There is of course no sure way to know which of these scenarios will come to pass. There is however, a lot of solid analysis that indicates having a long gold position in a portfolio is a good diversification strategy. (i.e. hopefully if equities and bonds pull back, gold will not) If you believe in the positive diversification aspects of having gold in a portfolio, there are a few basic alternatives to gain gold exposure in your portfolio. Buying an etf such as GLD is an easy way to do that. Alternatively, there might be some merit in achieving this exposure via gold mining stocks such as the GDX etf. Either might work. However, options on these equities provide another approach to gaining exposure which might minimize the risk in the event of a fall in the price of gold. There are two factors that are the basis for the options strategy described below.
Complete Story » |
| India Markets Friday Wrap-Up: Indian Indices Under Pressure Posted: 04 Feb 2011 05:01 AM PST Equitymaster submits: After a positive start in the morning, the indices saw no respite to selling pressure towards the end of the day. Every index saw declines with realty, FMCG and IT stocks under the most pressure. There were more than 2 stocks declining for every one that advanced. While the BSE-Sensex closed lower by around 441 points (down 2.4%), the NSE-Nifty closed lower by around 131 points (down 2.4%). Large caps faced more pressure versus the other indices. The BSE Midcap and the BSE Small cap faced comparatively less pressure and saw declines of around 1.5% each. As regards global markets, most Asian indices were closed today while European indices opened on a positive note. The rupee was trading at Rs 45.68 to the dollar at the time of writing. India seems to be fighting a losing battle with food inflation. Prime Minister Manmohan Singh warned that the high price levels in our country are threatening growth momentum. He stated that they need to be brought down with great urgency. Latest data showed that food inflation stood at 17.1% on higher food prices and surging oil prices. The central bank has already hiked rates 7 times, but to no avail. Instead of culling inflation, these rate hikes are instead stymieing growth. Supply chains need to be strengthened and farm produce needs to be distributed across the country without any roadblocks. It will be interesting to see what the budget has in store for these initiatives to improve production and distribution of Complete Story » |
| Posted: 04 Feb 2011 04:47 AM PST Marc Chandler submits: The U.S. dollar sold off in recent weeks. While we recognized the fundamental considerations behind its decline, we disagreed with them. Prudence and financial discipline warned against fighting the market. Now, however, a crack in the dollar bear case has crystallized and there is a potential opportunity here for medium term investors to reduce short dollar exposure or increase hedges on foreign exposures. To understand the dollar’s decline in recent weeks, one much appreciate market positioning. The active trading market had built an apparently sizeable long dollar position. In discussions with clients and other market participants, the position was not so much based on a constructive view of the dollar, but more a case of a stronger negative view of the euro and sterling. The greenback rallied strongly in the first week of the year. The euro made new lows since last year’s high was recorded in early November and it approached a key retracement of the euro’s rally from last June. For its part sterling retested the lows from December and they held. Position squaring ensured. Swing Low However, what transformed the move from one of simple profit-taking to the downdraft of recent weeks were two fundamental considerations. The first was the dramatic swing in market expectations of monetary policy at both the Bank of England (BOE) and Complete Story » |
| Is it Time to Sell Gold and Silver ? Posted: 04 Feb 2011 03:20 AM PST |
| Fed can keep most gold secrets but must yield one, judge rules Posted: 04 Feb 2011 03:14 AM PST |
| Posted: 04 Feb 2011 03:09 AM PST As we educate our readers on investing in precious metals mining companies, a common theme in our message is that investors must own/hold a "basket" of these companies. This criterion is based upon several factors. As is the case in many sectors, "high growth" is only available via investing in the smaller mining companies – the "junior miners". Conversely, while these smaller companies offer vastly superior growth profiles versus the "seniors", the trade-off is that (naturally) there is increased volatility with these companies, and risk. This "risk" comes in two forms. There is the absolute risk that any particular miner might fail to succeed, and will saddle its investors with long-term losses. The other aspect of risk is with respect to the rate of development of these companies. With their more speculative nature, even the expert analysts in this sector cannot predict with precision the speed with which these companies will develop. Holding a basket of these junior miners addresses both of these categories of risk. Spreading out our investments among more companies, greatly reduces the impact of any one "loser" on our overall performance. Similarly, by spreading out our "bets" among these companies we also address the second form of risk – the amount of time we must wait before the investment potential of a particular company is realized. By holding a number of these companies, we will (hopefully) always manage to pick a few of those miners who manage to excel over the short term. This variable rate of performance among our holdings provides us with additional opportunities to improve our rate of return. With companies which have "outperformed" over the short term, we can take some profits. In turn, with this new capital we can (if we choose) reinvest those profits in our miners which have lagged in performance (assuming we expect them to "catch up" with their peers), or simply add a new prospect which has caught our eye. Thus, by holding a basket of these miners, and actively managing our portfolio we can greatly improve our long-term return, while minimizing the amount of risk we must incur. Let me take a moment to qualify this advice. As I also state regularly in my writing, contrary to the message from most experts, "buy and hold" is not "dead" as a strategy when it comes to the precious metals sector. When financial advisors claim that buy-and-hold is "dead", this is nothing less than an admission on their part that they don't know what will happen in markets in the future. Sadly, these "experts" could have saved their clients $100's of billions in losses if they had merely confessed to their collective ignorance before the Crash of '08. Conversely, while the holders of these precious metals juniors were also ambushed by that crash, their portfolios have not only recovered all of those horrific losses, but generated fat profits for those astute enough to be holding these companies. The message here for more conservative investors is if a basket of these junior miners could not only survive but thrive after the Crash of '08, then rather than being "risky", a portfolio of these resilient equities is a safe and conservative strategy for buy-and-hold investors. Naturally, as we advise our readers of this strategy again and again, a request which we receive with increasing frequency is "help us in creating our own baskets of companies". It is in response to that interest that we are putting out our first feature on a "Bullion Bulls Basket". First, a few words of explanation. Without understanding the particular needs/objectives of any individual investor, it is impossible to say (generically) whether any particular "basket" of companies is suitable for their own portfolios. Thus the names and information presented here are purely for educational purposes – as illustrative examples. |
| Posted: 04 Feb 2011 02:37 AM PST When exhaustively researching any sector of stocks, a lot can be learned about a given industry, its constituents, and its fundamentals. And indeed at Zeal we've learned a lot about the silver-stock sector in our latest round of research. This research is invaluable in both identifying industry trends and selecting the companies with the highest probability for success. |
| One of the most important ways to prepare for the "End of America" Posted: 04 Feb 2011 12:02 AM PST From Sovereign Man: The night skies of northern Chile are among the clearest in the world. I've been astounded here every evening by the sheer beauty of more stars crowding the darkness than I have ever seen in my life… It's something that just about every human being can appreciate. La Serena is a thriving coastal town... a vacation hot-spot in Chile. It's about an hour's flight north of Santiago and the gateway to Valle de Elqui, a fertile agricultural region nestled in the mountains where I spent a long weekend. The weather here is also spectacular with an eternal, spring-like climate… So you can imagine I was feeling more than a bit guilty when I called my parents in Texas to check in on them this morning – Texas is suffering horrendous cold weather right now, like much of the U.S., and my parents were huddled in bed with the dogs trying to stay warm. Thing is, authorities have initiated rolling blackouts across the state because demand from so many people heating their homes at the same time has proven to be too much for the system to cope with. So now, community by community, they're shutting the power down for up to 45 minutes, possibly longer if the weather doesn't improve. You know the system is in bad shape when you have to import electricity from Mexico in order to keep the lights on… but that's exactly what's happening. Mexico's Federal Electricity Commission is riding in to save the day, transmitting nearly 300 MW across the border so that Texans don't freeze. Fortunately, my folks are pack rats and have an abundance of blankets, food, and water stashed away… But these events do certainly illustrate how fragile the system is and how dependent most people are on things they have no control over. With world food prices surging to the highest level ever recorded, energy demand increasing by the day, and the world population growing by over 70 million each year, I think it's definitely time to reduce system dependencies. There are essentially two ways to do this... Read full article... More on the "End of America": The bankruptcy of the United States is now certain Porter Stansberry: You must prepare for a crisis NOW Doug Casey and Rick Rule: How to invest for the End of America |
| This startling Chinese gold development has "stunned" precious metals traders Posted: 03 Feb 2011 11:43 PM PST From Mineweb: Consider the following paragraph from London's highly respected Financial Times – a publication not usually prone to hyperbole: Precious metals traders in London and Hong Kong said on Wednesday they were stunned by the strength of Chinese buying in the past month. "The demand is unbelievable. The size of the orders is enormous," said one senior banker, who estimated that China had imported about 200 tonnes in three months. Now China has already reported a five-fold increase in gold imports over the first 10 months of 2010... And if the estimate quoted above is correct, the country may well be seen to have imported upwards of 320 tonnes in the full year, which brings the total to within a hairsbreadth of Indian imports – and India has for many years been the world's largest importer of gold by a considerable margin. If Chinese gold purchasing momentum continues at anywhere near close to current levels, it will soar past... Read full article... More on gold: Casey Research: Why gold is falling today This is fantastic news for gold and silver investors Gold SHOCKER: Alan Greenspan's stunning admission |
| Two unbelievable ways China will change the world as we know it Posted: 03 Feb 2011 11:32 PM PST From Frank Holmes of U.S. Global Investors: More than 1.3 billion Chinese people are celebrating the New Year this week. We'll discuss that more in Friday's Investor Alert, but a friend sent me this TED video last week that is one of the best discussions on China I've seen in recent memory. Martin Jacques, author of When China Rules the World, spoke at a TED Conference back in October 2010. Jacques began his speech by saying, "the world is changing at a really remarkable speed." Jacques says China is going to change the world in two fundamental respects. First, never before in the modern era has the largest economy in the world been that of a developing country. Second, for the first time in the modern era, the dominant country in the world will not be from the West. Jacques' speech is a breath of fresh air because of his deep understanding, not just of Chinese culture, but what drives the country's politics, its business, and its people. While much of the U.S. media coverage of China is embedded with fear, Jacques explains that... Read full article (with video)... More on China: How China could highjack the gold market Donald Trump: China is "looking to strip us of everything" Peter Schiff: Why Americans MUST pay attention to China |
| You must diversify now before it's too late Posted: 03 Feb 2011 11:27 PM PST By David Galland, Managing Director, Casey Research: ... If you have significant assets, it is becoming increasingly important to get educated on diversification. Because... it's not just Canada, but pretty much every country in the world that kowtows to the U.S. government at this point. Case in point: as an experiment a couple years ago I tried to open a personal account in Uruguay and, despite being accompanied on my prearranged appointments by a well-known Uruguayan, a man of considerable influence at the highest echelon of Uruguayan society, none of the native banks would open an account for me. The only one that would, was an Israeli bank with large headquarters in NYC. I passed. Back to my theme... namely, once the scales drop from your eyes, an unpleasant reality materializes... Read full article... More on diversification: This is the cheapest place in the world to buy gold coins Why you should open a Chinese bank account immediately The unbelievable new way Americans can escape the dollar |
| SIR #15: Opportunities in Oil Sands Posted: 03 Feb 2011 10:41 PM PST This report was sent to subscribers on February 2, 2011. Join our free mailing list to receive actionable SIR information 48 hours before it is posted for the public… EXECUTIVE SUMMARY:
• Structural changes will have a lasting effect beyond initial protests and potential regime changes. • As the global economy relies more heavily on oil production outside the Middle East, oil sands developments look particularly attractive. • Three niche investments are likely to benefit from higher oil prices and increasing demand from non-Middle Eastern producers:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The social unrest in Egypt could be the beginning of a much larger shift in the Middle East… Last week, the world watched as the people of Egypt took to the street and demanded a change of leadership. After decades of of pent up frustration, it was finally time for citizens to be heard. On the economic front, world markets reacted with higher levels of volatility and a newly embedded fear premium. Oil prices moved sharply higher due to concerns over supply disruptions. Precious metals also caught a bid as investors once again fled to "safe assets" and considered gold and silver to be a stable storage of value. The rest of the market moved predominantly lower as higher energy prices combined with geopolitical risk makes for a challenging investment environment. But within a few days of the initial protests, the market began moving higher again. The investment world appears to believe that this regime change can take place peacefully and without causing a major disruption to the global economy. Unfortunately, this may be a bit of a naive assumption… It's Bigger Than Just Egypt A peaceful resolution is certainly more desirable than violence, but either way, an Egyptian regime change is likely to have a much larger effect than most investors currently expect. Up to this point, Egypt has been a fairly dependable ally for the US and one of Israel's more friendly neighbors. While the country has its share of problems when it comes to democracy and human rights, there is no denying that Egypt has largely been a stabilizing force in the Middle East. Of course, with a regime change in the works, it is uncertain what type of leader will be elected or put in power – and by extension, what that could do to the current balance of power in the Middle East. Even a peaceful change of leadership could result in a significant disruption in oil supplies from the Middle East. So while there is a lot of volatility and uncertainty surrounding the day-to-day events in Egypt, we believe that the big picture will turn out to be largely bullish for alternative energy and non-Middle East sources of petroleum. Back in September, we noted three uranium opportunities with significant upside potential. Since that report, Denison Mines (DNN) has rallied some 130%, Cameco Corp (CCJ) is up roughly 60%, and Uranium Participation Corp (U.TO) is up nearly 50%. All three continue to forge new recovery highs and are riding bullish trends as investors scramble to add exposure. A similar situation is setting up for energy companies engaged in Oil Sands production. This type of oil is heavier and more difficult from an extraction / refinement perspective. When oil prices are low, the higher costs for oil sands keep these resources from being a viable economic option. But now that supplies have the potential for disruption, and prices are moving steadily higher (which was the case well before the Egyptian turmoil broke out), oil sands are much more appealing. Energy producers can now operate profitably with much less political risk, and investment managers looking for safe places to park their energy allocations will be much more likely to consider oil sands companies. There are only a few investment opportunities that offer concentrated exposure to oil sands production, and have enough liquidity to make them a viable trading vehicle. But the companies participating in this area are financially healthy with stock patterns that look very attractive. Below are three actionable oil sands producers which should trade higher as the world adjusts to Middle Eastern leadership changes: Canadian Natural Resources (CNQ)
• Ample cashflow from natural gas production generates capital available for investing in oil sands production. • Strong balance sheet gives management flexibility in allocating capital to drilling and technology programs. • Oil hedges are expiring, allowing the company to profit from higher spot prices. Canadian Natural is in the enviable position of having a strong well-established business, while still giving investors potential for significant future growth.
Additions to capacity will be possible for two primary reasons: 1) Drilling expansion – Canadian Natural has a strong balance sheet with ample cash flow and available capital for new drilling programs. 2) Technology advances – As new technology emerges for extracting "heavy crude" Canadian Natural will be the first to take advantage of the opportunities with its access to resources and drilling programs already underway. Management has flexibility when it comes to ramping up oil sands production because of the strong cash flow the company already enjoys. CNQ currently produces about 1,250 mmcf/d of shale natural gas – generating profits that can be reinvested into long-term oil sands projects. In 2011, the company plans to invest $2.4 to $2.8 billion in new production projects – which will further cement the company's position as the largest regional producer of heavy crude. In contrast to large-cap traditional oil producers (which typically have operations in politically unstable regions – or risky deepwater drilling programs), Canadian Natural generates 90% of its production in North America. The lower risk should lead to a higher price multiple once investors become more comfortable with the concept of oil sands production. The balance sheet is another area that helps investors sleep better at night. CNQ has a debt to equity ratio of 50% which is relatively conservative for the capital-intensive industry. Furthermore, management is committed to paying down debt, so this ratio should improve over the next several years. I'm particularly impressed with the company's hedging techniques which have been successful in protecting profitability while avoiding the downside of capping future profits. According to a recent presentation, the company had several "collar" hedging positions that ensured a floor between $60 and $70 per barrel for a significant amount of the company's production. The majority of these collars are now expiring, but the price of oil is much higher and continuing to ramp. Management has bought a number of put positions which help to guard against a sharp drop, but CNQ should be able to participate as the price of oil increases. Trading at roughly 10 times expected earnings, CNQ looks relatively cheap in an uncertain environment for oil supplies. With a strong growth trajectory and minimal risk, CNQ could quickly work its way from the current $45 area up through $80 and even into triple digits. A chart breakout could also catch momentum traders' attention and add another catalyst for the stock to trade higher.
Gulfport Energy Corp (GPOR)
• New oil sands production coming online, leading to new sources of profitabiltiy. • Strong financial position creates a growth platform with available capital and a fully funded CapEx program. • 32% of the company's production for 2011 is hedged at nearly $87.00 per barrel. While Gulfport Energy has a fairly diversified portfolio of energy assets, the company's 25% investment in the Grizzly Oil Sands project should contribute significantly to growth over the next year. The Canadian oil sands represent a tremendous oil deposit that has until recently been unavailable for production. But with advances in technology, this heavy crude can now be more efficiently extracted and refined, creating a profitable opportunity for companies who have already secured leasehold rights. According to the Gulfport website, the Canadian oil sands actually rivals the country of Saudi Arabia as the largest known oil play in the world. The sands hold an estimated 315 billion barrels of recoverable reserves and are largely untapped except for a few pioneering firms. Gulfport offers investors a unique opportunity because of its large stake in the Grizzly project. The entire venture owns 527,609 acres which gives GPOR rights to the equivalent of 131,901 acres. The majority of this property was purchased in 2007 and is just now entering the production stage. Estimates for the first stage of the project (Algar Lake) put Gulfport's portion of production at 2,500 barrels per day – a meaningful contribution to the company's growth. Similar to Canadian Natural, Gulfport is making good use of its hedging strategies – creating a stable environment for the business while still giving plenty of opportunity to profit from increasing oil prices. For 2011, the company has 32% of its estimated production hedged at $86.96 per barrel. This provides a stable base and with oil prices in a bullish trend, the remaining 2/3 of production will likely be sold at more profitable prices. In the coming year, Gulfport expects to spend $110 to $120 million on expanding production. This is a significant commitment given the company's $1.1 billion dollar market cap, but the entire CapEx budget is funded by internally generated cash flow. With revenues growing at tremendous rates, earnings up an estimated 96% in 2010 and 76% in 2011, and an attractive base of underground assets, Gulfport is in a perfect position to capitalize on higher oil prices. Investors appear to agree with this assessment as the stock is in a strong bullish pattern and has continued to build on last week's breakout. While the pattern is a bit extended, the prospects for a continued breakout are good. One strategy for participating at this point would be to buy March $25 calls (with limited risk) on the company and then use any pullback to begin building a position in the stock. If energy prices remain stable, GPOR has the fundamental chops to command a price in the mid $30′s to low $40′s – and of course if we have a full-on energy crisis, the price could ramp much higher. We will be picking our spots and managing the risk carefully, but GPOR is on my radar list as an attractive oil sands play.
 Canadian Oil Sands Ltd. (COS.TO)
• The company is guiding for significant investment in expansion programs – creating a platform to benefit from higher oil prices. • A low debt to equity ratio allows for flexibility in committing capital to growth initiatives. • Despite some concern over a higher spending budget for 2011, traders responded positively to the company's Q4 report. Canadian Oil's most important asset is a 37% ownership stake in the Syncrude project – an oil sands development in Northeastern Alberta. As the largest partner in this cooperation, COS' ownership represents 1.9 billion barrels of proven and probable reserves plus an additional 2.5 billion estimated in contingent and prospective resources.  Canadian Oil Sands Process (click to enlarge) While the process of surface mining and processing the oil sands is very intensive (see production process) , the rising price of oil makes for a very economical business model. This week Canadian Oil Sands released their fourth quarter earnings report along with selective guidance for the coming year. The company beat expectations handily as higher oil prices combined with lower than expected costs boosted profit margins. Wall Street analysts turned their nose up at the report, noting a higher level of budgeted capital expenditures for 2011. But considering the current environment of higher oil prices and better profit margins, it makes sense for the company to be investing in growing production and boosting efficiency. Traders applauded the report, sending the stock higher in an apparent breakout from a five month consolidation. The final hurdle for the stock will be clearing the $28.50 level which proved to be resistance in early December. In their most recent investor presentation, management noted that an independent evaluation of Syracrude's probable reserves, the company should be able to continue current production levels for about 40 years. Based on the value of underground assets, the current rate of production and profitability, and the company's distribution plan; the stock price looks relatively cheap. If oil prices remain stable and COS is successful in its efficiency and production improvements, it would be reasonable to expect COS to test the 2009 highs near C35.00. Of course continuation in the bull trend for oil, and a strong Canadian dollar would act as tailwinds behind this investment. Canadian Oil Sands trades on the Toronto Exchange but should be available for most US trading accounts. The company pays a variable distribution to shareholders based on cash reserves and profitability. At this point the yield is just under 3%, and could help to support the stock price as well as attract yield-hungry investors who are also interested in capital appreciation. Most importantly, the recent earnings report is acting as a catalyst to send shares higher – and could be the jump-start the stock needs to begin a sustained bullish trend.
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| Posted: 03 Feb 2011 09:08 PM PST
Mercenary Links Roundup for Thursday, Feb 3 (below the jump).
02-03 Thursday
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| Newmont pays 37% premium to acquire Fronteer Gold Posted: 03 Feb 2011 08:30 PM PST Image:  My first gold related story today is a GATA release that was posted yesterday morning. Chris Powell's headline reads "Newmont pays 37% premium to acquire Fronteer Gold". The cash and stock transaction -- the latest in a string of deals targeting Canadian miners -- adds 4.2 million ounces of gold resource to the portfolio of the world's second-largest gold producer. This short read is well worth you time...and the link is here. |
| Gold Mining Acquisitions to Continue in 2011 & 2012 Posted: 03 Feb 2011 08:30 PM PST Image:  Eric King over at King World News posted a blog that will certainly be of interest after reading the previous story about the Newmont buyout of Fronteer. His blog is headlined "Gold Mining Acquisitions to Continue in 2011 & 2012". It, too, is worth the read...and the link is here. |
| China to raise gold, silver reserves in 2011 Posted: 03 Feb 2011 08:30 PM PST Image:  Casey Research's BIG GOLD editor, Jeff Clark, sent me the following piece last night that was posted over at commodityonline.com. It was filed from Beijing on Wednesday...and bears the headline "China to raise gold, silver reserves in 2011". I ran a story similar to this a few days ago, along with the comment that I would "believe it when I saw it." Buying more gold is one thing, but purchasing silver in size is a |
| Pensions Need Gold, the Currency of Hard Assets Posted: 03 Feb 2011 08:30 PM PST Image:  Writing exclusively for King World News, Hinde Capital CEO and gold advocate Ben Davies details why gold has become indispensable to pension funds as government pension schemes collapse into insolvency. Davies' essay is headlined "Pensions Need Gold, the Currency of Hard Assets". This is another interesting read...and the link is here. |
| The Real Reason for Rising Commodity Prices Posted: 03 Feb 2011 08:30 PM PST |
| Madoff Trustee Finds JPM Was Complicit in Ponzi Fraud Posted: 03 Feb 2011 08:30 PM PST Image:  My first story today is from Washington state reader S.A. It's a posting over at zerohedge.com that's headlined "Madoff Trustee Finds JPM Was Complicit in Ponzi Fraud" [Why am I not surprised! They can add this lawsuit to the 25+ they have against them for rigging the gold and silver prices as well. - Ed] It's not a long read...but very much worth your while. The link is here. |
| Two Huge No-No’s for Gold Investors Posted: 03 Feb 2011 08:26 PM PST |
| Do I See Lipstick On A Pig? Or Is The Stock Market and Gold Still Going Up? Posted: 03 Feb 2011 05:10 PM PST
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| Energy? No Thanks. Miners, Yes. Posted: 03 Feb 2011 05:02 PM PST Seems like everyone has now jumped back on the energy band wagon.To be precise energy, solar's, uranium and rare earths. I hear it constantly in the media. However if something has gone up long enough and far enough to garner the attention of the media it's usually closer to a top than a bottom. For instance, the oil service ETF is now stretched 33% above the 200 day moving average.  One has to wonder how much upside potential is left after a 5 month rally. What I don't hear anyone talking about anymore is gold or mining stocks (unless it's to tell us that the bubble has popped). While virtually every other sector has gotten extremely stretched above the mean the precious metal sector, the only sector in the world that is still in a secular bull market, has quietly moved down into an intermediate degree correction. So when you hear the countless analysts spouting nonsense about the gold bubble bursting, or the fear trade coming off, or any number of ridiculous reasons they dream up for why gold has moved down, you will know the real reason for golds pullback is nothing more complicated than the average run of the mill profit taking event. An event that happens like clockwork about every 20-25 weeks on average. These intermediate degree corrections are the single best buying opportunity one ever gets during a C-wave advance. Also in the bullish column, sentiment in the sector has now reached bearish extremes. Even better is the fact that most of the sector has pulled back to long term support, and or tested a major breakout level.  The upside potential in many of the mining sector ETF's and bell weather stocks is now huge, even if they were just to get back to the recent highs.  One has to ask themselves whether they think the profit potential is biggest in a sector where everyone is falling over themselves to buy. A sector that has already had a huge move and is incredibly stretched above the mean. Or if the odds might be better buying a secular bull market that has experienced a nice pullback. A sector where a return just to the old highs would already constitute a huge gain, not to mention gold should still have one more parabolic move higher this spring as the final leg of this two year C-wave finally tops out. My money is on the area where no one is looking. Buffett said it best. "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." Be sure to sign up for the free webinar this weekend.
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| Euro-Gold Spikes Higher as ECB Stays "Accommodative"… Posted: 03 Feb 2011 04:58 PM PST
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| Can the US return to a Gold Standard ? (Alan Greenspan 1981) Posted: 03 Feb 2011 03:00 PM PST
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| Posted: 03 Feb 2011 02:48 PM PST 
Unfortunately, we have very much strayed from those principles. In the United States today, the federal government completely dominates all other levels of government and mammoth international corporations completely dominate our economy. If our founding fathers could see what is going on today they would probably roll over in their graves. The history of the corporation can be traced back to the early part of the 17th century when Queen Elizabeth I established the East India Trading Company. Our founders were not too fond of the East India Trading Company. In fact, it was their tea that was dumped into the harbor during the original Boston Tea Party. In his book entitled "Unequal Protection", Thom Hartman described the great antipathy that our founders had for the East India Trading Company....
So a disgust for great concentrations of financial power is built into our national DNA. Many people today think of giant international corporations as being synonymous with "capitalism", but that is just not the case. Our founders envisioned a land where free enterprise could flourish in an environment where no institution held too much power. So this false left/right debate about whether we should give more power to the government or more power to the corporations is largely a bunch of nonsense. If the founders were around today they would say that we need to take a lot of power away from both of them. Fortunately, it looks like the American people are starting to think the same thing. Not only are the American people dissatisfied with government, they are also becoming increasingly dissatisfied with big corporations. As mentioned above, according to Gallup two-thirds of Americans are now dissatisfied with the size and influence of major corporations in America today....
As you can see, the gap between those in favor of the size and influence of major corporations and those not in favor has been significantly widening over the past decade. That is a good thing. Not only that, but the latest Chicago Booth/Kellogg School Financial Trust Index shows that Americans have very little trust in the financial system at this point. The following are some of the key findings from their most recent report.... *Only 26 percent of Americans trust the nation's financial system. *Only 13 percent of Americans trust big corporations. *Only 16 percent of Americans trust the stock market. *Only 43 percent of Americans trust the banks. These numbers are staggering, but they should not be surprising. The American people were not pleased at all when the major banks and big financial institutions were showered with bailouts during the recent financial crisis. A lot of that anger is still simmering. The recent housing collapse, which is still ongoing, was caused in great part by the behavior of the major banks and big financial institutions, but it is the American people which have suffered the most from it. The following very brief animation from Taiwan demonstrates this very humorously.... The American people are still wondering where their "bailouts" are. Most of the big banks and big corporations seem to be thriving even while the number of Americans slipping into poverty continues to grow. According to Calculated Risk, approximately 15 million Americans are unemployed, about 9 million Americans are working part-time for "economic reasons" and approximately 4 million American workers have left the labor force since the beginning of the economic downturn. When you total that all up, you get 28 million Americans that wish they had full-time jobs. Ouch. There are other numbers that are very disturbing as well. In the month of November, the number of people on food stamps set another new all-time record: 43.6 million Americans. So we have tens of millions of Americans that can't get the jobs that they want and we have tens of millions of Americans that can't feed themselves without government assistance. No wonder so many people are angry at the big corporations! The U.S. government has showered the big corporations and the big banks with bailouts, tax breaks and cheap loans and yet the big corporations and the big banks are not coming through for the American people. Meanwhile, food prices continue to go up. According to the United Nations food agency, global food prices set another new all-time record during the month of January, and they are expected to continue rising for months to come. That certainly is not going to ease tensions in the Middle East and elsewhere around the world. When people are not able to pay for the food that they need that tends to make them very, very angry. For now we are not likely to see food riots in the United States, but as food prices rise all of those food stamp cards are not going to go as far as they used to. Average American families are going to feel more strain at the supermarket. There will be less money available for other things. A key indicator to watch is the price of oil. The price of oil is one of the key components of the price of food, and if we see the price of oil go up to $120 or $150 a barrel that could mean really bad things for both the U.S. economy and the overall global economy. If we do see another financial crisis like we did in 2008, is the U.S. government going to rush to bail out the big corporations and the big banks like they did the last time? As we have seen from the numbers above, that certainly would not sit well with the American people. |
| More Withdrawals of Silver at the COMEX, what's new. Posted: 03 Feb 2011 01:51 PM PST Sorry I'm late.... Before we get into the metals, I want to first acknowledge the dog and pony show I witnessed on Live TV today, God, aka the Ben Bernank, was the epitome of what we try to teach our offspring NOT emulate. (swallow-sorry I just puked in my mouth again thinking about it) I want to highlight his TSN turning points during this charade and laughter, smiles, high 5's, and super |
| The Hyperinflationary End Game Posted: 03 Feb 2011 01:40 PM PST We take up today's Daily Reckoning where Dan left off yesterday… That is, how does it all end? In massive hyperinflation? Or massive deflation? Before we attempt an answer, here's another question to ponder: Does it have to be one or the other? Or, more accurately, doesn't one lead to the other? If so, the question is more about timing the change in direction of monetary flows rather than betting outright on the big H or big D. This is a topic that readers of the Sound Money. Sound Investments newsletter hear about often. It's a pet theme because in today's screwed up monetary world, analysing the big picture flows is crucial. We like to quote from the excellent The Great Reflation, by Tony Boeckh, published in late 2009. From 1968 to 2002, he was chairman and editor-in-chief of BCA publications, and publisher of the highly respected Bank Credit Analyst. The bloke knows what he is talking about. One of the book's most powerful statements is: "…inflation and deflation are two sides of the same coin with the difference being in the timing. Too much inflation always ends in deflation, and deflation paves the way for the next inflation so long as the central bank is able to reflate." That seems a pretty accurate assessment. The credit inflation of 2003–2007 led to deflation in 2008, followed by a reflationary effort in 2009/10. We are still experiencing the 'benefits' of this inflation. Underpinning this big picture dynamic is the US dollar, in it's duel (and completely incompatible) role as the world's reserve monetary asset and currency of the American people. The system is without external discipline – it has no mechanism to promote rebalancing. As Boeckh says: "The debtor keeps spending and borrowing, and the creditor keeps building industrial capacity, lending, and experiencing asset inflation. This goes on until a crisis puts an end to it. At that point, the debtor has too much debt and the creditor has inflated asset prices and excess productive capacity. Both create deflation…" Obviously, the debtor is the US and the creditor is China. But we're still in the inflationary part of the cycle and no one is really thinking about deflation at this point. Just take a look at the Dow Jones Industrial Index. Day after day it rises. It's relentless. US blue chips are now viewed as an inflation hedge. Value is a secondary concern. More ominously, soaring commodity prices, especially for food staples, are causing social unrest in poorer countries all around the world. This is what happens when the world's central banker (Ben Bernanke) starts experimenting with monetary policy. In a muffled speech given overnight to the National Press Club in Washington, Bernanke could be heard through the sand his head was firmly stuck in saying monetary policy was working because equity prices had risen. And later, he had this to say on the effect of higher food prices on emerging market economies: "I think it's entirely unfair to attribute excess demand pressures in emerging markets to U.S. monetary policy because emerging markets have all the tools they need to address excess demand in those countries." In other words, Bernanke is not concerned about maintaining the US dollar's role as a stable global reserve currency. Let's face it.. He never has been. Only now he's saying it more forcibly. It's also a warning to China. He's tugging the levers with only the domestic US economy in mind. The external value of the US dollar is not a concern. Pumping up the stock market by monetising government debt is. The market knows this, hence the asset price inflation we are seeing just about everywhere. Some are even speculating about hyperinflation. Now hyperinflation is a different beast to inflation. It represents the disintegration of a currency's value. This occurs when governments, with the help of the central bank, print money to fund their expenditure. The US is already on this path. The Fed is monetising debt at a rate of knots. But could it really lead to hyperinflation? The probability is low. Hyperinflation in advanced, productive economies is very rare, and usually associated with war and its aftermath, or revolution. In a study on hyperinflation, Peter Bernholz nominates only two developed economies to suffer that fate – revolutionary France and post WWI Germany, in the famous Weimar inflation. Bernholz shows in a study of 12 hyperinflations that all were caused by government deficits of at least 20 per cent of GDP. The US is currently around 10 per cent. Irresponsible and stupid, yes. Hyperinflationary, no. But there can be do doubt the US is on the path to hyperinflation. It is a process that starts with high and rising inflation. Out of nowhere, it goes parabolic, as confidence in the currency vanishes. Most hyperinflations occur over many years of budget and currency neglect. So the US is on the path, but not close yet. The question for investors is whether we'll have another bout of deflation before the authorities really lose their heads (as opposed to just putting them in the sand). The other point to consider is what would US hyperinflation mean given it is also the world's reserve currency? International reserve assets total around $9.2 trillion. US treasury bonds represent a large portion of this sum. In a hyperinflation (or even a large inflation) the real value of these assets would plummet. Here's the question – If the US Treasury market suffers a major fall in price (because of rising yields), isn't that deflationary? The US treasury market is the largest asset market in the world. A fall in price would represent the loss of massive wealth, which is deflationary. But a fall in price against what? After all, it's the world's reserve asset and meant to be the benchmark for value. Well, precious metals would be an obvious choice, and perhaps the only one. The US dollar falling against other currencies would prove deflationary for those countries, especially for those that have built their economic success around mercantilist trade policies. Fortunately, such a dire scenario is some way off. But it's still something you must think about and prepare for because we're heading that way. In the meantime, enjoy the current reflationary effort and see it for what it is – a last ditch effort by the world's hegemon to delay its day of reckoning. We'll leave the last word to Tony Boeckh, who is far smarter than we are. "When the acts of borrowing and speculating push market values far beyond what is historically normal, it is time to look for the exists. Even though you may be a year or two early, the money made at the end by taking large balance sheet risk is never kept, except by luck." Greg Canavan |
| Posted: 03 Feb 2011 01:26 PM PST Jason Burack joins us to put the recent volatility in perspective. Jason Burack is an Investor, Entrepreneur, Financial Historian, Austrian School Economist, and Contrarian. Jason co-founded the startup investor education and financial education company Wall St for Main St, LLC, to try to help the people of Main Street by teaching them the knowledge, skills, research methods, and investing expertise of Wall Street. Jason is working on getting up a Wall St for Main St website. In the meantime, you can also find Jason's articles, podcast interviews, video blogs, and other related content on the popular investing websites: Financial Sense, Seeking Alpha, The Daily Gold, The Financial Tube, and The Daily Commodities.
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| gold and silver rise/extreme chaos in Egypt Posted: 03 Feb 2011 01:19 PM PST |
| Chinese Silver Buying Just Beginning Posted: 03 Feb 2011 11:51 AM PST Just a few decades ago, China the Giant was barely a mortal. It produced most of what it consumed, and the corporate mega-producers installed during the darkest days of Asian freedom and democracy produced all the commodities the country might need within its own borders. |
| Posted: 03 Feb 2011 11:06 AM PST John Ogg of 247 Wall Street provides a nice summary of the latest Newmont acquisition. He writes: Newmont Mining Corporation (NYSE: NEM) is doing what we would have expected to see more of in late 2009 and into 2010. It is making an acquisition. The company is buying a Canadian company called Fronteer Gold Inc. (NYSE Amex: FRG), but the acquisition appears to be for the Nevada operations located near Newmont's operation in Nevada.. Fronteer Gold shareholders will receive C$14.00 in cash and will receive one common share in a new company called Pilot Gold. The NewCo will own certain exploration assets of Fronteer Gold. The cash buyout price comes to a premium of approximately 37% to Fronteer Gold's close yesterday. The total value in Canadian Dollars (close to Par with U.S. Dollar) is $2.3 billion. Newmont's market cap as of yesterday was $27.4 billion for a comparison. It is not quite 10% of the size. Fronteer Gold owns a 100% interest in the development-stage Long Canyon project that is about one hundred miles from Newmont's existing infrastructure in Nevada, which gives Newmont the potential for significant development and operating synergies. Fronteer also owns a 100% interest in the Northumberland project and a joint venture interest with Newmont in the Sandman project in Nevada, among other assets. Fronteer Gold has total attributable Measured and Indicated gold resources of 4.2 million ounces and Inferred resources of 1.7 million ounces at Long Canyon, Northumberland and Sandman. In January 2011, Fronteer Gold released an interim resource estimate for Long Canyon, which reported Measured and Indicated resources of approximately 1.4 million gold ounces and an additional Inferred resource of approximately 0.8 million gold ounces. Pilot Gold will own a portfolio of Fronteer Gold's exploration properties in Nevada, Turkey, and Peru and will be capitalized at closing with $10 million (Canadian Dollars) of cash. After the deal closes, Fronteer Gold shareholders will hold an aggregate 80.1% interest in Pilot Gold, and Newmont will hold the remaining 19.9% interest and Pilot Gold common shares will be consolidated on a one-for-four basis. Fronteer Gold Inc (NYSE Amex: FRG) shares are trading up 38% at $14.38 versus a 52-week range of $3.76 to $12.09. This buyout price appears to be an all-time high. ~Jon C. Ogg |
| Why You Should Be Buying Gold As the Fed Prints Money Posted: 03 Feb 2011 10:24 AM PST Stocks were flat yesterday. Gold was down $8. Just noise, in other words. Doesn't mean a thing... But wait...sugar at a 30-year high...cotton at a record high...oil at a 28-month high... What's going on? Could the markets have been so wrong last year...and the year before...and the year before? All of a sudden, they're discovering that commodities are a lot more valuable than they had thought. How could they have been so wrong before? Or are they wrong now? Or is it just more noise? And what's this? "Fed passes China in Treasury holdings," says The Financial Times. So, who's the biggest holder of US debt? The Fed! And since the Fed doesn't have any real money to speak of, how did it get all those US bonds? It simply created the money to buy them. Out of thin air. In other words, the US didn't really borrow the money at all. It just printed money. Whoa! Isn't that what Zimbabwe did? Isn't that what the Reichsbank did? Isn't that what Banana Republics do...just before they go bust? They can't pay their expenses honestly, so they just print up some extra currency and hope nobody notices. But people do notice, eventually. And they dump the currency. Well, maybe this time it is different. Hope so. Because the Fed just keeps printing money. It has a mandate to buy $600 billion of US Treasury debt in the first half of this year. Surely that isn't just noise, is it? No, it's something important. Something you need to pay attention to. It's something that affects the value of every dollar you've ever managed to save. Maybe it's why commodities are so high. And maybe it's why the euro is back up to $1.38. And maybe it's why the smart money is buying gold. Gold is what you buy when you fear the authorities are up to no good. But so far, very few people own gold. Ask your friends and neighbors. Many will have never considered buying gold...and they'll look at you as though you were a kook for suggesting it. In the average man's mind - at least the average mind of the average citizen of one of the average mature social welfare states - the government controls the money. And he thinks he can trust the government. Because government is a good thing. It is there to ease his suffering... ..it will make sure that the rich don't get too rich... ..and that he will have a retirement pension, public libraries, fire departments, and food tasters. If his car has a defect, he'll count on the feds to make sure it gets called in and fixed too. ..and his money? Despite the evidence of 100 years of Fed stewardship - in which the dollar lost 97% of its purchasing power - he still believes that the feds are on the case, and that they'll make sure the US dollar is a valuable and reliable way to store wealth. And if he's wrong? Then, the feds will turn out to be less reliable than he believes. And he'll be out beaucoup dollars. And more thoughts... The average man doesn't care much what kind of government he has. He has a foggy view of the whole thing...a bit of Mystic Knights of the Sea combined with the Rights of Man, Democracy, and supporting the home team. To say that he doesn't think clearly about it is misstating the situation. He doesn't think about it at all. And why should he? He has better things to do - like earning money and watching television. But he still expects things of government. At the most basic level, he wants the feds to keep order. Nobody likes disorder...except for people who cause it. And even their appetite for anarchy is limited and temporary. They like it only until they have a chance to impose some kind of order of their own. Today's modern governments have struck a bargain with the common man. They keep order, of course. But there's more to it than that. Keeping order doesn't cost very much. And governments today, as Paul Krugman puts it, are "big, ambitious and expensive." What do they do? They promise to look after the voter...to ease his pains...to succor him and support him in all his endeavors. That is, the voter looks to the government as he once looked to the church - to salve his sufferings. But what does he suffer from? Not from want. There are very few - if any - people in America or the other developed nations who suffer from real want. Instead, having too much is likely to be their problem. They eat too much. They have too much stuff. They've spent too much. And they have too many things to do and not enough time to do them. They suffer from plenty, not from want. Then, what suffering does the government alleviate? What itch does it scratch? What hurt does it make go away? As we discussed yesterday, people do not necessarily want to be richer. What they want more than that is not to be too much poorer than their neighbors. It's relative wealth that counts. There was a wise and silly report in The Financial Times earlier this week. The writer criticized Barack Obama's drive to make America more "competitive." He pointed out that being competitive is not the same as being rich. You get richer by becoming more productive. You don't get richer - necessarily - from becoming more competitive. Someone may be even more productive than you are. So what? As long as you're able to produce more goods and services, more efficiently, you will be richer. Trouble is, people are naturally competitive. They judge their own wealth and status in comparison to that of others. Without a point of reference, wealth - beyond what you need to survive - is irrelevant. You're probably wondering where we're going with this. And to tell you the truth, in all the excitement, we kind of lost track ourselves... ..but here's the point: what the common man really wants is for the government to beat down the rich...and humble the powerful. His suffering is the kind of suffering the Bible condemns: envy. He wants what isn't his. He covets his neighbor's ass. Not because he needs another ass, but because he thinks it isn't fair that the neighbor has it. He only wants what is "fair"...unless he can get an unfair advantage himself. Regards, Bill Bonner. |
| Posted: 03 Feb 2011 10:24 AM PST The year 2011 is the year when inflation will play the role of wrecking ball. It seems to threaten everything from emerging markets to the pretty earnings narrative of the market as a whole. I use the term "inflation" here as the man on the street does. It is when prices for most everything go up. It is not the best definition, because it obscures the reason why prices for most everything go up in the first place. The reason is that governments everywhere can't help but print lots of money. But let us not wander off course. It is what it is. Instead, let's think about the big emerging markets for a moment. They have been so important to the investment story of the last decade, for sure. Yet rising food and energy prices pose a big risk to them. In India, food prices are at their highest levels in more than a year, rising 18%. The dabbawalla, when he is done delivering lunchboxes, trots off to the market and finds that the price of onions has doubled in only a few months. Even the basics, like potatoes, have become expensive to the average Indian. One 54-year-old cloth trader in Mumbai complained: "It seems everything is going up in price, from vegetable and meat to diesel and household cooking gas. We are always worried as to what is next." Food prices are again becoming a serious issue, as they did in 2008 when the last food crisis brought riots in 30 countries all over the world. The UN tracks an index of 55 food commodities. It rose for the sixth straight month and is, in fact, above the previous high in June 2008. In China, the typical Chinese also faces rising prices for nearly everything. The official inflation rate recently hit a 28-month high. But it's the surging price of coal that may prove to be China's Achilles' heel, at least in the short term. Coal is what powers the great boom in China. And coal is at two-year highs. The basics like food and energy are like brakes on these economies. I think it would be surprising if, say, China could continue to grow 8% a year in a world of $100 oil - at least initially. (Solutions are found, in time.) Of course, the US and the more mature economies are not immune to rising food and energy prices, either. The thing is it is early in this story yet. Inflation will likely get much worse, if history is any guide. Everyone seems to know the US inflationary story of the 1970s. The official inflation rate hit nearly 14% by 1980. In other countries, it was worse. In the UK, inflation topped out at 27%; in Japan, 30%. It was not that long ago. Who is to say how bad things can get today? We will see, and we will watch things closely. In the stock market, inflation poses its own challenge to earnings. Thus far, out of the March 2009 bottom, earnings have exceeded expectations. The market has danced accordingly. But rising prices for commodities mean that many companies will face cost pressures. Whether they are able to pass on those increases to consumers and maintain their profit margins (and sales) is the challenge. Plus, those expectations have shifted. The market has risen to date on the back of a skeptical and pessimistic earnings view. As all bull markets do, it has successfully climbed that wall of worry. Yet cheerful forecasts make for a market vulnerable to near-term disappointment. The consensus forecast is $96 in earnings for the S&P 500, which would top its record mark in 2006. For the upcoming quarter, the consensus calls for a 29% increase in earnings from a year ago. We won't have to wait long to see some early indications if this is likely or not, as earnings start to roll in this week. Regardless, I'm convinced inflation is going to become the story in the markets this year. There are a number of investment consequences of the above, which we'll work out as we go along. However, since it is still early in the inflation curve, I think commodity businesses ought to do OK for the simple reason that what they sell adjusts nearly instantly to the effects of inflation. Oil companies, coal miners and farmers don't apologize for the prices of their goods. A barrel of oil is a barrel of oil, and you either pay the price or you don't get it. It's not a bag of Doritos, for which you can switch to a knockoff brand if they raise the price on you. But not all commodities will be on such footing. Take US lumber prices. I found this next chart very curious:
As David Wilson of Bloomberg points out, "Lumber has bounced back to prices seen during last decade's boom in US housing even though the homebuilding industry, one of the biggest sources of demand, is still in a bust." How so? Chinese demand. But the increase is from a temporary surge. China is trying to reduce its dependence on Russia, which is China's largest supplier. Perhaps it is a long-term shift. Or perhaps the Russians will sweeten the deal to get back their market share. If so, then the earnings of Plum Creek, Rayonier, Weyerhaeuser and other US log producers may enjoy only a brief day in the sun. In the commodity realm, I prefer longer-lasting advantages. Oil, for example, has held up well, and we know how difficult and expensive it is to find new sources of supply. The price of gold may be the most durable price of any commodity. Especially as the inflation thesis plays out. I'd stick with the smaller miners, because I think inflation will make it more attractive for big gold producers to buy smaller ones than to create such production from scratch. Despite this big-picture guesswork, I think it will be important to be choosy. First, the recent market rally has lifted all boats, even the leaky ones. But over the long haul, the leaky ships will still sink. It will pay to be in the right names. Second, you always have to consider the consequences of being wrong. You'll fare better in such cases with a quality name, well financed, led by talented people and acquired at a cheap price. Such investments will likely make you money over time, even if you get the big picture wrong. This is what smart investing is all about. Regards, Chris Mayer Editor's Notes: Chris Mayer studied finance at the University of Maryland, graduating magna cum laude. He went on to earn his MBA while embarking on a decade-long career in corporate banking. Chris has been quoted over a dozen times by MarketWatch, and has spoken on Forbes on Fox. Similar Posts: |
| Posted: 03 Feb 2011 10:00 AM PST The US dollar is expected to reach a multi-year low in the near future. From the cyclical low, I expect the dollar to regain a strong footing and work higher against the crowd. This is not to say the dollar won't eventually decline, but not that easily. |
| Posted: 03 Feb 2011 10:00 AM PST Following a disappointing jobs report, gold oscillated in a $33 range. Additionally, we discuss Fed Chairman Bernanke's remarks at the NPC luncheon |
| Posted: 03 Feb 2011 09:00 AM PST Since, being as melodramatic as I can be, all is lost, there is nothing that can be done, except for the government(s) to come up with plans for some new Big Screw Jobs (BSJs) with which to forestall the Big Ugly Inevitable (BUI). This is the take I get on a Bloomberg article that starts off with, "Speculation and price swings in agricultural markets may threaten food security, 48 farm ministers meeting in Berlin said a month after a United Nations gauge of global costs reached a record." There was, alas, nothing in the report about how The Courageous Mogambo (TCM) was there, and who cried out, in his outrage and his grief, "That's because you morons are all printing money and deficit-spending like it is some kind of freaking virtue or something! Milton Friedman said, and history has proved, that inflation is always and everywhere a monetary phenomenon, which, if you don't understand English, means you must have somebody who does savvy the lingo translate it into whatever indecipherable gibberish you people call a language so that maybe you morons will learn something and stop saying such stupid things! Now, open this door so I can come in there and REALLY tell you all what a bunch of lowlife socialist halfwits you are!" Instantly, there were, of course, quizzical looks at my concluding reference to "socialists" since, up to that point, the whole conversation was merely about how the prices of food are rising ominously, although nobody mentioned the rises in the prices of energy and taxes, which are as bad or worse! And although nobody actually said anything to me, I knew what they were thinking. I always know what they are thinking. They were thinking to themselves, "Nobody said anything about anything socialist! This raving lunatic Mogambo is always ragging on socialists and communists and aliens from outer space and invisible helicopters full of invisible government goons always hovering over his house, shooting some kind of thought-control waves into his stupid head, explaining why he wears that stupid tinfoil hat, but not explaining why he has crumpled the aforesaid tinfoil into what appears to be a snazzy Viking helmet, replete with horns!" I was intending to make a snotty remark about how I noticed that none of THEM was wearing a tinfoil hat and how none of THEM was buying gold, silver and oil as protection against the raging inflation in prices that is caused by the Federal Reserve creating So Freaking Much Money (SFMM), even when the horror of the latter proves the wisdom of the former. And Doubly Especially So (DES) when the torrent of new money is borrowed by the government and used for new, obscenely high-and-getting-higher deficit-spending, a pathetic tragedy made "necessary" by the fact that, nowadays, half – half! – of all spending in the Whole Freaking Country (WFC) is government spending, as gigantic wads of money are spent on a long and growing list of things and people that are getting more expensive to maintain because the Federal Reserve is creating So Freaking Much Money (SFFM) that the prices of everything, including supporting them, are going up, and how everyone who can't see that obvious fact is a Big Fat Moron (BFM) So, there I was, marshaling my forces for a Legendary Mogambo Onslaught (LMO) against such socialist monetary stupidity when, fortunately, it did not come to that, and I was completely vindicated by French Agriculture Minister Bruno Le Maire saying, "There is a risk of more food riots unless the surge in prices is contained, including through trading regulations"!!! Those concluding three exclamation points were added by me as both indicating that this, indeed, was pure socialist crap (and with a vicious police-state undertone to boot!) and to say, "Up yours!" to those who thought I was wrong! Containing prices! Trading regulations! The German Agriculture Minister Ilse Aigner piped up to say that "Food markets may not be the object of gamblers," which is a huge, industrial-sized load of hoo-hah (and which I think is translated into German as "Grosseloadacrap," but I am not sure) because Every Freaking Thing (EFT) that I can think of is, somewhere, by somebody, a leveraged bet of some kind, thus literally defining Every Freaking Thing (EFT) as "the object of gamblers"! Hell, somebody ought to tell this Aigner character that the sheer, monstrous size of the derivatives market – alone! – is at least four times bigger than global GDP, for crying out loud, and which are all (theoretically) bets, which makes a complete mockery of whining about betting on the prices of commodities! So, commodities, out of all things, should not be the object of gamblers? Hahahaha! The rationale is, of course, that "Food and agricultural commodities are not like anything else. Sometimes it's about pure survival," meaning that people starve to death when they can't afford to buy any real food, even to augment their grubs-and-roots diet, because the price of food has gone up so high, which it does because prices Always, Always, Always (AAA) go up when the money supply expands so much so fast, like it is now with the Federal Reserve creating so much money, so incredibly much money, so impossibly much money, so outrageously much money that prices Must, Must, Must (MMM) explode upward. This is seemingly proved when you mystically combine Always, Always, Always (AAA) with Must, Must, Must (MMM) to get MAMAMA, the person for whom you will be crying out, begging her to take you back home to live at her house, perhaps live in her closet, or for her to somehow come back to life after being dead all these years, get a mortgage, buy a house and THEN let you live with her, all because you lost your stupid butt by foolishly ignoring The Mogambo's advice, the lessons of the Austrian school of economics, Milton Friedman, and 4,500 years of history, which I helpfully distill down to its investment essence: Buy gold, silver, and oil stocks, pronto! The Mogambo Guru Why Food Prices Must Go Up originally appeared in the Daily Reckoning. The Daily Reckoning recently published an article looking at the impact of quantitative easing. |
| Scotia Mocatta Sells Out Of All Silver Bars Posted: 03 Feb 2011 08:23 AM PST Scotia Mocatta Sells Out Of All Silver Bars  Submitted by Tyler Durden on 02/02/2011 10:47 -0500 When a week ago we noted that ScotiaMocatta sold out of the Valcambi 1 kg block, yet once again showed the 100 oz silver bar as back in stock, we said: "We will keep tabs on how long before this also becomes "sold out."" We have the answer and it is 7 days. As of today, Canada 's biggest bullion bank is out of not only the 100 oz silver bar, but all silver bars! This follows yesterday's news that in January the US mint sold 50% more silver than in any month before. A screen capture of ScotiaMocatta's online store page as of January 24...  And as of today:  h/t Silver Watchdog |
| Posted: 03 Feb 2011 08:20 AM PST What do you think of the National Inflation Association? Some of their stuff is interesting and I agree with many of their concerns. BUT They also have a specific agenda. If there is no inflation, their "reason for being" disappears. So it is to their benefit to keep beating the "inflationary" drum. There is also little info on who they are. I have seen a video with the head of the NIA in it, (young guy). For all I know HE is the NIA and is living in his mom's basement! Don't really think that's the case but I don't know if the NIA is 1 person, 10 people or 1,000 people. So while I generally agree with much of what they say, I wonder about their specific predictions and scenarios. How much value to you place in their opinions and predictions? |
| Posted: 03 Feb 2011 07:00 AM PST |
• Social unrest and political shifts in Egypt raise concerns for traditional oil supplies to developed nations.
• The largest producer of heavy crude in Western Canada.
• Diversified base of assets capped off with a 25% stake in the Canadian Grizzly Oil Sands.
• Higher oil prices combined with disciplined cost controls helped the company to beat expectations.
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