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Tuesday, December 27, 2011

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2012 Preview - Australian Dollar Set For Rough Year

Posted: 27 Dec 2011 06:54 AM PST

By Tim Clayton:

The Australian dollar is likely to be dominated by global risk conditions for much of 2012 and looks set for a renewed decline at the start of the year. Asian economic doubts are set to intensify and financial sector de-leveraging remains an extremely important issue at a global level, both key factors that work against the Australian currency. Throughout the year, selling into strength looks to be the best approach as it heads toward the 0.82 area against the US dollar.

Bearish bets on the Chinese economy are hazardous at the best of times, especially given the opaque nature of data collection and reporting. It has also become extremely fashionable to look for bad news in the Chinese property sector as media stories of ghost towns multiply. It is, therefore, easy to gain a distorted impression. Nevertheless, alarm bells are ringing very clearly surrounding the housing sector, lending and the


Complete Story »

Weyerhaeuser: 5 Reasons Paper Will Beat Rock

Posted: 27 Dec 2011 06:49 AM PST

By Arsene Lupin:

The last few years have been really good to commodities in general, but metals and mining (therefore "rock") in particular. Mining blue chips such as VALE and Freeport McMoran (FCX) have been the envy of the market, as they've fed China's seemingly insatiable appetite for building & construction. In that same time frame, Weyerhauser (WY), a blue chip in "paper" has performed in line with the market, but languished in comparison with mining plays. One reason for this tepid past performance is that WY has been a victim of being viewed as a pure play on US Housing.

Two things are changing that make me take paper over rock going forward. First, the bullishness on China is turning to nervousness, reflected in a number of articles including this on Yuan Revaluation. Second, the market is beginning to consider the trough valuations for US housing, and the meaningful potential upside starting


Complete Story »

Basic Materials Stocks Hedge Fund Managers Are Crazy About

Posted: 27 Dec 2011 06:35 AM PST

By Insider Monkey:

The basic materials sector includes base materials like steel, iron, aluminum, copper, gold, oil and the like. Though not all commodity-related stocks (i.e. gold stocks) are classified in this sector. As an investment, these companies tend to offer modest dividends and growth is moderate but success is dependent on them actually finding the materials for which they explore, so there is some risk as well.

Amongst hedge fund managers, these stocks figure prominently because when consumer demand is up they can outperform their respective commodities. For instance, David Einhorn announced in late October, "With gold at today's price, the mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk-adjusted returns even if gold does not advance further." Einhorn explained, "Since we believe gold will continue to rise, we expect gold stocks to do even better." In turn, during the third quarter, he cut his


Complete Story »

Tuesday Options Recap

Posted: 27 Dec 2011 06:33 AM PST

By Frederic Ruffy:

Sentiment

Trading is slow after the three-day weekend. Economic news helped set a positive tone for morning trading after data showed an index of Consumer Confidence improving to 64.5 in December, which was up from 55.2 the month before and significantly better than the 58.0 that was expected. Meanwhile, crude oil bubbled $1.55 higher to $101.23, but gold lost $12 to $1594 an ounce. Trading was uneventful overseas as well. Back in the US, the Dow Jones Industrial Average has traded in a narrow 58 point range and is up 25 points. The tech-heavy NASDAQ gained 13. With about an hour left to trade, the CBOE Volatility Index (.VIX) added 1.19 to 21.92. Trading in the options market is very light and being influenced by ex-dividend activity. 5.6 million calls and 2.7 million puts traded across the exchanges so far.

Bullish Flow

Nokia (NOK) is down 14 cents to $4.79


Complete Story »

Brent - WTI Drops To Lowest Levels Since January

Posted: 27 Dec 2011 05:59 AM PST

Hickey and Walters (Bespoke) submit:

While largely out of the headlines in recent weeks, the continued collapse in the Brent-WTI spread could be one of the biggest stories of the last three months. If it wasn't for the $20+ drop in the spread between Brent North Sea and WTI crude oil prices, US consumers would likely be staring


Complete Story »

How The Bankers Drive Up Bullion Prices, Part II

Posted: 27 Dec 2011 05:29 AM PST

In Part I, I observed that if we really wanted to understand how the short-term manipulation/suppression of the gold and silver markets leads to even higher longer term prices we needed to focus on the relentless attacks by the bankers against the miners.

I explained why the bankers have such a pathological hatred toward the miners:

1) Higher valuations for the miners are seen as a bullish "buy" signal for the sector as a whole.

2) Gold and silver miners are certain to decouple (to the upside) from all other classes of equities.

However, by suppressing the share prices of the miners even more ruthlessly than they suppress the bullion market itself, the bankers are not only ensuring even higher long-term bullion prices but ultimately better/higher valuations for the miners as well.

The mechanics of this progression are yet another illustration of the "irresistible force" represented by the principals of supply and demand. I was tempted to include a chart of bullion prices versus miner share prices. Unfortunately, the only proxies available for miner share prices are one of the miner indices: either the HUI or XAU. However, those indices are dominated by the larger cap miners, and more importantly are comprised almost entirely of producers.

This distorts our picture of the gold and silver miners in several respects. First of all these companies at the top of the "food chain" represent only a tiny minority of the total number of gold (and silver) miners. Secondly they understate the level of suppression taking place, since whenever these troughs in the sector occur the junior miners are punished much more severely in markets than the larger-cap companies.

The global mining industry is not powered by multinational mining giants like BHP Billiton or Freeport McMorran. It may be dominated by these large-cap miners, but they in turn are utterly dependent upon the diligent (and efficient) exploration and development of the junior miners, who locate/develop almost all of the world's new and important mineral deposits.

The gold and silver miners are no different. The average large-cap gold miner wouldn't know a gold deposit if it tripped over one. Rather, these clumsy behemoths simply wait for the expertise of the juniors to identify large and lucrative deposits – and then they place a phone call to their bankers and set in motion a take-over.

The reality here, however, is that most of the value (for shareholders) is generated in the finding-and-development stage – and not through these buy-outs followed by mine construction and eventually production. The proof here is the long term performance of the juniors versus the seniors.

Even with the relentless suppression of the bankers, long term investors in this sector have been able to reap excellent returns from quality junior miners. Meanwhile, the performance of the seniors has been nothing less than abysmal. Not only have the large-caps failed to provide any leverage on the price of bullion (as they are supposed to), but as a class they have provided only a small fraction of the return of bullion itself.

Only part of this dismal under-performance can be attributed to lost $billions due to their ill-advised (banker-driven) hedging and other gold derivatives. Focusing on gold, the problem for the seniors is that they are too lazy to develop the smaller gold deposits, while the 5+ million ounce deposits which they covet are naturally yielding top-dollar when they are sold (living in an era of permanently rising gold prices).

Unfortunately for the senior producers, the serial currency-dilution of the bankers (otherwise known as "competitive devaluation") means that prices are rising for everything. So after paying dearly to buy these gold deposits, the seniors are then faced with soaring construction costs. Exacerbating this problem, because of their focus on large deposits, and because of the additional permitting and development time required for these larger projects, it is the senior producers who suffer the maximum profit erosion due to these cost overruns.

Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy – Part III

Posted: 27 Dec 2011 03:50 AM PST

By Dan Kervick, a PhD in Philosophy and an active independent scholar specializing in the philosophy of David Hume who also does research in decision theory and analytic metaphysics. Cross posted from New Economics Perspectives

Now so far, I have described the operations of the monetarysovereign as though money were the only thing in the world. But this is clearly not the case. The model of themonetary sovereign I have developed is intended to be a model of agovernment. And while governments might have nearly unlimited and very easily deployed power in the creation and destruction of money, a government also participates in the exchange of real goods and services. And these goods and services are clearly finite. So there is something very special about money which is yet to be considered.

Let's remember that government spending – insertions ofmoney – can come in different varieties: there are purchases, in which money is inserted into a private sector account in exchange for some good or service delivered to the sovereign; and there are straight transfers, in which some money is inserted into a private sector account without condition, with the government receiving nothing in return. Similarly,we need to recall that government receipts – removals of money – can come also in different varieties: there are sales, in which money is removed from aprivate sector account in exchange for some good or service delivered by the government to the owner of that account – as when someone buys a carton from the postal service, for example – and there are taxes,in which some money is removed from a private sector account without condition, with the owner of that account receiving nothing in return.

In a democratic society, we should think of the owner of the monetary sovereign's account as the entire public, representing a significant portion of the economy usually called the public sector. The public cannot create valuable goods out of nothing at will, or receive the benefits of valuable services at will. Thesethings come in finite amounts, and it is a very big deal to the public whetheror not it possesses some good – like a bridge, a park, or a work of public sculpture, or a dam, or a rocket engine. It is also a very big deal to the public whether it is performing some service for a private sector individual or firm, or whether that individual or firm is providing a service to the public. So, while it might make little difference whether we think of the monetary sovereign's monetary possessions according to the infinite account model, the empty account model or the quotidien account model, we have no such freedom when considering the public's possession and exchanges of real goods, or its receipts and provisions of the benefits of real services. When it comes to the exchange of real goods and services, what the public possesses matters. As democratic citizens, decisions over the public sector provision or acquisition of real goods and service are among the most frequentand important decisions we have to make.

And herein lies an important difference between theproduction of money and the production of other goods. Traditionally, the difference in cost between producing some unit of money, and the value that can be fetched by that money in the market when it is used to purchase something, is called "seignorage". In earlier times, when the public's money was fashioned from material resources like gold, which had to be mined from the ground, refined and shipped at a substantial cost, seignorage was still important, but less significant than today. But in the world of modern money, when money in colossal denominations can be created at very low cost, simply by moving a few electrons around on some hard drives by virtue of a few keystrokes on a computer keyboard, the value that is derived from seignorage is even more significant.

A democratic public that possesses seignorage power should be very hesitant to give it up, as it would for example, by ceding monetary power to private sector corporations with their relatively small collections of self-seeking owners and their hierarchical, non-democratic forms of government. If the creation of the various forms of money were permitted to be strictly a private sector endeavor in the modern world, we might reasonably suspect it would all end up in the hands of a few financial sector oligarchs – Goldman Sachs, Barclay's, Chase, etc. – justas these oligarchs have come to dominate other forms of financial power. Nor should the public take a casual attitude toward free-styling monetary entrepreneurs who might seek to employ innovative technologies to invent forms of money that have the potential to succeed in supplanting the public's money. They would thereby reap seignorage profit for their own private benefit, while at the same time diminishing public control over the public's monetary system, and robbing a democratic public of its monetary power. And the romantic and entrepreneurial monetary rebel of today could easily become the monopolizing monetary kingpin of tomorrow without the restraint of democratic governance.

So let's turn away from these anti-democratic nightmare scenarios of the public's monetary powers falling into private hands, and return now to our simple model of the monetary sovereign, which we will regardas a democratic government connected to a public sector, wielding its monetary and other powers on behalf of public purposes.

It is important to recognize that a monetary sovereign has no operational need, strictly speaking, to borrow or tax in order to spend. By an operational need I mean something that the government must do in order to carry out some operation, and without which that operation simply cannot occur. Because the monetary sovereign can always create any money it needs in order to carry out a spending operation,there is no operational need for it first to acquire that money from some other source. In the end, recall, the monetary sovereign is responsible for all of the money that exists in the monetary system which it governs. It is the producer of the currency in that system, not a mere user ofthe currency. It is just flat wrong to view a monetary sovereign as an enterprise like any other enterprise – such as a household, a small business, a corporation – mere users of the monetary sovereign's money whose monetary power is limited to the making of exchanges, and whose monetary scorecard is subject to ordinary budget constraints.

So the monetary sovereign has no operational need to tax or borrow in order to spend. However, the monetarily sovereign government may have a policy need to tax or borrow. That is, the government may have reasonable policy goals – such as the maintenance of price stability, the encouragement of private sector production and commerce, the promotion of economic equality or other goals- that are best carried out with the aid of taxing or borrowing. The economist Abba Lerner encouraged us to view all government financial operations functionally – that is in terms of their effects. Whether a monetarily sovereign government should engage in some particular monetary or financial operation depends entirely on the government's policy goals, and the degree to which the operation helps advance those policy goals. Lerner thus called this approach togovernment financial operations "functional finance", and contrasted it with the ideal of "sound finance" – an ideal based on misconstruing monetarily sovereign governments as mere currency users subject to ordinary budget constraints.

Now this idea of a monetary sovereign might seem frightening. Surely the discretionary power to create and destroy the money that is in common use is an awesome and potentially threatening power indeed. The trepidation experienced here is not at all misplaced. But it is also important to realize that the existence of such power, or at least the potential existence of such power, is inherent in the very idea of governmental sovereignty, and that much therefore depends on the specific form of government that possesses this sovereign power, and the wisdom of those who determine the actions of that government. A democratic public – in which sovereignty is distributed equally among its entire people, which endeavors to subject itself and its own governmental operations to the rule of law and appropriate checks and balances, under durable and vigilantly maintained democratic institutions – can employ its monetary sovereignty wisely and on behalf of enlightened public purposes and the general good.

The idea of monetary sovereign can also inspire a different kind of emotional reaction in people: not fear, but disapproval. The public sector under amonetarily sovereign government, if such a thing exists, seems to receive something for nothing by virtue of a seignorage power. The employment of that power effectively delivers benefits to the public that are not received in exchange for something else. All the rest of us private individuals, on the other hand, are generally required to produce something of value in exchange for the benefits we received. This asymmetry might not seem fair or appropriate, since the monetarily sovereign government has an unfair advantage over private sector economic actors. Various inhospitable terms might come to mind here to describe the monetary sovereign's advantage: "free lunch", "ill-gotten gains", "theft over honest toil", "counterfeiting" etc.

This emotional reaction can be hard for people to shake, and is even in some sense natural, but it is grounded in a profoundly wrongheaded and false analogy between the sovereign role of a self-governing people under a democracy, on the one hand, and the role of private individuals, households and companies on the other. First of all, The United States government and its people have made a substantial investment – of work and sweat and tears, and even including an investment of many lives – in order to secure something approaching monetary sovereignty for their society. So if they exercise this monetary sovereignty in the pursuit of public purposes and the general good they are hardly receiving something for nothing. They have invested a whole lot of something in the past in order to control a monetary system they can use to accomplish these public goals.

Second, a democratic government like the government of the United States is not just one enterprise among others in a competitive economic game of rising and falling fortunes, a game in which the government must therefore "play by the same rules" as every private sector individual, household or firm. The United States government is the instrument by which we the people are supposed to organize and direct our common efforts toward the fulfillment of our most important national goals and aspirations, including such things as "promotingthe general welfare" and "establishing justice." It is absurd to suggest that because a corporation like Goldman Sachs, for example, does not possess the seignorage power that comes from monetary sovereignty, then the American people must decline to employ that power themselves, in the spirit of fairness to Goldman Sachs and the desire for a level playing field. Goldman Sachs is not entitled to a level playing field with the sovereign American people. We're the constitutionally recognized boss in our society. If the people of the United States have been strong enough, and diligent enough, and have sacrificed enough to deny seignorage power to Goldman Sachs but preserve it for themselves and their democratic government, then tough for Goldman Sachs. But good for us.

Finally, it is absurd to claim, as some monetary commentators across the generations sometimes have, that government money printing or its modern electronic equivalents represent something analogous to counterfeiting, as though the money used by a sovereign government were the property and creature of some mysterious third party or extra- governmental power or entity that the government then fraudulently manufactures for itself. In modern economies money is the creature of a government, and its creation and regulation subject to the laws of that government. Under a democratic government, the power to create and regulate money belongs to the public. The public, working through its government, can't be the counterfeiter of its own legally ordained money. It might make foolish decisions from time to time in the way it deploys its money-creating power, but these decisions do not encompass the counterfeiting of its own money. It is impossible for the rightful issuer of a currency to counterfeit that currency.

So the emotional aversion some feel to the exercise of monetary power by a democratic government is misguided. Much political energy, however, has gone into perpetuating these irrational reactions. The owners and servants of concentrated private financial power sometimes seek to shield the US public from a clear awareness and understanding of its own monetary powers, and from recognizing that it can deploy its inherent monetary sovereignty for public purposes so long as it organizes itself to lay hold of these powers and command them. They would like the American people to believe that the people themselves, and their democratic government, are mere users of a mysterious currency they do not control, and are thus dependent on the will of others in exercising whatever monetary power the people are permitted to wield by those mysterious powers. The plutocrats promote these myths and taboos of monetary superstition because an informed public with a clear-eyed appreciation of monetary matters would obviously work to prevent the further usurpation of their powers by plutocrats.

This is Part Three of a six-part series. Part One is here. and Part Two is here.


Got Gold Report - Top Pick for 2012 is GDXJ

Posted: 27 Dec 2011 03:46 AM PST

After giving it a great deal of thought, our impression is that small mining shares have been unreasonably beaten up in late 2011 and that is the primary driver of our decision to choose GDXJ as our 2012 Top Pick for Steven Halpern's TheStockAdvisors.com event.  Just below is the full article for our readership, having already shared it in full to Vultures.  Happy New Year from Got Gold Report.  

2012 is the Year for Small Miners and GDXJ 

By: Gene Arensberg, Got Gold Report, www.gotgoldreport.com

"Small mining shares have been mistreated in 2011, but nothing in markets lasts forever.  The second-worst correction in the history of small mining shares is underway. We see it as a fabulous 'Vulture Bargain Hunting' opportunity." – Got Gold Report's Gene Arensberg

HOUSTON -- With precious metals in a late-year material pullback in 2011, and with the smaller, less liquid and more speculative junior miners and explorers having been "clocked" by a fearful and worried market, we think positioning a reasonable portion of one's portfolio in the Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) makes sense.  First to capture a rebound for 2012 and then hang on as mining shares finally "answer" higher metals prices looking ahead. 

Continued… 

The GDXJ tracks and attempts to replicate as closely as possible, before fees and expenses (reasonably capped at 0.54% per annum), the Market Vectors Junior Gold Miners Index.    

Smaller, more speculative mining companies can be extremely volatile individually and most are considered more risky than their larger cousins, but the exchange traded fund GDXJ spreads the risk out among a basket of nearly 80 companies.  The small (under $1 billion in market capitalization) to mid-sized ($1 billion to $5 billion market cap) firms in the ETF are literally the "food" for larger, so-called major mining companies such as Barrick, Newmont or Goldcorp, because the successful junior miners have found and de-risked or put into production important new deposits of precious metals the majors need to replace their declining metal reserves.  Part of the allure of the smaller companies is their potential to be gobbled up by the "bigs," and through GDXJ investors gain exposure to many of the companies on the large miner shopping lists. 

20111227-GDXJ-Bargain

The GDXJ, 1-year, daily, as of December 22.  The chart we use for our own trading purposes and share with Vultures (Got Gold Report Subscribers). Please note that GDXJ traded at $24.21 at the time of its recommendation as our Top Pick. 

Governments to 'Help' the Miners

Gold and silver have been gaining in value for most of the last decade when measured in paper U.S. dollars.  As more and more people come to understand that governments worldwide have chosen to print oceans of their fiat currencies, literally debasing them by increasing the quantity of "money" in the global financial system, wealth is migrating to precious metals in order to preserve purchasing power.

Gold and silver are apparently moving higher in price, but in reality what is happening is that dollars, yen, euros and other fiat currencies are losing purchasing power.   We at Got Gold Report believe that worldwide weakening of paper currency is bound to continue and will likely accelerate in the near future. 

The "cheaper" dollars are not that good for public confidence, or savers, or people on a fixed income, but cheaper dollars are good for at least two things.  Cheapening the country's currency makes it easier for the government to pay the enormous national debt racked up by irresponsible elected representatives, and higher prices for gold and silver should be good for companies that look for and produce the precious shiny metals. 

20111227-Gold-HUI

Gold and the HUI (purple), an index that tracks major mining firms, since 2005, weekly. 

Weak Confidence in Miners to Morph into the Opposite, GDXJ More Volatile

Interestingly, gold has corrected as much as $360 or 18.8% since it topped in early September near $1,924 the ounce.  Always more volatile silver has out-corrected gold, dropping as much as $23.67 or 47.5% since its April 2011 pinnacle near $50.  The metals correction and heightened fear by investors as Europe undergoes a tortuous restructuring of its mountainous debt is in large part why GDXJ has sold off more strongly than the indexes that track the larger miners.

For example, the large mining company-tracking AMEX Gold Bugs Index or HUI has corrected as much as 24% versus GDXJ's 43%. The HUI has remained in a year-long trading range during this tough correction period for the metals while the much more volatile GDXJ has retreated to mid-2010 levels.  

20111227-GDXJ-support

GDXJ, 2-years, daily, entering probable support zone absent a global meltdown.

The volatility of the smaller mining company GDXJ is roughly about double the indexes of the larger mining companies then.     

So when confidence in the junior mining sub-sector returns, as it almost certainly will at some point, the very high volatility of small mining shares that has hammered the index as much as 43% since GDXJ peaked near $43 in May 2011 can and should work to the upside just as it did to the downside in late 2011.

With a reasonable expense ratio (0.54%), a wide sampling of some of the most promising junior miners and explorers (about 80 companies), good liquidity (averaging about 4 million shares per day in December of 2011) and, arguably, a beaten up share price to begin the year (near $26), we're looking for a return of confidence by investors in mining shares and intend to accumulate GDXJ as one of our favored ways to position for it. 

One final point:  Many of the junior miners in the GDXJ were unmercifully sold off in high percentages late in 2011 due to tax loss selling, exacerbating the ETF's correction.  The effects of tax loss selling are, of course, temporary, ending with the end of December.  So the best of all worlds would be the beginnings of a return of some confidence by investors, with firming precious metals prices, at the same time that the unnaturally harsh tax loss selling pressure ends.  While only one of those metrics is time certain (tax loss selling ends in December), we look for all three to occur in 2012.

For more on this subject we invite readers to view a recent blog post at GotGoldReport.com, which looks at this same topic from the point of view of the Canadian Venture Exchange Index or CDNX.  The CDNX tracks some of the smaller, less liquid and more speculative issues in the resource sector and is even more volatile than the GDXJ. 

Just below is a short clip of that article and the chart of the CDNX to whet the appetite. 

Second-Best Buying Op Ever

What we are witnessing is the second largest liquidity vacuum/buyer's strike in the history of the CDNX, and it comes at a time when it is virtually a "lock" that prices for precious metals will remain at a multiple of where they traded back in 2003.

Think about that for a moment. Now consider that the CDNX traded as high as the 3,200 level with gold then in the $670s in Q1 of 2007.

We raise the Bargain Banner today with the CDNX trading at less than half where it was with $670s gold as gold is trading more than 2X that 2007 period. (CDNX cut more than half, Gold at more than double the price. Own that idea. Nothing remains so out of kilter forever.) 

20111227-GDXJ-LT-Gold

CDNX, since 2002, monthly, with the gold price in blue. The CDNX is actually trading at about the same level it did when gold had yet to take out $400 and silver was then less, that's less than $5 the ounce in 2003. What is wrong with this picture? Anyone? 

What is wrong is that the small miners haven't "answered" the metals prices since at least 2007.

All 'Good Things' Come to an End

We cannot know, in advance, what the catalyst will be that breaks the nasty fear-based shunning by the market of the small resource companies. We cannot know how long it will be before our super-cheap position taking (buying shares today at 4 for 1 and even up to 10 for 1 red tag sale prices) will bear big time "home run" fruit. We only know that these fear-greed cycles, these waves of human sentiment are ALWAYS temporary. We only know that at some point buyers will be buying today because they fear that prices will be higher tomorrow, instead of selling today because they fear that prices will be lower tomorrow.

We only know to expect that today's second-worst liquidity vacuum and buyer's strike will morph into the exact opposite. We only know to target and to position at Ridiculous Cheap (RC) prices in our "Faves" ahead of time.

Rogers' Way

Jim Rogers is fond of saying that he just likes to wait until he sees a pile of money sitting in a corner and then he just goes over and scoops it up. By that, of course, Mr. Rogers is saying that he looks for the point in time when prices for something become absurdly cheap and people hate them. Then he positions in them confidently until they return to where they belong and people love them again. He's also noted for saying that he's a terrible short-term trader and is willing to position "as long as it takes." How about that? Apparently Mr. Rogers is a fully fledged Vulture. …

We really cannot expect such unusually large market imbalances to last for much longer, either. That kind of fear just isn't the norm in markets, no matter how it "feels" today, but we must also be prepared mentally for our timing to be "as long as it takes." We don't get to choose the timing in our chosen market, but we do get to choose to let the market tell us what that timing is. (One of the most important lessons a Vulture ever learns.)

We cannot know in advance when the market we have chosen to game will pull a 2008-style reversal, but we could very well be nearing that time as tax loss selling comes to a close. In any event, we think that the CDNX is like Jim Rogers' pile of money sitting in a corner right now. How about you?

Please note:  This article was originally shared with Vultures prior to Christmas, 2011.  Members of the GGR team hold long positions in the GDXJ with the intention to add to their positioning on weakness just ahead.  

View From the Turret: Light Holiday Trading

Posted: 27 Dec 2011 01:13 AM PST

Welcome to the lightest trading week of the year…

Not only is this week pared back to only 4 sessions, barring any huge event in Europe, each day should feature anemic volume making it difficult for the heavy hitters to move any material amount of exposure.

The light holiday trading has a natural tendency to create choppy action – and in this environment, short-term chart patterns become unreliable and any trading signals should be taken with a grain of salt.  It's little wonder that many professional traders take this week off because of the poor reward-to-risk characteristics.

At Mercenary Trader, we're still manning the desks, but the focus this week is on outlining some of our plans and goals for the coming year.  2011 has been a tremendous year of growth for us, and 2012 will be no different.  We have a couple of new services in development right now – along with some exciting partnerships we are setting up with companies who offer premium trading resources.

All of these initiatives will help to improve the quality of our content, the profitability of our trades, and allow us to cover more opportunities on a day-to-day basis.  I'm tremendously excited about the coming year and look forward to hearing what you think about the new opportunities in the coming months.

For this week, we're much more focused on managing our existing positions – tightening risk points and watching for pyramid opportunities – rather than aggressively pursuing new setups.  With light-volume choppy action, chart patterns tend to become less reliable and we would rather wait for better conditions to lay out new exposure.

Below are a few trades we are currently tracking – (all actual trades time-stamped and documented in the Mercenary Live Feed)

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Stable Dividend Stocks Climb

Despite the bearish overhang and headline risk that has plagued the market this year, stable companies paying high dividend yields have attracted a significant amount of capital.

Part of the draw here is the fact that "traditional" income investments just aren't paying a material amount of income.  10 year treasuries have been paying only 2% and shorter-term fixed income investments are even lower.  On the municipal side, risk levels are high, but investors aren't getting paid to take that risk.

A few industries like energy pipelines and consumer staples have natural cash flow that is somewhat independent of the economic cycle.  The stability naturally attracts capital during uncertain periods – which is why we're seeing natural gas pipelines and tobacco stocks rallying sharply.

We've got a profitable position in Magellan Midstream Partners LP (MMP) which has rallied 5% from our November 11th purchase – along with a 4.7% dividend yield.  The fact that MMP has a low Average True Range (ATR) means that we can take a larger position (in nominal dollar terms) because our risk point is much tighter.

With a tighter risk point, we are able to buy more shares with a tight risk point – allowing us to make more profits out of this 5% move than we might otherwise make in a 20% swing for a more volatile position.  For position sizing, the denominator is the capital we will risk before having the trade stopped out – rather than the total amount of cash it takes to buy the position.

At any rate, MMP continues to push higher and our risk point has now been tightened to ensure a profitable trade…

The Sky (Cloud) Is Falling!

Cloud computing has been one of the speculative areas that we have followed all year.  The elements for an implosion have been there from the start.  But until the second half of the year, this sector has held up relatively well.



We took a short position in Salesforce.com Inc. (CRM) a couple of weeks ago at a key technical juncture.  The stock had broken a key support area dating back to August – and then rallied back up to the 50-day average.  For many equities, the 50 EMA is a good technical indicator of strength or weakness.  Many institutional managers accumulate positions above this line, while whittling down their risk when stocks fall below this line.

At any rate, the 50 EMA repelled the stock, and we took a short position just below.  As managers liquidated their risk, we were able to take half profits off the table and tighten our risk point to ensure a gain on the entire position.  Even after the fall, CRM still trades at a premium multiple to earnings and could continue to fall.  We're also interested in adding horizontal exposure in the coming year – with a number of related stocks setting up good short entries.

Euro Continues To Languish

The European debt crisis has weighed on the markets all year – and the EURUSD currency pair has been in a bear trend for the majority of the last 6 months.

In early November, we took a short position in the euro – after a bullish breakout turned out to be a false move.  Traders who bought into the "all clear" signal became trapped in a losing position.  Their liquidation offered the fuel for a new decline which has taken the EURUSD pair to the critical 1.30 level.

A break of this level would do tremendous damage both on a technical (chart) level – as well as on a psychological level.  We're currently holding our position with a risk point just above 1.35 and looking to add additional exposure once the currency breaks definitively below this level.

This holiday week is a good time to recharge the batteries, while reviewing high-level trading strategies and goals for the coming year.  Entering 2012, there are still a number of key risks in play – leading to plenty of trading opportunities as markets react.

Trade em well this week and take some time to enjoy friends and family as well…
MM

Is PAGE dead on PBOC ban on non-Shanghai gold exchanges?

Posted: 27 Dec 2011 12:54 AM PST

Mineweb (ex-Reuters) is reporting that "Gold exchanges in China outside of two in Shanghai are to be banned, authorities said in a statement released on Tuesday."

Looks like the much hyped Pan Asia Gold Exchange is dead. Not sure where this leaves those who claimed that it "will ultimately destroy the remaining short positions in both gold and silver".

I will come back to this story but for the moment I want to see how the pumpers and hype merchants spin it, or unspin what they said before.

I also find it interesting that this story breaks at the same time as China Daily reports that "China should further diversify its foreign-exchange portfolio and make more gold purchases when the metal's price dips but is still at a relatively high level, a senior central bank official said on Monday."

What is China's game re gold? How can we weave these two stories into a coherent explanation?

China Clamps Down on Gold Trading Frenzy

Posted: 27 Dec 2011 12:26 AM PST

China Clamps Down on Gold Trading Frenzy


Tuesday, 27 Dec 2011 09:13 AM

Gold exchanges in China outside of two in Shanghai are to be banned, authorities said in a statement released on Tuesday.

Gold exchanges have mushroomed across China, from the northern port city of Tianjin to Guangxi bordering Vietnam, as spot prices in the precious metal have soared to record highs and speculation has boomed.

"No local authority, institution or individual is allowed to set up gold exchanges," said the notice dated December 20 and jointly issued by the People's Bank of China, the Ministry of Public Security and other regulators.

The notice — published on the central bank website (www.pbc.gov.cn) — said the Shanghai Gold Exchange and the Shanghai Futures Exchange are enough to meet domestic investor demand for spot gold and futures trading.

Existing exchanges or "platforms" were told to stop offering new services.

The PBOC cited lax management, irregular activities and evidence of illegality which were causing risks to emerge, as the reasons for taking the decision.

The central bank said it would lead a team to clear up the mess — gold exchanges will be altered or closed, banks will stop providing clearing services to them; and some people will be put under police investigation, PBOC said.

An official at the Beijing Gold Exchange Center, who declined to be identified, told Reuters over the phone that the exchange has not received any detailed instructions.

"But the talk of a crackdown has been going on for a while," he said. "Of course, this affects our business."

Read more: China Clamps Down on Gold Trading Frenzy

Why Buy Gold Now, Forecast $4,500

Posted: 27 Dec 2011 12:14 AM PST

form MarketOracle:

On the economic front we see that for the month of October personal income had gained 0.4% while spending had increased 0.1%. For November, economists polled by MarketWatch had expected personal income to gain 0.2%, and for spending to also rise 0.2%. Meanwhile, there was no growth in November for the price index for personal consumption expenditures, though this inflation gauge is up 2.5% from the prior year. The core inflation reading, which excludes volatile food and energy costs, rose 0.1% in November, matching economists' expectations. Compared with the prior year, core inflation is up 1.7%. The personal-saving rate declined to 3.5% in November from 3.6% in October, and down considerably from the 7.1% rates we saw during the summer. Finally we see that credit card debt increased considerably during the month of October.

In an interesting note the National Association of Realtors (NAR) corrected its estimates of existing home sales today (December 21st), and 3.54 million previously reported home sales vanished, in revision, since January 2007. Put in perspective, the amount of sales wiped out was the total amount of seasonally adjusted existing home sales that previously had been reported in 2011, through October. Post-2006, 14.3% of existing home sales were eliminated, with sales in the Northeast taking a 30.9% hit, followed by a 14.2% reduction in the Midwest, 12.3% loss in the South and 5.3% loss in the West:

Read More @ MarketOracle.co.uk

LISTEN: Interview with Jim Sinclair

Posted: 27 Dec 2011 12:06 AM PST

Ellis Martin talks with Jim Sinclair (who predicts a modest gold price of 1700-$2100) in what now appears to be a weekly spot.

~TVR

China still on the gold rush

Posted: 26 Dec 2011 10:30 PM PST

Gold and silver prices have fallen slightly on news of a clampdown on gold trading in China. According to Reuters, Chinese regulators have stated that the Shanghai Gold Exchange and the Shanghai ...

Gold & Silver Market Morning, December 27, 2011

Posted: 26 Dec 2011 09:00 PM PST

"Thin Holiday Trade" Sees Gold Flat as Euro Stocks Rally…

Posted: 26 Dec 2011 05:01 PM PST

Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy – Part II

Posted: 26 Dec 2011 04:49 PM PST

By Dan Kervick, a PhD in Philosophy and an active independent scholar specializing in the philosophy of David Hume who also does research in decision theory and analytic metaphysics. Cross posted from New Economics Perspectives

Reflections on Modern Money

Before considering what it would mean to make our monetary system more democratic, let's begin by calling to mind a few familiar features of money and modern monetary systems in general, features we all intuitively understand as users of money in a modern monetary economy.

First, money obviously comes in very different forms. Not only are there different currency systems – the dollar system, the euro system, the renminbi system, etc. – but even within a single system, money can take significantly different forms. There is all of that familiar paper and metal currency, consisting of tangible objects that can be physically transported from one hand to another, and that are denominated with different face values. But money might also exist simply as "points" electronically credited to someone's digital monetary scorecard at a bank. These points are debited from and credited to various accounts, and need never be exchanged for physical currency. We can already see a near future in which the traditional material currency of metal coins and paper notes will no longer be used. In thinking about our modern monetary system, then, it is useful to think of it as a network of such monetary scorecards. And we can think of the exchange of physical paper and metal currency as just one among several ways of adding and subtracting points from the monetary scorecards of those who exchange the money. Each individual possess such a scorecard, but so do businesses, governments and other organizations.

Conceiving of our monetary transactions in this way is compatible with the intellectual framework developed by Hyman Minsky, who said, "A capitalist economy can be described by a set of interrelated balance sheets and income statements." However, the world of balance sheets Minsky asked us to describe contains more than just money. These balance sheets record the ownership of other financial assets – that is, promises or commitments of money rather than money itself. And they also contain accounts of real assets – items of positive value to their owners, like cars or buildings or a book collection – that are not financial assets. Finally, the balance sheets are also accounts of liabilities – things that represent negative value to their owners, such as debts that legally commit the owner of the debt to an outflow of wealth over time.

A second thing to note about modern monetary systems is that the market value of these exchangeable monetary points lies, for all of their users, purely in their exchange value. That is, the only value that attaches to the acquisition and possession of money comes from the knowledge that money can be exchanged for other things. It is true that people also seek to acquire money as a "store of value" that they save for indefinite periods and have no definite plans to spend. But the only reason one can be successful in storing value when one saves money is that other things continue to happen out in society that preserve the use of that money as a medium of exchange. If at any time people became unwilling to accept that form of money in exchange, the saver would no longer be storing value when they saved their money, but valueless points on a meaningless scorecard.

The fact that the value of modern money is purely based on its acceptance in exchange makes money different from all of the non-monetary items that we accumulate and exchange. Non-monetary items of value always have a direct practical utility, for at least some significant number of people, a utility that is not dependent on the prior exchange of those items for something else. The utility might be realized in consumption, as it is with a bar of chocolate, or in the production of some other product or service, as with a block of iron. It is true that for some specific people, the entire value of some non-monetary object might derive from the prospect of exchanging that object for something else. So, for example, I might be a philistine art collector who buys paintings only to store value over time and perhaps exchange them later for the things I really want. For me, paintings function as something like money. But I can use paintings in this purely mercenary way, as merely something to exchange for something else, only because there are other people who love paintings for their own sake.

Similarly, I might be a prisoner who trades goods for cigarettes, even though I don't smoke, but only because some other prisoners do smoke, and are willing to give something up for the cigarettes. But money is different altogether. What makes a certain good a form of money is that its value for pretty much everyone lies entirely in the fact that others will accept it in exchange. There is no non-monetary, non-instrumental foundation for the exchange value of money. There might be a few demented misers with a perverse love for paper bills and metal coins themselves, and a few numismatic hobbyists who collect these bits of money as cultural curiosities and works of art in themselves. But the exchange value of money does not depend in any significant way of the existence of this relatively small number of people.

Thirdly and finally, it is clear that governments play a very important role in the regulation of contemporary monetary systems, and in the creation and destruction of the monetary units in that system. The monies we use have an official, legally institutionalized role in our economies, an official status that is advertized to us by the markings and declarations on the physical currency itself. Almost all money in actual widespread use is some government's money. The government is central in preserving the value and stability of the government's money over time. And we know that while we all have a great deal of liberty to exchange the money we personally possess for other good and services, and to exchange goods and services for money, the legal authority to create and destroy the official government money is tightly regulated and protected. It is to such official, government administered monetary systems – at least when they exist in democratic societies – that I refer when I describe a monetary system such as the dollar system as "the public's money."

But how do those governmental monetary processes happen? How is the monetary system stabilized over time? How is money actually created and destroyed in a modern monetary economy? The full answer to these questions is not simple. Governments are complex entities, consisting of many separate branches, divisions, departments and agencies, each with its own assigned powers and authorities, and many distinct operational centers have their hands on different aspects of the monetary system. The private sector plays a key role as well. My focus will primarily be on the processes that create and destroy money. We can put off the precise details of government monetary operations for now, and start instead with a simplified model. I will call the government in this simple model a "monetarily sovereign government", or just a "monetary sovereign".

Monetary sovereigns can come in different forms, but in a democracy the people as a whole are supposed to be the ultimate seat and source of the government's sovereignty, including its sovereignty over monetary operations. Think of the monetary sovereign, no matter what individual or group of individuals constitute and exercise that sovereignty, as possessing a single monetary account of its own – a single unified monetary scorecard. Initially, the monetary sovereign's scorecard can be thought of as very much like anyone else's monetary scorecard. When the monetary sovereign spends, and either buys something from someone in the private sector or transfers money outright to the private sector, some monetary points are deducted from the monetary sovereign's scorecard and an equal number of points are added to that private sector scorecard. And going in the other direction, when the monetary sovereign taxes, or when someone purchases some good or service from a government agency, some monetary points are deducted from the private sector scorecard and an equal number of points are added to the monetary sovereign's scorecard.

But there are two wrinkles, two special circumstances that make the monetary sovereign's scorecard very different from private sector scorecards.

First, the monetary sovereign is the seat of government, and hence the ultimate administrator of its own scorecard. If you and I exchange money, and the exchange takes place via our bank accounts, the banks that oversee these accounts administer the adjustment of the monetary points on our scorecards. And if two banks exchange money, the government, which operates a central bank that serves as a sort of bank for bankers, administers the adjustment of monetary points between the two bank scorecards. But when a monetary exchange takes place between the monetary sovereign and any other person or entity in the private sector, the monetary sovereign is the ultimate administrator or arbiter of the monetary adjustment. The monetary sovereign's scorecard is not administered by some third party, but by the monetary sovereign itself.

It is true that the scorecard of some agency within the government might be administered by some other agency of the government. In the US system, for example, the Treasury Department's monetary transactions are administered by the Federal Reserve System, which holds the Treasury Department's accounts. But the Fed is ultimately part of the government, which means that the US government as a whole is the ultimate administrator of the government's own accounts.

The other way in which the monetary sovereign's monetary scorecard is different from a private sector scorecard is connected with the first difference: A monetarily sovereign government reserves for itself the power of adding or deleting monetary points on its own scorecard or any other scorecard, at its own discretion, without any requirement that an equal number of monetary points are debited from any other scorecard or credited to any other scorecard. And the monetary sovereign uses its power to guarantee that it is the sole entity in the monetary system that possesses such power. The monetary sovereign, in other words, wields the exclusive power to create and destroy money in the monetary system it controls. Currency users in the private sector, on the other hand, can only exchange monetary points in ways that make the books balance. To the extent that agents other than the monetary sovereign are permitted to engage in money-creating and money-destroying operations, these operations take place only with the permission of the monetary sovereign, and under the guidance or supervision of the monetary sovereign.

There might appear to be one partial exception to the above restriction, however. Private sector banks are also permitted, within certain limits, to create new monetary points in the monetary system. When a bank decides to give a loan to some new borrower, it creates a deposit account for that borrower and credits the loaned amount of dollars to that account. In effect, it creates a new monetary scorecard for the borrower and puts some monetary points on it. As the economists Basil Moore, Scott Fullwiler, Marc Lavoie and many others have emphasized, those points need not come from anywhere. They need not be the result of a transfer of points from some other account to the borrower's account. Although the bank might be subject to central bank reserve requirements that mandate the bank hold a certain percentage of money against its deposits, in its reserve account at the central bank, the bank typically has several weeks to meet these requirements, and can acquire the reserves after making the initial loan, either from other banks or from the central bank itself.

So bank lending can in some sense create additional money. However, in a very strict sense, what the bank borrower receives is not monetary points, but a promise of monetary points to be delivered in the future. That promise is a liability of the bank – something it now owes the borrower and that the borrower can convert into money on demand. If the borrower decides to withdraw the promised money in the form of material currency, the bank must take cash from its vault and give it to the borrower. At this point, we can see an actual transfer of money from the bank to the borrower. But the bank's vault cash has to be acquired from the monetary sovereign, and it has to pay for that cash.

Now since bank deposits can be exchanged just about as freely as money in any form, they can be legitimately defined as one form of money itself. There is perhaps no strict line that can be drawn between liabilities for money or promises of money, on the one hand, and money itself, on the other hand. But ultimately, however we define "money", all of these banking operations are administered and regulated by the monetary sovereign, and so the monetary sovereign's decisions are ultimately responsible for which lending operations a bank is permitted to conduct, and whether the bank's lending results in a net increase in money in the monetary system. The monetary system is under the ultimate control of the monetary sovereign, even if the sovereign chooses not to be very assertive in exercising that control, and passively allows banks to create money as they see fit.

So let's return to the operations of the monetary sovereign itself. In order to bring the nature and ultimate capacities of monetary sovereignty into sharper relief, let's consider three distinct models or mental pictures of the monetary sovereign's monetary operations. These mental pictures are designed only to provide a more vivid imaginative understanding of monetary sovereignty. And initially at least, they might appear to be dramatically different pictures. But we will see that in the end the pictures are, somewhat surprisingly, fully equivalent in everything that is really essential and important about the monetary sovereign's operations.

The first picture can be called the infinite account model. Think of the monetary sovereign as possessing an account or monetary scorecard that holds an infinite quantity of dollars. When it spends in its unit of currency, it credits some amount of units X to some private sector account, but debits X units from its own account. When it taxes, it debits X units from some private sector account, but credits X units from its own account. But since it possesses infinitely many units of the currency in the first place, these operations have no effect on its own balances. Currency units come in and go out, but the addition or subtraction of a finite number of units from an infinite stock of units never makes any difference. The same infinite number of units exists on the monetary sovereign's scorecard at all times.

A second picture is the empty account model. In this case, think of the monetarily sovereign government as possessing an account that contains no money whatsoever. Its scorecard always stands at zero. When it spends, it credits X units to some private sector account, but makes no change at all in its own account. When it taxes, it debits X units from some private sector account, but again makes no changes at all to its own account. Since it never possesses any money on its books, the monetary sovereign's basic monetary operations of taxing and spending can be viewed as simply creating private sector monetary points out of thin air and destroying private sector money, not transferring that money back and forth between the private sector and the government. On the empty account model, only private sector monetary scorecards are marked up with monetary balances, and the monetary sovereign never possesses money of its own.

Finally, there is the quotidien account model. The monetarily sovereign government is seen on this model as always possessing a finite amount of currency units – just like a private sector entity. At all times, some finite number of monetary units are on its monetary scorecard, and the monetary sovereign running a quotidien account is scrupulous about balancing the books on its monetary operations. When it spends, it credits X units to some private sector scorecard, but scrupulously debits X units from its own scorecard. When it taxes, it debits X units from some private sector scorecard, but again carefully credits X units to its own account. Since it possesses only finitely many units in the first place, these operations do have an effect on its balances. However, there is one added wrinkle: the monetary sovereign is, as before, legally entitled to create or destroy currency units on its scorecard as a separate operation. So in the end, while there are always some finite number of units on its scorecard, the monetarily sovereign government ultimately chooses exactly how many units that is, since it can add or subtract units from its own scorecard at any time. Even though the sovereign's bookkeepers are scrupulously balancing the books when it comes to recording exchanges to and from the private sector, the fact that the government can at any time credit or debit some additional amount makes the bookkeeper's care somewhat absurd or meaningless, at least with regard to the monetary sovereign's own account.

Recognizing that degree of meaninglessness in the quotidien account model is the key to grasping a very fundamental fact about monetary sovereignty. When it comes to understanding the real economic effects of the monetary sovereign's operations, it really makes no difference whatsoever which picture one employs. The three pictures are all equivalent. If the monetary sovereign is entitled to create or destroy currency units at will, it really doesn't matter whether we imagine the sovereign as possessing infinitely many units, zero units or some finite number of units of its own choosing. All that matters is what happens to the accounts in the non-governmental sector. The monetary sovereign administers the monetary system of the real economy, and that real economy consists of the sphere of goods and services that are produced and exchanged by the world outside of the government, a world in which the government's money plays the role of facilitating exchange, accounting for value in a standard unit of measure and making payments. Since those people and entities in the private sector economy are not permitted to create currency units at will, unless such power has been delegated to them by the monetary sovereign, their spending and savings decisions are constrained at any time by the number of units they possess at that time. And the rate at which money is exchanged for goods and services depends ultimately on the amount and distribution of money that exists out in the private sector. What ultimately matters, then, is whether some government operation has the effect of adding monetary points to some private, non-governmental sector scorecard, or deleting monetary points from some private, non-governmental sector scorecard. What happens to the sovereign's own scorecard is insignificant with regard to the creation and destruction of value in the real economy, that is, with regard to all of the things we really care about.

Going forward, then, it will be good to use neutral terms to describe the effects of the fundamental monetary operations of the monetary sovereign, terms which do not depend on which of the three models we use to conceive of these operations. We will say, then, that taxes "remove" money from the non-governmental sector, and that government spending "inserts" money into the non-governmental sector. The monetary sovereign possesses the power of a government to make these things happen, and the insertion and removal of money from various places in the private sector can have profound effects. But what happens behind the accounting wall separating the monetary sovereign's scorecard for all of the other scorecards makes no real difference to anybody. Whether one chooses to regard the insertion of money into the economy as a transfer of money – in accordance with either the infinite account model or the quotidian account model – or as the creation of money from nothing – in accordance with the empty account model – really makes no difference to the effects of these operations in the private sector economy.

So far, I have discussed only two main kinds of government monetary operations: taxing and spending. But I have neglected to discuss borrowing, another significant government financial operation. How should we understand the borrowing operations of a monetarily sovereign government?

To answer this question, we should begin by asking what we mean by "borrowing" and "lending", in the financial senses of those words. What does it mean to say someone has borrowed money from some bank lender? Well it is clear that we don't mean quite the same thing that we mean when we talk about other non-monetary acts of borrowing and lending in the everyday world. If my neighbor borrows my lawnmower from me, and I lend it to him, I simply hand over my lawnmower to him for some more-or-less agreed amount of time. He uses it for a while, and then gives it back to me. End of story. The value of the lawnmower has probably depreciated just a tiny bit as a result of the use, and my neighbor has derived some value from the lawnmower for which he did not pay me. But if, instead of agreeing to lend him the lawnmower, I am only willing to hand over the lawnmower for some more-or-less agreed payment from my neighbor, we would probably say that my neighbor has then rented my lawnmower from me, not borrowed it. So in essence, my act of lending constitutes a modest neighborly gift on my part. I give the gift and my neighbor receives it. That's all.

But clearly, that is not at all the way we are using the terms "borrowing" and "lending" when we apply these terms in the usual way to the borrowing and lending of money. As we all know, a bank loan is no gift! In the case of money, we are talking about an exchange or trade. When people borrow money, they acquire some money in exchange for a promise, a promise to pay some other amount of money in the future – almost always a greater amount. The promise then represents a financial asset for the lender, and a financial liability to the borrower: it represents something the lender is slated to gain and the borrower is slated to lose. The financial instrument, the promise, represents a cash flow. From the point of view of the lender, it represents an inflow of monetary payments, generally associated with a fixed payment schedule. From the point of view of the borrower on the other hand, the financial instrument represents an outflow of money on the same more-or-less fixed payment schedule. A bond – such as the bonds sold by businesses and governments – are essentially financial instruments formalizing promises of this kind. In terms of a monetary scorecard, we can think of a financial asset like a bond as something like some marks on the scorecard corresponding to a schedule of pre-determined point increases. The lender's scorecard contains the bond as well as any previously existing monetary points the lender possessed. As any one of the various times indicated on the schedule transpire, some marks indicating a scheduled payment of currency units at that time are erased, and the appropriate numbers of actual currency units are added to the scorecard. Gradually w

How to Invest in Graphite and the Future of Graphene

Posted: 26 Dec 2011 06:59 AM PST

Graphite has not been on the radar of most investors until now. This is more than a flashback to the #2 pencils you had to use to fill in those annoying answer sheets in school. Graphite is an excellent conductor of heat and electricity and has the highest natural strength and stiffness of any [...]

"Christmas Week Rally" Spied in Gold as ECB Member Sees "No Reason" Not to Use Q.E.

Posted: 25 Dec 2011 09:54 PM PST
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