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- Risk ETFs Buckle In The 11th Hour Of The 11th Week [Podcast]
- Hecla: A $5 Mining Stock To Reward Investors In 2013
- India ETF Performance And Update
- Ampio Pharmaceuticals Realizing Swift Progress On All Pipeline Fronts
- Zero Hedge: Can gold-plated tungsten be rehypothecated too?
- Can Bernanke Break the Dollar Rally?
- Bullish future for Mexican silver mining
- Buffet vs. Gold: What’s Next, Soros vs. Indoor Plumbing?
- Gold Bar (1 Kilo) Filled With Tungsten Found in UK
- Gold Prices Rally as Bernanke says ‘Continued’ Stimulus Needed
- Monday Pre-Market Video Analysis on What is About To Happen
- Gold-Stock Panic Levels
- Gold Chart
- $250,000 in Roman Coins Found Buried in England
- Gold & Silver Market Morning, March 26 2012
- View Friday’s Rally in Gold with Caution
- Black swans on the horizon
- Investors “Looking to Short Gold” which is “Now Contrarian Trade”, India Strike Continues
- Emerging Gold Juniors and Explorers Should Recover in 2012: Jeff Berwick
- View From the Turret: What About China?
- Randgold Highlights Mining Risk as Turkey Seeks Gold Bullion
- Ben Bernanke on the Gold Standard
- The Ugly Math Behind American Debt
- What Australia Has That China Needs
- European Banks: The Biggest Fire Sale in History
- The Best Real Estate Bets
- Investing In Silver: How to Buy Silver Coins and Bars
- On the Meaningless of Contracts and the New Optionality
- The Price Of Gold
- Silver Update: “Illusionary Recovery”
| Risk ETFs Buckle In The 11th Hour Of The 11th Week [Podcast] Posted: 26 Mar 2012 05:56 AM PDT  By Gary Gordon: Give all three of the U.S. large-cap benchmarks credit. They've been remarkably resilient in remaining within a stone's throw of respective multi-year highs. Nevertheless, a sensible money manager has to take the entire landscape of risk assets into account. If the environment for stocks is still so rosy, then why are small-caps and foreign stock ETFs faltering? And if the U.S. economy is nearing a self-sustaining recovery, then why are energy and materials ETFs below 50-day trendlines? Throughout the week, I've highlighted several reasons why investors may wish to brace themselves for volatility, including: 1. 3-MONTH LIBOR RATES. They may not be rising anymore, but they have flattened out since the start of March. In fact, European Stock ETFs and Emerging Stock ETFs simply can't gain any traction if inter-bank willingness to lend tightens up on reignited sovereign debt contagion fears. 2. FINANCIAL ETF MOMENTUM. Before the 2008 banking meltdown, Complete Story » |
| Hecla: A $5 Mining Stock To Reward Investors In 2013 Posted: 26 Mar 2012 04:59 AM PDT By Bret Jensen: Sometimes it pays to wade into an equity that is having temporary problems that are significantly impacting its stock price. It is hard to get up the nerve to catch a "falling knife," but if done right it can lead to outsized profits in the long term as the company puts its current concerns behind it and investor sentiment turns driving the stock forward. One such candidate for this approach is Hecla Mining (HL). The company is facing a shareholder lawsuit over how it handled communication of two deaths at its Lucky Friday mine as well as other activity which has caused production to fall off at that mine. This has put a litigation cloud over the stock, but one I believe will be resolved by the end of 2012. Contrarian investors should consider picking up a stake in this silver miner while temporary events are providing an entry point Complete Story » |
| India ETF Performance And Update Posted: 26 Mar 2012 04:52 AM PDT By Christian Magoon: India ETF products finished the week negative after concerns including the rising price of oil and the rupee losing value against the dollar pushed markets downward. Broad based India ETFs like INDY and INDA from iShares were off 2.6% and 3.4% respectively. India currently imports close to 80% of its oil. As word spread of Iranian oil exports being cut by around 300,000 barrels a day due to sanctions, markets quickly pushed oil to $106 a barrel. The impact of this price increase on Indian productivity pulled Indian markets downward. In addition the rupee has been on a two week slide against a stronger U.S. dollar. A devaluation of the rupee versus the U.S. dollar happened late last year during the peak of the EU debt crisis and Indian markets slid along with that plunge as well. A weaker rupee is not good for India importers or the government's fiscal Complete Story » |
| Ampio Pharmaceuticals Realizing Swift Progress On All Pipeline Fronts Posted: 26 Mar 2012 04:14 AM PDT By VFC: Ampio Pharmaceuticals (AMPE) released positive trial news for Optina in the treatment of Diabetic Macular Edema last week and shares quickly spiked to over the four dollar mark as a result. Although shares have since retreated to under that price, the results solidify a trend that has the company's pipeline of repositioned products on a roll. Before the positive Optina results, Ampio had also informed investors and the medical community that its potential blockbuster product, Ampion, had been successful in multiple trials as an anti-inflammatory. Given the side effects that are carried with today's standard anti-inflammatory treatments, Ampion could come along just at the right time when medical professionals are looking for alternatives. Going for the swift trifecta in the news cycle, this past Thursday Ampio provided an update on its third lead product, Zertane, for the treatment of premature ejaculation. In a deal similar to one announced last year Complete Story » |
| Zero Hedge: Can gold-plated tungsten be rehypothecated too? Posted: 26 Mar 2012 04:12 AM PDT |
| Can Bernanke Break the Dollar Rally? Posted: 26 Mar 2012 04:04 AM PDT |
| Bullish future for Mexican silver mining Posted: 26 Mar 2012 02:57 AM PDT |
| Buffet vs. Gold: What’s Next, Soros vs. Indoor Plumbing? Posted: 26 Mar 2012 01:45 AM PDT Buffet vs. Gold: What's Next, Soros vs. Indoor Plumbing? February 27th, 2012 By Aaron Krowne Founder, ML-Implode.com This precious little editorial by Mark Hebner discusses the long-running saga of Warren Buffett and gold, that is, the Oracle of Omaha's well-known disparaging views of the yellow metal. The treatment is fair enough, but it ends up rather abruptly adopting Uncle Warren's analysis and siding with him against gold. To me this represents a sad failure to think beyond one man's limited worldview. Hebner asks rhetorically in the conclusion: "where are the fortunes created from gold?" My answer is simple: the fortunes created from gold are the same as the fortunes created from public utilities, law and order, title and transfer of real property, functional representative government, and so forth. That is, the value to society of gold is totally in the form of an externality — but very much real, and arguably more important to society than cent one of entrepreneurial capital (or returns). That's because gold, as the only known sound monetary basis, makes up the foundation from which a legitimate (and thus long-term and sustainable) capitalism can be built. Gold is the reference point and the "check and balance" that makes all money and banking function properly. Without it, there can be no general facility of "savings" for the middle class of the poor (and therefore no real wealth to form the capital pool of legitimate investment), no expectation of generally-increasing real wages (provided by a gradually-appreciating monetary unit), no true "insurance scheme" to protect currency from bank failures, and arguably, no reliable long-term financial contracts. I won't even get into what an "elastic currency" does for rewarding bad behavior by national governments and profligate big, powerful banking institutions (via their central bank patrons). The only reason gold's value as an important utility is less well-recognized than the value of, say, public sanitation, is that the economy appears to chug along just fine for a while when the golden monetary anchor is removed. Yet, as we are seeing now, eventually all hell will break loose as the complex machine of the economy begins to come apart at its myriad joints and gears and heads towards total collapse into a smouldering heap. There is actually an apt analogy in another area of society's "public utilities": (fairly-implemented) law and order. Society can operate for a significant while "by the seat of the pants" without it, but sooner or later, a system of ad hoc power and capricious enforcement will break down horribly — and often catastrophically, irreversibly and murderously. That's what Buffett is excusing by his relentless, misguided disparagement of gold. So to Buffett and Hebner I say: the fortunes created by gold are only hard to see if you cannot see the entirety of Western technological progress (and the progress of its civilization in general) from the days of Issac Newton at the Royal Mint through the late-1960s breakdown of the Bretton Woods currency-rigging scheme, when the last vestiges of (offical) monetary gold were removed. A final remark: as if to underscore the perennial hypocrisy of Buffett (a man who has benefitted in a decidedly non-free market manner through his ownership stakes in Wells Fargo, Goldman Sachs, and Bank of America, while simultaneously exerting significant influence on Congress and the federal government in determining their bailouts), it was announced on February 22, 2012, that Berkshire-owned Richline Group is buying the US Precious Metals business of Cookson Group. Perhaps gold will end up making a "fortune" for Uncle Warren after all. http://blog.ml-implode.com/2012/02/b...door-plumbing/ |
| Gold Bar (1 Kilo) Filled With Tungsten Found in UK Posted: 26 Mar 2012 01:30 AM PDT gold.ie |
| Gold Prices Rally as Bernanke says ‘Continued’ Stimulus Needed Posted: 26 Mar 2012 12:12 AM PDT Gold prices rallied to $1,679 per ounce Monday morning US time – up nearly 1% on last week's close – after Federal Reserve chairman Ben Bernanke said "continued accommodative polices" are still needed to support the US economy. |
| Monday Pre-Market Video Analysis on What is About To Happen Posted: 25 Mar 2012 11:58 PM PDT Here is my video analysis on what to expect this week in silver, gold, oil and the SP500. Watch Video Now: http://www.thetechnicaltraders.com/ETF-trading-videos/ Also if you have not signed up for Stocks, Futures and Options Magazine which is Free, you should do so now. They have had some great educational articles recently and if you want to master the market you must understand futures prices and how they are inter-connected. Get this Free Magazine Now |
| Posted: 25 Mar 2012 10:01 PM PDT Despite all the gold-stock hate out there, this beaten-down sector is overdue for a major rally. And even if you don't believe pre-panic levels relative to gold are attainable again, merely mean reverting by depressed post-panic standards offers an enormous buying opportunity. |
| Posted: 25 Mar 2012 09:47 PM PDT Weekly Gold Had Profit-Taking. Now, We Pause, Settle And Then Rally. RSI (top box) has inverted bull head and shoulders. Price remains above all moving averages. Price has a bull double bottom. Volume is climbing. (Bottom Box) moving averages crossed to buy side as blue histograms rise showing upside pressure. This week of March 11-16-12 is messy as Europe settles down. Next, more buying begins in a new cycle.
        This posting includes an audio/video/photo media file: Download Now |
| $250,000 in Roman Coins Found Buried in England Posted: 25 Mar 2012 09:03 PM PDT
Unrest in the Roman Empire 1,700 years ago is the most likely explanation for a hoard of 30,000 coins found by archaeologists working at the site of a new city centre hotel in Bath, home of the famous Roman spa and baths (click here for our review). The 'Beau Street Hoard' is the largest stash of Roman silver ever discovered in the UK. The coins have fused together into a single block of metal making it difficult for the London Museum in charge to count and identify the loot. By weight it is worth around $250,000. |
| Gold & Silver Market Morning, March 26 2012 Posted: 25 Mar 2012 09:00 PM PDT |
| View Friday’s Rally in Gold with Caution Posted: 25 Mar 2012 08:55 PM PDT |
| Posted: 25 Mar 2012 08:30 PM PDT An unexpected drop in US home sales for February and a weakening dollar supported the gold price on Friday, with the April Comex contract settling up 1.2% at $1,662.40 per troy ounce. ... |
| Investors “Looking to Short Gold” which is “Now Contrarian Trade”, India Strike Continues Posted: 25 Mar 2012 07:08 PM PDT
Investors "Looking to Short Gold" which is "Now Contrarian Trade", India Strike Continues THE WHOLESALE MARKET price of buying gold bullion climbed to $1658 an ounce shortly after US markets opened on Friday – matching the level it rose to four hours earlier when London began trading – as European stock markets edged lower and commodity and government bond prices rose. The cost of buying silver meantime hit $31.87 per ounce – 2.2% down on last week's spot market close. Based on PM London Fix prices, it was unclear by Friday lunchtime whether gold would record its fourth straight weekly loss. Last Friday's PM Fix was exactly $1658 per ounce. A day earlier, spot gold touched a 10-week low when it fell to $1628 per ounce at the start of Thursday's US trading. "Sentiment towards gold is as low as it has been for many years, possibly since the rally started," Kamal Naqvi, head of commodity investor sales at Credit Suisse, tells the FT. "For virtually the first time this cycle, buying gold is a contrarian trade." Spot gold is down over 7% from its February peak on the final day of last month, but "investors are not using this as an opportunity to buy cheaper gold" says Edel Tully, precious metals strategist at UBS. "Instead, more are looking at the potential to short it." "In the past month gold prices have been strongly negatively correlated to the Dollar," says the latest precious metals note from French investment bank Natixis. Natixis cites the recent rise in 10-Year US Treasury bond yields, which have risen around 25 basis points (0.25 percentage points) since the start of March. "Higher interest rates increase the opportunity cost of holding gold, and are therefore a further negative factor for gold prices." The US Federal Reserve may need to raise its interest rate next year – rather than leave it on hold until late 2014 as projected by most Federal Open Market Committee members back in January – Federal Reserve Bank of St Louis president James Bullard said Friday. "Overcommitting to the ultra-easy policy could well have detrimental consequences for the US and, by extension, the global economy," said Bullard, who attends monetary policy meetings but is not a voting FOMC member this year. US economic data continue to show signs of improvement, with manufacturing activity and private sector employment rising in recent weeks. Fed chairman Ben Bernanke warned yesterday however that "consumer spending is not recovered" and remains "quite weak relative to where it was before the crisis". "In terms of debt and consumption and so on we're still way low relative to the patterns before," Bernanke told students at George Washington University during the second of his four lectures on the role of the Federal Reserve. Over in Europe, "the worst is over, but there are still risks", European Central Bank president Mario Draghi said yesterday in an interview with German tabloid Bild. "The situation is stabilizing." European banks borrowed over €1 trillion at the ECB's two longer term refinancing operations (LTROs) held in December and February. "Is the ECB jumping the gun?" ask Standard Bank currency strategists Steve Barrow and Jeremy Stevens in their Friday research note. "We think it is. We believe it is premature to think that stabilizing the banks automatically saves the Eurozone economy as well." Preliminary data released yesterday suggests the Eurozone's manufacturing sector has accelerated its rate of contraction this month. Here in the UK, the Bank of England's Financial Policy Committee revealed some of the policy tools it is considering implementing in order to improve stability in the financial system when it published its latest minutes on Friday. One option under consideration is imposing a maximum leverage ratio to limit the amount institutions can lend relative to their capital base. "The Committee agreed that it would advise HM Treasury that the statutory FPC should have powers of Direction to set a maximum ratio of total liabilities to capital — and to vary it over time," the minutes report. "A leverage ratio limit would constrain financial institutions' ability to increase the overall size of their exposures relative to their capacity to absorb losses." Many gold dealers in India today continued their strike begun Saturday in protest at last week's gold import duty hikes, despite today marking the Gudi Padwa festival, traditionally an auspicious day for buying gold. "As of Tuesday this week, it was estimated that the local gold market had suffered a loss of business worth $800 million," says Natixis. "Historically, changes in tax and other regulations have not had a material impact on Indian demand for gold. As an integral part of Indian culture, gold traders have typically found a way to work within or around any restrictions…[so] we would not expect the new measures to have a significant impact on Indian demand for gold." Turkey meantime is considering plans aimed at encouraging its citizens to deposit privately-held gold with commercial banks, the Wall Street Journal reports. Like India, Turkey has experienced significant exchange rate and balance of payments problems over the last year, which has seen those countries' governments turn their attention towards gold. Ben Traynor Gold value calculator | Buy gold online at live prices Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. (c) BullionVault 2011 Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
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| Emerging Gold Juniors and Explorers Should Recover in 2012: Jeff Berwick Posted: 25 Mar 2012 07:00 PM PDT Jeff Berwick, chief editor and founder of The Dollar Vigilante and avowed anarchist, holds precious metals for safety and holds their equities for profits. In this exclusive Gold Report interview, he... Visit the aureport.com for more information and for a free newsletter |
| View From the Turret: What About China? Posted: 25 Mar 2012 06:20 PM PDT
Small cap growth stocks are particularly strong with the iShares Russell 2000 Index (IWM) trading near the top of its recent range, and posting a strong bullish close on Friday. Nathan O. has a conditional buy set up for our Global Trend Capture service – and a move higher this week is likely to trigger a new long position. The action sets up an interesting juncture for markets as the dynamics in China are important in terms of global growth, and yet the majority of sectors simply shrugged off the news and continued higher. Even the iShares Emerging Market Index (EEM) found support at the 50 EMA and reversed higher on Friday. With the overall market holding up well, we have been able to add bullish positions to the roster – while tightening risk points on existing trades as they move into profitable territory. But at the same time, high oil prices and weakening China dynamics have led to breakdowns in a few key areas – allowing us to set up offsetting short positions. A balanced trading book is important at this juncture, because the slowdown in China, coupled with a still uncertain picture in Europe, could cause markets to deteriorate quickly. Major sentiment shifts can be sparked by unexpected catalysts and if institutional managers find a reason to reduce their risk exposure, the short side of the book is situated to capture gains as managers bail out. Heading into a new week, we've got our eye on the technology sector (semiconductors look particularly strong), industries linked directly to Chinese weakness, and a few oil-related sectors. The Mercenary Live Feed has a fairly wide roster of existing positions and pending trades (long and short) as we continue to adjust to the shifting dynamics. Below are a few of the trades we are particularly interested in for the week ahead: Get our best content delivered FREE to your inbox! Check out the Mercenary Dispatch page to learn more. Base Metal Miners As China's economy goes, so goes demand for the base metals. For base metal miners, tack on the additional cost pressure from higher oil prices and you have a very difficult environment for turning a profit. This dynamic isn't lost on institutional asset allocators who have been pulling capital out of the key base metal miners for some time now. Quickly scroll through the charts of the following major mining companies:
All three have fallen below the 50 day averages and are dealing with major overhead resistance. Recent short-term rallies or drift up patterns have set up excellent short opportunities for continuation trades. With the entire group basically confirming the bearish price action, we have been able to build horizontal exposure – increasing our odds of a major profit as confidence in China's growth evaporates.
Aussie Aussie Aussie!  The Australian dollar is directly linked to China's fortunes because of the tremendous amount of natural resources exported to China. Strong growth in China is good for the Aussie… And of course slowing growth raises some concerns. It's no surprise that the Aussie has turned south as China's growth has been called into question. But what is really exciting is the magnitude of this potential move if the Aussie dollar continues to roll. After completing a double top in February, the AUDUSD pair has traded sharply lower – but still has plenty of room to run before hitting a support level near 0.9600. If you pull up a longer-term weekly chart, you can see another support area near 0.8060, followed by the 2008 low near 0.6000. While we're not necessarily predicting carnage for the Aussie, our short trade is particularly attractive because we can enter a short position with a very narrow risk envelope, and plenty of room for profits. Currency markets can be a great place for longer-term trend patterns, and if the Aussie falls and then consolidates a few times along the way, we should be able to pyramid into a much larger position (with ever-tightening risk points) along the way. Of course there is no guarantee that the trade will be successful (we're not all that into making predictions), but the setup in terms of reward to risk could lead to one of our most best overall trades this year.
Weekly Fail: BATS IPO… This past week's "fail" award goes to Bats Global Markets Inc. (BATS) – an electronic stock exchange that essentially dropped a live hand grenade on the very day of their initial public offering. Talk about embarrassing, the exchange not only halted trading on its own (new) stock, they also caused the NYSE to halt trading on a number of other major stocks including Apple Corp. (AAPL). According to weekend reports, BATS is expected to retract their IPO and refund investor's money – in what has to be a nightmare logistical issue, costing the firm and the underwriters hundreds of thousands (if not millions). The BATS flop could end up being a good thing for competing exchanges. The NYSE and NASDAQ are both publicly traded, and have been setting up bullish patterns over the past few months. We have been building positions in clearing and execution companies as the industry has seen capital inflows and some attractive breakouts. NYSE Euronext (NYX) recently broke out of a six month base and then took three weeks to consolidate the gain. This is a great pattern for a continuation trade – made better by the relative strength for the whole group. If BATS failure causes more mutual funds and other institutional investors to clear more through the major exchanges (versus ECN's), NYX and NDAQ will likely see strong growth this year.
With markets still close to multi-year highs, we're being very careful with adding bearish exposure. Counterbalancing our bullish risk is helpful in managing the overall risk to capital, but the big money is still made in the big swings. For that reason, it is important to remember that we're still in a predominantly bullish environment… Trade 'em well this week!  |
| Randgold Highlights Mining Risk as Turkey Seeks Gold Bullion Posted: 25 Mar 2012 05:44 PM PDT While short-term corrections in bullion prices can be frustrating for investors, the pullback in miners has been even more pronounced. In the past month, the Market Vectors Gold Miners index declined almost 11%, while the Market Vectors Jr. Gold Miners index has fallen 14%. |
| Ben Bernanke on the Gold Standard Posted: 25 Mar 2012 05:24 PM PDT New World Economics |
| The Ugly Math Behind American Debt Posted: 25 Mar 2012 04:09 PM PDT Despite the US economy's wallowing debt problem, we probably shouldn't count America out just yet. A new report from Citigroup says that North America has the potential to become the next "Middle East". We're assuming that's in terms of oil and energy production...and not in terms of social instability and revolution, although either is possible at this point. If America can lower its national energy costs, it will also lower its national security costs. This might not please the military industrial complex. But it could be good news for everyone else. Let's not be too naive though. WE borrowed the "After America" name from Brisbane-based John Birmingham, who wrote a book of the same name a few years ago. It turns out it's a popular theme. Current affairs commentator Mark Steyn has an After America book out as well. And in a recent article, he shows the ugly math behind America's debt problem:
A second-term Obama would roar full throttle to the cliff edge, while a President Romney would be unlikely to do much more than ease off to third gear. At this point, it's traditional for pundits to warn that if we don't change course we're going to wind up like Greece. Presumably they mean that, right now, our national debt, which crossed the Rubicon of 100 percent of GDP just before Christmas, is not as bad as that of Athens, although it's worse than Britain, Canada, Australia, Sweden, Denmark, and every other European nation except Portugal, Ireland, and Italy. Or perhaps they mean that America's current deficit-to-GDP ratio is not quite as bad as Greece's, although it's worse than that of Britain, Canada, France, Germany, Italy, Spain, Belgium, and every other European nation except Ireland. Yep. Nobody is going to get through the next 20 years unscathed. Before you can prosper, you have to make sure you survive. But take heart! There may be life in the Anglo-Liberal Western order yet! At the "After America" conference, Dr. Paul Monk gave a great talk about the history of the Anglo-Liberal order over the last 300 years and why China is in no position to take the lead of a new global order right now (at least not a global order similar to the one we've had for the last 300 years). This caused us to reflect last week. We had a nagging doubt that we'd left something out of the conversation. Not wanting to be a cheerleader for an idea that's no longer true, we didn't talk about resilience and dynamism and the "can do spirit". Those things are mostly cultural clichés in America now. But then we watched this video on the code breakers of Bletchley Park in World War Two and were encouraged. By the way, this is an extraordinary story. The two men that feature in it - Bill Tutt and Tommy Flowers - changed the course of the war...and of history. Tomorrow we'll show you how Tutt and Flowers inadvertently exposed the inherent weakness in all centralised systems...and why that's good news for the future. Until then! Regards, Dan Denning From the Archives... Gold Money: A Once-in-a-Generation Buying Opportunity A Question Australia Might Have to Answer Australian Tax: Running Government at a Profit China: Why All Feasts Must Come to An End Greg Smith - A Former Goldman Sachs Insider Finally Speaks Out
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| What Australia Has That China Needs Posted: 25 Mar 2012 04:06 PM PDT Your editor's fingers are a little rusty after a full week away from the keyboard. But our hands were not idle! We rediscovered the pleasure of discovering information the old fashioned way last week, analogue style! More on the benefits to your brain of reading books in a moment. But first, this whole "Asian Century" thing is getting quite complicated, isn't it? We took a week off following the "After America" conference to ponder what it all meant. Is America done for? Can China liberalise its currency without destroying its banking system? And will former Treasury Secretary Ken Henry include a copy of our DVD in his forthcoming report, "Australia in the Asian Century"? To be honest, the fact the Australian government has commissioned a white paper on the whole subject makes us nervous. Nothing says "stale and uninteresting idea" like a government white paper. In fact, it leads us to one of the ideas voiced at our conference that there won't be an Asian century at all. The whole premise might be flawed. We won't repeat all the arguments made over two days. You've probably read about them already. Or perhaps you'll watch them in a few weeks when the DVD is finished. But more than one speaker made the point quite clearly that China is in no position - monetarily, economically, or militarily - to assume the role of global hegemon. America could very well fall from grace as a result of its huge deficits. But no Great Power is waiting in the wings to replace it. There may very well be an Asian Century. But it may not start for another 50 or 100 hundred years. Hmm. The time off gave us the leisure to think about things in a larger context. We highly recommend it. You don't realise how much of your conscious thought is occupied with mundane crap until you step away from it. Giving your brain space to breathe...and then reading a few interesting books...is a great way of stirring the neurons a bit. Speaking of stirring things up, did you see the story in the weekend edition of the Financial Review about the second biggest phone equipment maker in the world being barred from participating in the build-out of the National Broadband Network (NBN)? The company is named Huawei, which sounds pretty Chinese. Huawei was founded in 1987 by Ren Zhengfei, a member of the People's Liberation Army. The Australian government didn't come right out and say it was worried Huawei is an instrument of the Chinese communist party and its involvement in the development of critical IT infrastructure is a security threat. But you can imagine that sort of thing being said when there were no microphones or reporters around. For the Chinese, it will be another example of how Chinese investment in Australia is treated "unfairly". And the whole affair highlights how strange things are going to be in the coming years. In this case, Australia doesn't want to do business with Huawei because it views Huawei as a proxy for the Chinese government and a potential instrument of cyber spying or hacking. But you can't exactly say that in public about your largest trading partner, can you? It would probably be a relief to Australian politicians if their conversations with China were only about energy. This was one of the themes at our conference. No matter what happens to the world's monetary system - and naturally none of the forecasts were terribly positive - the world's economy (even if it contracts) will still need energy. In fact, the destruction of the underlying capital of the Western banking system makes the race for tangible assets like energy even more urgent. Australia fares well in this context. Right now there are eight major LNG projects totalling $180 billion worth of investment. Australia is on track to become the world's largest LNG exporter. This may be complicated somewhat by the victory of the Liberal National party in Queensland's elections yesterday. But even if coal-seam-gas projects face more scrutiny in Queensland, it's hard to imagine the new government taking action that would undo billions of dollars in investment. The energy relationship between Australia and China is pretty clear. Australia has it and China needs it. It's the geopolitical relationship between the two countries that's complicated. Regards, Dan Denning From the Archives... Gold Money: A Once-in-a-Generation Buying Opportunity A Question Australia Might Have to Answer Australian Tax: Running Government at a Profit China: Why All Feasts Must Come to An End Greg Smith - A Former Goldman Sachs Insider Finally Speaks Out
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| European Banks: The Biggest Fire Sale in History Posted: 25 Mar 2012 04:06 PM PDT It's going to be the biggest fire sale in history - and it begins in 2012. Europe's banking sector holds 2½ times as many assets as the U.S. banking sector. It's huge. And it's in big trouble. Europe's banking sector needs cash - mountains of cash. As a result, it will have to sell more than $1.8 trillion of assets, which will likely take a decade to work through. For perspective, it sold only $97 billion from 2003-10. "The list of asset sales is the longest I've seen in 10 years," says Richard Thompson, a partner at PricewaterhouseCoopers in London. Knowing how these things work, the final tally could well be double that. The world has never seen anything this big before. Where will the cash come from? This is our opportunity. There is no better, more-reliable way to make money than to buy something from someone who has to sell. Bankers are the best people in the world to buy from. Believe me, I know. I was a vice president of corporate banking for 10 years before I started writing newsletters in 2004. I would get at least three or four requests every year from some investor group asking if we had any assets we were looking to unload. Why? Because they know banks are stupid sellers. I once had a big real estate deal go bad on me. But I knew I was covered by good collateral twice over. You'd never know it based on the pressure I got to get rid of the thing once the borrower stopped paying and the bank took the asset. I knew, given a little time, I could sell the property and make a bundle for the bank. But the folks at the top didn't want to hear it. They wanted that bad loan gone. They wanted to wipe it off the books fast. So I sold it quickly, basically at fire-sale prices. It was still the most-profitable loan the bank made that year, because I got a price a good 35% above the loan amount. But the group I sold it to - which could've been more patient in marketing the property - flipped it again and made an easy 50% above that. The bank left a lot of money on the table and knew it - and didn't care. But institutionally, banks can't really hold bad debts for long. As soon as they report a big bad debt on a quarterly financial statement, some annoying things happen. It means they have to put aside more capital for this particular loan, which they hate to do, as it lowers profitability and requires a lot of paperwork. It can raise the attention of regulators, which banks hate. It can raise shareholder suspicions about lending practices, which banks hate. So the usual way to deal with bad debts is to clear 'em out as fast as possible. (Unless you're swamped with bad debts in a full-blown crisis, in which case you try to bleed them out and buy time to earn your way out, and/or patch them up as best you can to keep up appearances while you pray for a miracle - or a bailout.) With the EU banking sector loaded with trillions of stuff it must sell, the mouths of knowing investors drool with money lust. These are deals the big boys do. Prem Watsa, the brain behind Fairfax Financial and dubbed by some as "the Warren Buffett of Canada," gets to do these deals. Wilbur Ross, the billionaire investor famous for investing in distressed assets, gets to do these deals. Warren Buffett gets to do these kinds of deals. One such investor is a guy named Bill McMorrow. You've probably never heard his name before. But his current joint venture fund has returned 42% annually since it began in 1999 by buying up distressed property from banks. McMorrow has a lot of practice buying stuff from banks. In 1995, he bought up property debt from troubled Japanese banks. In 1997, he waded into Hawaii's busted property market, picking up a 450-acre land parcel at Kohanaiki on the "Big Island." In the U.S. financial crisis in 2008, he bought up apartment buildings in California. This is the sort of thing that builds 42% annual returns through the storms of crisis-filled markets. His company and partners recently bought $1.8 billion of U.K. real estate from the troubled Bank of Ireland at a 20% discount to the face value of the loans. "This is a very high-quality loan portfolio," McMorrow said. "All the loans are current." There are 170 properties that secure these loans. All of the property is in the U.K., and 60% is in London. It's a mix of office, multifamily and retail, with a smattering of industrial property, hotels and land. I'm betting he'll make a mint. McMorrow is a real estate guy through and through. It's what he knows. He's been at it for 36 years. So his opinion and track record ought to carry water. "When you look at the opportunities around the world," McMorrow said, "we really feel over the next three-five years that the greatest opportunities - for all the reasons that everybody reads about now everyday - exist in Europe. The markets here in the United States, although there will always be some opportunities to buy things at prices that we like, have become, I would say, way more efficient. There is more capital and there is more efficiency in the market, so prices in many cases got bid up to the point where we're probably not buyers." But in Europe, the banks have to raise cash. I think the EU crisis, as boring as it is, is about to get a lot more interesting as investors get a chance to pick up cheap assets from the biggest fire sale in the history of earth. Regards, Chris Mayer From the Archives... Gold Money: A Once-in-a-Generation Buying Opportunity A Question Australia Might Have to Answer Australian Tax: Running Government at a Profit China: Why All Feasts Must Come to An End Greg Smith - A Former Goldman Sachs Insider Finally Speaks Out
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| Posted: 25 Mar 2012 04:05 PM PDT Joseph Saylin did not like to take chances. He didn't trust people very much and he didn't trust paper wealth very much. He trusted dogs and real estate...and that's about it. Joseph Saylin, my grandfather, was the son of Latvian immigrants. Joseph worked hard... always. And saved money... always. He was ambitious. He was a physician at the age of 21, a lieutenant in the US Army at the age of 24, a captain at 27, a major at 31, a colonel at 35. "I was always the 'boy this' and the 'boy that,'" he would often boast during his twilight years. "I was the 'boy doctor' and the 'boy colonel.' A lot of guys were jealous. But they didn't even think about how hard I worked." Don't get the wrong idea; Joseph was not one of those all-work-and- no-play guys. In his 1912 high school yearbook from El Monte, California, he offered the following senior quote: "I am very fond of the company of ladies." To be sure, Joseph knew how to play; but more to the point of our tale, Joseph also knew how not to play. In other words, he did not play in the highflying stock market of the 1920s. Joseph parked his savings in real estate. Between 1923 and 1973 he bought a variety of houses and office buildings in Southern California. He once bought 4,000 acres of sand and sagebrush in Utah, just because it was so cheap. He called it "the ranch" and always tried to drag his grandkids up there for long weekends. But his youngest grandchild, your editor, always refused to take the 12-hour car ride just to look at sand and sagebrush. Fortunately, Joseph also bought properties of greater aesthetic and/or investment value. He purchased residential and commercial properties in Venice Beach, Brentwood, Arcadia, Orange and Lake Arrowhead. He even owned a gas station in Torrance. He always bought them cheap. Unfortunately, he often sold them cheap as well. If only he had held onto his large house on South Rockingham in Brentwood, California (yes, the same Rockingham made famous by a former professional football player with anger management issues), he would have tripled or quadrupled the ultimate size of his estate. But no matter, Joseph was not hurting financially. Throughout two World Wars, one Great Depression, one hyperinflation and numerous lesser crises, he maintained course and speed: Buying Southern California real estate, while using little or no debt financing. Joseph's frugal tactics served him well. He accumulated a small fortune during his 86 years on this planet. He might have amassed an even larger nest egg, if his wife had not devoted her golden years to traveling around the world - first-class - with her best friend. These two feisty, 70-something women would book around-the-world flights on Pan Am and disembark wherever their whim dictated. India, Egypt, Israel. In fact, my grandmother was in Israel in 1967 when the Six-Day War broke out. Joseph's lifelong commitment to real estate served him extremely well. Importantly, he made most of his money during the post-war years, when America was in the sweetest "sweet spot" of its entire history. As a result, American real estate was a "strong buy" from many, many decades. It may still be a "buy," but it probably isn't a "strong buy." Now that the latest US housing boom has gone bust, a few select portions of the US real estate market may have become "strong buys" once again. But the US economy is unlikely to provide a multi-decade tailwind to housing prices like it did after the Second World War. Of course there will still be opportunities in the United States. But some of the best real estate bets may be in the fastest growing economies of the world. Therefore, the would-be real estate tycoon may want to cast a glance overseas and consider the opportunities that beckon from foreign shores. Regards, Eric Fry From the Archives... Gold Money: A Once-in-a-Generation Buying Opportunity A Question Australia Might Have to Answer Australian Tax: Running Government at a Profit China: Why All Feasts Must Come to An End Greg Smith - A Former Goldman Sachs Insider Finally Speaks Out
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| Investing In Silver: How to Buy Silver Coins and Bars Posted: 25 Mar 2012 03:35 PM PDT For investors who want to capture the coming move in silver, buying silver bars or coins is still one of the best options. Like gold, investing in silver is a great hedge against inflation and financial turmoil alike. |
| On the Meaningless of Contracts and the New Optionality Posted: 25 Mar 2012 03:10 PM PDT An old saying is that contracts are only as good as the parties that enter into them. And the evidence is growing that when there is a meaningful power disparity between two parties to an agreement, the odds are high that the bigger player will elect to behave badly. This blog is rife with examples: pervasive contractual and regulatory violations in securitizations and foreclosures, banks exploiting not just ordinary consumers with "tricks and traps" but even billionaire clients; debt collection abuses; routine raiding of employee pensions while CEO pay and perquisites remain sacrosanct; and, of course, the pilfering of customer accounts at MF Global. And conditions on the ground are even worse. Hoisted from comments:
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| Posted: 25 Mar 2012 11:32 AM PDT Gold is Money it retains is value. Dollars, on the other hand, don't retain their value because Ben Bernanke is printing them like crazy. Investor demand for gold has increased tenfold in 10 years indicating that the commodity is entering a new phase of the gold bull market as China and India drive demand. The price of gold has also been affected by global monetary stimulus programs and the exchange rate between gold and paper is expected to rise even further, with analysts predicting that the next 12 month target for gold will be USD 2,000. ~TVR |
| Silver Update: “Illusionary Recovery” Posted: 25 Mar 2012 11:08 AM PDT BJF on the illusion of recovery in the 3.25.12 Silver from BrotherJohnF: Got Physical ? ~TVR |
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