28 February 2007

A European Perspective

Feb 27, 2007 Gold and Uranium - A European Perspective Dudley Baker 321gold . . . Inc: "The question now becomes, 'will the European investors EVER be investing in 'our' (U.S. and Canadian) bull market in the precious metals stocks?' Most analysts assume (I know, this is usually trouble) that all investors in the world will one day be investing in the precious metals stocks and/or warrants. Maybe - Maybe Not!! Is it possible this bull market will remain basically a U.S. and Canadian affair? Do we need the rest of the investors of the world to assist with driving the mining shares to the outrageous price levels predicted by some analysts as we peak in the coming years?
Investors' views and opinions of the world financial markets, gold, uranium, etc. are dictated by the specific currency in which we make our investment decisions. As the U.S. dollar rises or declines, the Euro rises or declines as well as all other currencies of the world, investors are faced with making investment decisions as viewed from their particular currency. It is possible the lack of European investors in the mining shares is a sign that we are still in the early stages of this bull market. Perhaps; but it is entirely possible that this bull market will take place basically on this side of the pond. Either way it will still be a great party but the more investors the better before the clock strikes midnight."

Near the end of the cycle

Great Balls of Fire Financials Hit Bigtime

Feb 28, 2007 Great Balls of Fire Richard Russell 321gold . . . Inc: "Yesterday the Shanghai Stock Exchange Composite suffered its biggest loss in a decade -- down about 9%. The Chinese government has been warning that it would slow China's furious rate of growth. Bank reserves were contracted a few times, the Chinese central bank stepped on the brakes. The result -- a major smash in Chinese stocks. It was a crash heard 'round the world.
If China slows down, China's enormous export of goods will slow down. China's huge use of commodities will slow down. The activities of 1.3 billion Chinese people will slow down. How much of a change the nine percent drop in Chinese stocks will bring on, remains to be seen. Some see it as merely a temporary warning, a 'gut-check.' Others take it more seriously. My opinion -- major bull moves don't tend to end this way. Major tops entail weeks, more often months, of distribution. I haven't seen the signs of steady distribution yet. I've seen overvaluation, over-speculation, over-optimism, ignoring of risk -- but I have not yet [seen] the signs of distribution.
It used to be said that when the US sneezed, the rest of the world caught a cold. And I wonder, has that changed? Is it China that has now taken the US's place? When China coughs, is the rest of the world in trouble. Hard to believe, but that may well be the case today. Below, a daily chart of FXI, the 'China 25 Index Fund.'"

Calm Before the Storm?

Safe Haven Calm Before the Storm?: "CURRENT SITUATION - Everything seems to be going well in the financial world and the investing public is busy doing what it does best - bidding up stock prices after a big rally. Today, there is no regard for risk with the investors' greed being stoked by the mainstream financial media which claims that the US economy is in a sweet spot due to reasonable growth and low inflation (as measured by the bogus official statistics). In all fairness, the bulls have plenty to cheer about. After all, the long-term bond-yield in the US is still relatively low, the price of oil has taken a tumble and global stock markets are flirting with their record-highs. So, I ask myself whether we should join the herd or is it time for caution?
My observation is that dark clouds are gathering over the horizon and this is the time to be on guard. In fact, we may be experiencing the proverbial calm before the storm. Bearing in mind the recent developments in the Middle-East, I suspect that a geo-political disaster is around the corner. I hope I am wrong but it increasingly looks as though either Israel or the US will attack Iran over its 'nuclear program'. I had first forecast this in August 2005 and believe my fears will be validated in the near future. Over the past few weeks, Washington has increased its rhetoric over Iran's 'nuclear program' and dispatched the USS John C. Stennis and USS Eisenhower aircraft carrier groups to Iran. This is an ominous development and suggests that we may be at the brink of another war."

US recession and financial distress

Today we had a meltdown of many stock markets, first in China, then in Europe, the U.S., emerging markets and globally. What happened today is consistent with my outlook for a U.S. hard landing this year.
The China crash had its source in the stock market bubble in China that is now beginning to burst as Chinese authorities started to crack down on these speculative excesses. This crash may be the beginning of a broader downward adjustment in the stock market in China that may lead to a broader economic slowdown in China.
We also had contagion from China to other global stock markets. This contagion is a combination of the China crash and of the lousy economic news out of the US. ..This is not the first time that financial contagion happens from emerging markets to advanced economies: in the fall of 1997 when the Asian crisis became global a collapse of the Hong Kong market in October led to a sharp sell-off of the Dow Jones (500 points in one day), as the one we had today. Also the collapse of Russia in August 1998 led - with a short lag - to contagion to US financial markets and to the LTCM near-bankruptcy. So shocks from emerging markets can affect markets and economies in developed countries, especially when the latter have meaningful financial and real vulnerabilities, like the US today.
The US is likely to enter into a recession in 2007; and even a likely and early easing of monetary policy by the Fed will not prevent such a recession as there are too many weaknesses in the US economy: a housing recession, an auto recession, a manufacturing recession, a real investment recession (as corporations are reducing real capital investment and inventories are falling), a US consumer that is on the ropes and at its tipping point; a meltdown in sub-prime mortgages that is leading to a generalized credit crunch in the economy. It is already ugly and it will get uglier in the real economy and in the financial markets. We are likely to observe a vicious cycle where a credit crunch and a persistent sell-off in equities leads to a worsening of the real economy with a hard landing (recession) that then weakens further the financial system. One cannot rule out a broader banking crisis if a deep recession occurs.
What will be the fallout of a US recession for the rest of the world? Europe, Asia and the rest of the world will not decouple from a US hard landing. If the US were to experience a soft landing Europe and the rest of the world will do fine. But if a US recession does occur there will be a significant economic slowdown in Europe, as well as in China, Asia and other emerging markets. China will be a primary victim as its excesses and its dependence on exports to the US are particularly important. So it is still the case that when the US sneezes the rest of the world gets the cold.
A US recession will be the result of the bubbles and excesses of the US economy in the last few years: a housing bubble now going bust; negative household savings; negative government savings (i.e. large budget deficits), low national savings and thus a large current account deficit. The party will be soon over; and the complacency and under-pricing of risk in financial markets will soon be corrected with painful consequences for the US and the global economy. The US economy has been living in a financial bubble for too long. Now this bubble is bursting – yesterday in housing and sub-prime, today in the stock market, soon enough in a wide range of other risky assets. The fallout will be very painful for the US and the world once a US recession and severe financial sector distress interact in a vicious cycle.

27 February 2007

Fieldstone Accepts Buyout by C-BASS ((CS), (CSGN.VX), (FICC), J.P. Morgan Chase & Co. (JPM), Lehman Brothers Holdings Inc. (LEH), MGIC Investment Corp. (MTG), Radian Group Inc. (RDN), (CH001213), (US46

Fieldstone Accepts Buyout by C-BASS ((CS), (CSGN.VX), (FICC), J.P. Morgan Chase & Co. (JPM), Lehman Brothers Holdings Inc. (LEH), MGIC Investment Corp. (MTG), Radian Group Inc. (RDN), (CH001213), (US46: "NEW YORK -(Dow Jones)- Mortgage lender Fieldstone Investment Corp. (FICC) said Friday it agreed to be bought for about $259 million by C-BASS LLC, a purchaser of credit-sensitive assets like home loans to people with poor credit, becoming the latest subprime lender to sell out amid an ongoing shakeout in the sector.
New York-based C-BASS, majority-owned by mortgage insurers MGIC Investment Corp. (MTG) and Radian Group Inc. (RDN), will buy Fieldstone for $5.53 a share in cash, a 113% premium to Fieldstone's closing price Thursday. The two insurers announced plan to merge early this month. Fieldstone's shares recently traded up 95.8%, or $2.49, to $5.09 on volume of 10,3 million compared with average daily volume of 787,600.
The deal is worth $259 million based on 46.9 million Fieldstone shares outstanding, according to CapitalIQ. The purchase price is subject to a reduction of 20 cents a share should Fieldstone not settle litigation before the merger, the companies said. "

The Food Chain of Finance

THE TRIUMPH OF CREDIT MARKETINGAND ITS INEVITABLE IMPLICATION, by Jeffrey Webster, Editor, Investment Sense. 'Leaving aside ethical questions, which depend on the reader’s personal sense of justice, the fact is that there are practical limits beyond which consumers simply become incapable of paying. In fact the “Merchants of Misery” may well enjoy a period of fervid growth in the initial phases of the contraction. However at some point social mores will switch from a general acceptance of aggressive debt promotion and massive profit margins earned on the poor to a sense of disgust and a desire to reform. No doubt there will be a new wave of anti-usury laws targeting Second Tier enterprises like rent-to-own, check cashing and pawn shops. No tree grows to the sky. Eventually the three decade promotion of debt to the highest risk groups will backfire, leading to unprecedented losses through exceedingly high rates of default.'"

Atlantic Free Press - Hard Truths for Hard Times - The Second Great Depression

Atlantic Free Press - Hard Truths for Hard Times - The Second Great Depression: "This week’s data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. “The slump in home prices from the end of 2005 to the end of 2006 was the biggest year over year drop since the National Association of Realtors started keeping track in 1982.” (New York Times) The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states”. Arizona, Florida, California, and Virginia have seen precipitous drops in sales. The Commerce Department also reported that “the number of vacant homes increased by 34% in 2006 to 2.1 million at the end of the year, nearly double the long-term vacancy rate.” (Marketwatch)"

26 February 2007

It's the sitting that does it!

"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine-that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader, after he knows how to trade than hundreds did in the days of his ignorance". -Jesse Livermore (Reminiscences of a Stock Operator)

22 February 2007

Storm Cloud at the Global Bazaar? - washingtonpost.com

Robert J. Samuelson - Storm Cloud at the Global Bazaar? - washingtonpost.com: "Global finance is mysterious, exciting and sometimes reckless. A specter now haunts it -- the specter of excess 'liquidity.' Will this prove a passing anxiety or, as in 1997 and 1998 with the Asian financial crisis, will it threaten the stability of the entire global economy? Good question."

Australia was once awash with gold, says new geological study

"The chemistry of gold in brine suggests that water has a lot higher capacity to carry gold than we have been able to measure. We have very salty groundwater in parts of Australia, particularly in some of our gold-bearing regions," ABC quoted him as saying.Dr Frank Reith and his team, also a part of the study, found that bacteria played a key role in forming gold grains and nuggets. They found that certain species of bacteria removed gold from the soil and deposited pure grains of it around them.Dr McPhail said these two pieces of evidence became important when scientists looked back millions of years, to periods when Australian rocks were subject to a process known as deep weathering."During these times, the rocks were being weathered by interaction with the atmosphere and water," Dr McPhail said."That weathering may have taken place during times when much of Australia was less arid than it is now. Over millions of years you get climate changes. There were periods when a lot of Australia was tropical," added Dr Reith.Dr McPhail said these hot, wet conditions would have provided the ideal environment for gold-moving bugs and for water to contain higher gold concentrations."During those times, and we're talking about 60 million years ago or 12 million years ago for example, groundwater may have contained more gold," he said."The work could prove a boon for mineral explorers," he added."If gold was more mobile in the geological past, such as during deep weathering episodes, then this work could help focus exploration in weathered terrains. It could point to new deposits," he said. (ANI)

Westpac report finds risks and opportunities in climate change

Westpac Internet -Latest news: "The 2006 report sets out Westpac's non-financial performance across more than 110 indicators covering human, social and environmental capital. The report again emphases the links between sustainability and shareholder value, with Westpac CEO, Dr David Morgan, stating that managing social, environmental and workplace performance, along with stakeholder relationships and other intangibles, is fundamentally linked to long-term shareholder value.

Dr Morgan said the value proposition was most obvious around climate change, with 2006 shaping up as a turning point in Australia: 'With widespread acceptance that climate change is real, business has a tiger by the tail. There are critical risks but also real business opportunities - from lending in a water and carbon-constrained environment to valuing next generation assets.'

In 2006 Westpac was a key member of the Australian Business Roundtable on Climate Change; commenced trading in the EU Emission Trading Scheme (EU ETS), and was recognised for 'best in class' management and disclosure practices in the Carbon Disclosure Project's (CDP) global Climate Leaders Index. Westpac continues to look at pursuing the ultimate goal of carbon neutrality; that is zero net emissions."

Can 4% of Homeowners Sink the Entire Market?

charles hugh smith-Weblog and wEssays: "That's $6.5 trillion, which means all 50 million mortgage holders are left with a grand total of $1.5 trillion in net equity. If housing values decline 15%, that's a $2.85 trillion haircut off net equity. If we set 2/3 of that against mortgaged real estate, (the other 1/3 being a decline in the value of free and clear homes), then the decline collectively suffered by all mortgage holders is $1.9 trillion--enough to put them in a negative equity hole.

This is a staggering conclusion, for it suggests just how a 'mere' 4% delinquency/foreclosure rate could trigger a 'modest' 15% decline in housing values, which would put the nation's mortgage holders (if taken in aggregate) under water: the nation's household debt would exceed the value of the mortgaged residential real estate.

So let's put this together. With the Pareto Principle in hand, we can foresee the distinct possibility that when a mere 4% of outstanding mortgages enter delinquency / foreclosure, then a 'tipping point' will be reached, triggering effects which far outsize the proximate causes.

Please examine the chart above carefully. Over 69% of the population are homeowners, and another 26% are in poverty. According to the FDIC, the recent surge in ownership from 64% to 69.5% has created a pool of 'at-risk' borrowers who couldn't have purchased a house with a conventional mortgage. Of the remaining 4% who are not homeowners or those living below the poverty line, the recent stalling home ownership rates at about 69.1-69.7% suggests these households are just above the poverty level and unable to buy a house, not yuppies renting penthouse suites who are now ready to buy a McMansion. "

The Korea Times : Year of Pig Ushers in Hopeful Year

The Korea Times : Year of Pig Ushers in Hopeful Year: "A pig ironically has a dual image _ both positive and negative.
Since it began living as a domestic animal in Korea some 2,000 years ago, pigs have brought a lot of myths and superstitions closely associated with wealth, good luck and sometimes a mythical supernatural power in sacrificial rituals.
However, pigs are also synonymous with greed, laziness, stupidity and dirtiness.
Pigs found in Korean history carry these mixed blessings long grafted onto folk culture and handed down to current times.
This year will find many people fussing a lot more than usual over all kinds of myths and rumors as the year of 2007 ushers in the year of a pig, hopefully an abundant year.
Year of the Golden Pig?
The belief about pigs is expected to be exaggerated more than ever this year.
The lunar calendar designates each year as one of the 12 zodiac animals; the pig is the 12th zodiac animal.
The lunar year follows the sequence of the 12 zodiac animals _ rat, ox, tiger, rabbit, dragon, snake, horse, sheep, monkey, rooster, dog and lastly, pig.
But this pig year, called the year of ``chonghae,’’ which means a red pig, returns every 60 years."

21 February 2007

Monday view: Cheap solar power poised to undercut oil and gas by half

Within five years, solar power will be cheap enough to compete with carbon-generated electricity, even in Britain, Scandinavia or upper Siberia. In a decade, the cost may have fallen so dramatically that solar cells could undercut oil, gas, coal and nuclear power by up to half. Technology is leaping ahead of a stale political debate about fossil fuels.
Anil Sethi, the chief executive of the Swiss start-up company Flisom, says he looks forward to the day - not so far off - when entire cities in America and Europe generate their heating, lighting and air-conditioning needs from solar films on buildings with enough left over to feed a surplus back into the grid.
The secret? Mr Sethi lovingly cradles a piece of dark polymer foil, as thin a sheet of paper. It is 200 times lighter than the normal glass-based solar materials, which require expensive substrates and roof support. Indeed, it is so light it can be stuck to the sides of buildings.
Rather than being manufactured laboriously piece by piece, it can be mass-produced in cheap rolls like packaging - in any colour.
The "tipping point" will arrive when the capital cost of solar power falls below $1 (51p) per watt, roughly the cost of carbon power. We are not there yet. The best options today vary from $3 to $4 per watt - down from $100 in the late 1970s.
Mr Sethi believes his product will cut the cost to 80 cents per watt within five years, and 50 cents in a decade.
It is based on a CIGS (CuInGaSe2) semiconductor compound that absorbs light by freeing electrons. This is then embedded on the polymer base. It will be ready commercially in late 2009.
"It'll even work on a cold, grey, cloudy day in England, which still produces 25pc to 30pc of the optimal light level. That is enough, if you cover half the roof," he said.
"We don't need subsidies, we just need governments to get out of the way and do no harm. They've spent $170bn subsidising nuclear power over the last thirty years," he said.
His ultra-light technology, based on a copper indium compound, can power mobile phones and laptop computers with a sliver of foil.
"You won't have to get down on your knees ever again to hunt for plug socket," he said
Michael Rogol, a solar expert at Credit Lyonnais, expects the solar industry to grow from $7bn in 2004 to nearer $40bn by 2010, with operating earnings of $3bn.
The sector is poised to outstrip wind power. It is a remarkable boom for a technology long dismissed by experts as hopelessly unviable. link

16 February 2007

Ghawar Is Dying

August,2001--"Ghawar is dying." Could those three simple words signal the beginning of the end for the industrialized human civilization on Planet Earth? No one in a position of knowledge or authority has uttered them publicly yet, nor are they likely to for a few years to come. So we do have some time--but not much. Then again, they may have been said quietly two years ago and we would never know. Life's funny that way. Too bad this isn't a laughing matter.
Some two hundred kilometers east of Riyadh, Saudi Arabia, is a stretch of uninhabited and unremarkable desert in the Empty Quarter. This hot, desolate landscape sits above the largest oil field in the world: the Ghawar. It's a big chunk of nothing one hundred and fifty miles long and twenty-five miles wide, but thousands of meters below its surface lie seventy billion barrels of oil patiently waiting to be pumped out. They've waited for millions of years. A few more won't matter. And after that? After that, Ghawar will no longer be dying. It will be dead. Nothing left but sand and sinkholes.
Before you sit back, all smug and comfy with that seventy billion barrel figure, let me do a bit of quick math for you: that's only an 875 day supply of oil for the world at the current rate of use. (And that rate rises every year, just as the Ghawar's not unlimited oil reserves get lower.) Admittedly, the Ghawar is not our only source of oil. (And unless you happen to be Saudi, its not even your oil at all, now is it?) Still, the Ghawar is The Big One, and when it goes, things will change--forever. The only questions are: When will it happen, and how will we know?
The when is easy, if vague: it could happen at any time from two years ago to twenty years from now. But how will we know? That's a far more difficult question to answer.
I can picture a Mercedes Unimog lumbering alongside pipelines in the desert, stopping at each well head. At each stop, a man climbs down from the machine and walks over to the well. He looks and records a number from the gauge, then returns to the truck. This scene plays out over and over. It would take days to record all the numbers from the wells in the Ghawar. Still, it must be done. Those hand-written numbers are given to a field technician who dutifully records them, one well at a time, in a computer database. All that data gets sent to the Saudi government, where the numbers are studied, analyzed, and agonized over. If the figures are the same as or higher than the last figures, life is good. If not, then what?
What if the Ghawar IS dying? It would be easy enough to play with the numbers for a year or two--until the decline rate starts to speed up and the loss can't be hidden. After that? Plan B might call for a declared "voluntary reduction" in oil production to "stabilize the market at the optimum level." Yeah, right. How in the world would you ever know exactly how much oil is being pumped or shipped from a country half way around the world to other countries you've never seen? The answer is obvious: You wouldn't. You never will. C'est la vie.
Somewhere in Los Angeles, on quite literally the other side of the world, an SUV pulls into a gas station and the driver gets out. The pump is turned on and a gas tank is filled. Sure, it cost more here at this big, fancy franchise than it did over at that little independent station, but the indy was closed today. Matter of fact, hasn't it been closed for about a week now? What's up with that? Ah, well. At least it's not that much more. What's an extra buck or two to fill the tank? No big deal. Unless Ghawar is dying, in which case it is a very big deal indeed--and will get considerably bigger before it's all over. Maybe this was a sign of a weakening pulse?
You're Invited to the FuneralMeasured up against the big scheme of things, the death of Ghawar and our oil-powered industrial civilization will fall somewhere between the Black Plague of 14th Century Europe and the meteor that wiped out the dinosaurs. Unlike the plague, this will effect humans world-wide, but unlike the meteor, it will effect only humans. Chickens may some day cross the road with impunity. Animals both large and small will prosper (Hey, you try whaling in a row boat!) And the earth will undoubtedly cool off a bit. Too bad we all won't be here to enjoy it.
With the death of Ghawar will undoubtedly come the deaths of humans. Many humans, it would seem, the result of probably unavoidable wars for the last remaining oil to the much-predicted pandemics and mass starvation. Estimates on the sustainable limit to humans on this planet have ranged from an utterly dismal 1/70th of the current population (about 100 million) to an almost cheerful (by comparison) two billion. Keep in mind there's six billion of us here right now, so some of you will have to leave. You'll stay for the funeral, though, won't you? I mean, after all, Ghawar is dying.
I don't expect to be told. Politics and the global economy being what they are these days, I really can't picture anyone standing up in front of a row of television cameras and announcing to the world that the largest field of crude oil known to man is, in fact, drying up. What's Arabic for, "Ghawar is dying"? It doesn't matter. It's a phrase we'll never need to know--or hear. If it is the biggest, it will also be the last. By the time Ghawar begins to die--and by the time we hear about it--hundreds of other oil fields all over the world will also be dead and gone. Ghawar will still be pumping crude oil at an impressive rate as the industrial world of man comes to a creaking, painful halt. That's the irony of it, you see: by the time the Ghawar starts to run dry, we will have either found another way to get things done or simply stopped doing them. There's a very good chance that the last of the oil in the Ghawar will remain in the ground, untouched and unneeded, forever.
So is the Ghawar dying? Does it matter? There may come a time when all the SUVs in Los Angeles will roll to a tank-dry halt. After the riots and the wars, after the yelling and screaming and dying, what's left of humanity (if we have any humanity left) will stand up, dust itself off and get on with Life. The Ghawar, virtually unknown today, will be all but forgotten by then. The troubles of Saudi Arabia and the Middle East will cease to be a common feature of the nightly news, as they would no longer have anything to offer the West--nothing left to fight over. Just footnotes in a history book.
Cries and WhispersMaybe what's called for here, as Blutto Blutowski so eloquently put it, is a stupid and futile gesture that could serve as a mind-bite for the masses--some bit of mysterious innuedno that could spread like backfence gossip or a clever teaser ad. Tell people the world is running out of oil and they glaze like a donut. We know the direct approach doesn't work. We have to be subtle. Devious. Underhanded. But without any actual outright lying. (The truth is, after all, so much more annoying!) So how about bumper stickers? Everybody reads them when they're stuck in traffic or stopped at a light. You do. I do. And if you read it on a bumper sticker, it must be true, right? All we need now is a whole pile of "Ghawar is Dying" bumper stickers. It need not say any more than that. The truth is always mysterious and seldom obvious. Let 'em figure it out for themselves. Of course, the ultimate irony would be to see that bumper sticker on a big SUV--the very thing that's draining the Ghawar to death. That's right up there with "Honk if you hate noise pollution"! HA!
Ghawar is dying. If you whisper it quietly, maybe people will listen. If not, the approaching silence will get their attention soon enough.

13 February 2007

Dell's saga: When facts don't matter - MSN Money

Dell's saga: When facts don't matter - MSN Money: "Obviously, this level of lunacy can't continue indefinitely, but while it goes on, it can reach any magnitude. There's no determining in advance whether it lasts for five minutes or 90 days. One can only try to tell when it has exhausted itself. All I can say is, the spectacle that I see on a daily basis is really something for the history books."

12 February 2007

Uranium: How high could the price go…$576?

Uranium: How high could the price go…$576?: "As uranium prices continue to rocket upwards vast profits are being made in uranium stocks. However it is impossible to ignore the question: How high could the uranium price go?
This article is meant to be provocative and stimulating with the aim being to encourage more discussion resulting in the picture for uranium becoming clearer for investment purposes.
Oil is generally considered the staple fuel of the world, along with the other fossil fuels. It recently made an all time high, but when you take inflation into account oil was at its most expensive in 1980 when it reached levels of around $37.75 a barrel which is $92.26 in today’s US dollars. As oil prices rise, the cost of energy from oil-powered plants rises considerably. "

8 February 2007

TraderFeed: Inside The Trader's Brain: Decision-Making and Emotional Arousal

TraderFeed: Inside The Trader's Brain: Decision-Making and Emotional Arousal: "Sometimes, looking back on our trading decisions, we wonder if we were in our right minds. How accurate that concern turns out to be! Some of the best trading psychology interventions are the ones that keep us in our right minds as we make decisions under conditions of risk and uncertainty."

7 February 2007

Europe 2020

Europe 2020: "Both metals are in a bull-marke,t which started in 2001 for silver and 1999 or 2001 for gold after a bear market since 1980. And what was before? (Graph11) shows you the price of gold since 1800 in US$ with an Elliott wave labeling. According to that labeling, this bull market is a fifth wave and the next one too. Fifth waves in tangibles are driven by fear, the strongest human emotion and therefore the biggest price moves take part in these parts of the bull market. Around 150,000 tonnes of gold have ever been mind by mankind and maybe 90% or 2,500 bio US$ are still around, but not liquid as lots of it disappeared in jewellery. Central banks say they hold 32,000 tonnes, but reliable research by many writers on this page come only to around half of it. Relative to a total world debt of at least 120,000 bio $US, gold is scarce and confirms the fifth wave.
Goldmines are scarce too as the capitalisation is only about 150 bio US$, relative to world stock markets of around 25,000 bio $US. Mines or metal? (Chart 12) shows the gold mining index HUI divided by silver. Mines have been stronger than silver, but are due for a corrective move against silver. Is gold cheap? Graph 13 shows the Dow industrial against gold since 1792. In 1869, at the top of the gold bull market and the end of the US Civil War, 0.17 ounces bought on Dow Jones. If the Dow Jones would drop to 5000, it would need 29,000 ounces to achieve the same ratio. Can the crisis become that heavy? Graph 14 shows Zurich real estate in gold in 1900 one ounce bought 2.9 square meters of real estate, now around 0.15. Zurichs, sell your house, buy gold and you will get at least 30 of them!! Graph 15 shows gold in real terms measured against the Swiss CPI (it's probably less cheated than the US CPI)."

Off to a Good Start in 2007

Safe Haven Off to a Good Start in 2007: "Silver also looks great. It's strong, solid and even though it weakened more than gold recently, it's still stronger than gold on a major trend basis (see Chart 3C). Silver shares have been the best of all, better than gold and silver, and much better than gold shares.
Silver is also poised to rise further. Chart 3A shows its solid rise above its rising 65-week moving average now at $11.30. With the leading indicator poised to move higher, silver now has the potential of reaching its May high near $14.88, and possibly surpassing it before the indicator reaches overbought (see Chart 3B).
Both gold and silver will be in a new ballgame above the May highs. Looking at silver's big picture on Chart 4, you can see that once silver breaks above the May high it will also be clearly breaking above its 1983 high, and it will be starting to enter the top side of its mega upchannel. Silver's next upside target would then be $22 before it eventually goes on to test the 1980 highs near $50.
For now, it's best to keep a larger portion of your metals portfolio in the physical metals or their ETFs, and keep more silver shares than gold shares"

Brittleness and Risk,

charles hugh smith-Weblog and wEssays: "So what happens when authorities stamp out all small forest fires? They create the perfect conditions for a gigantic conflagration. The flaw is the old forest management policy of suppressing all forest fires was revealed when a huge uncontrollable fire swept through Yellowstone National Park some years ago. In other words: a system which allows occasional fires is resilient, while one which suppresses all small fires guarantees a giant conflagration.

In financial terms, this 'normal cycle' of growth, small fires and regrowth is 'the business cycle' in which credit and business expand, eventually reaching an unsustainable level (high inventories, too much debt and capacity, etc.) Businesses go bankrupt, defaulting on credit, people save rather than borrow, and capital is accumulated for the next cycle of investment and borrowing. "

6 February 2007

Game Over: Thirty-Six Sure-Fire Signs That Your Empire Is Crumbling

Game Over: Thirty-Six Sure-Fire Signs That Your Empire Is Crumbling: "So. You’ve built yourself an empire, eh?
Well, bully for you!
What’s next, you ask? Well, now you’ve got to do what everybody does when they have an empire, of course. You’ve got to worry about it falling apart, mate!
But how to tell for sure? Let me see if I can be helpful. Here are some rules of thumb to keep in mind, thirty-six sure-fire indicators that your empire is falling apart:
You know your empire’s crumbling when the folks who are gearing up their empire to replace yours start blowing up satellites in space. And then they don’t bother to return your phone calls when you ring up to ask why.
You know your empire’s crumbling when those same folks are cutting deals left, right and center across Asia, Latin America and Africa, while you, your lousy terms, and your arrogant attitude are no longer welcome.
You know your empire’s crumbling when you’re spending your grandchildren’s money like a drunken sailor, and letting your soon-to-be rivals finance your little splurge (i.e., letting them own your country). "