Archive for June, 2014

China companies fake gold deals for $15bn loans, says auditor – Financial Times

China companies fake gold deals for $15bn loans, says auditor
Financial Times
In April, the London-based World Gold Council, the marketing arm of the industry, said that imported bullion was being used “to raise low-cost funds for business investment and speculation”, and was part of the wider growth in shadow banking in China.
China's Gold Imports From Hong Kong Drop as Yuan Rate SwingsBloomberg
Kilobar contract expected to spark new gold demand – World Gold CouncilCreamer Media’s Mining Weekly
Singapore Kilobar Gold – first in the world to trade on exchange platformMetal.com News
Reuters
all 137 news articles »
Saturday, June 28th, 2014 Invest, News, Wealth Comments Off on China companies fake gold deals for $15bn loans, says auditor – Financial Times

U.S. Must Secure Heavy Rare Earths From This Alaskan Mine

Wars are being fought all over the world over control on natural resources.  Attention is focussed on Eastern Europe and the Middle East particularly Iraq.  I am greatly concerned that not enough is being done by the U.S. to secure critical materials of heavy rare earths needed for cruise missiles and our latest military technologies.

We still rely completely on China despite their export cuts and warnings to the West to mine and refine your own rare earths.  Heavy rare earths are increasingly needed in permanent magnets crucial for some of our defense technologies.

China has been warning the world for years that they will cut exports.  The U.S. can’t be reliant on another country for these basic elements.  One day we could wake up left out in the cold and naked if we don’t start getting our act together.

Don’t believe the naysayers who say rare earths are hype or that they are plentiful and abundant.  Many of the heavy rare earth development projects are just too costly to bring into production in a timely manner.  Investors are also beginning to realize the Molycorp and Lynas will not solve the heavy rare earth shortage as they are light rare earth projects.

The Alaskans understand the importance of strategic metals.  I have maintained my bullish attitude on Ucore (UURAF) for its advantage of having the highest grade heavy rare earth project in the U.S. and incredible geopolitical support.  Ucore just released news that Alaskan Governor Sean Parnell approved the financing of Ucore’s Bokan Project near Ketchikan.  

Senate Bill 99 which was passed unanimously in the legislature was signed by the Governor in a highly publicized meeting with many government officials and business leaders.  Ucore may be the US chance to secure the heavy rare earths instead of being left at the mercy of the Chinese.

Southeast Alaska could see a big boost to its economy should Ucore’s Bokan come into production.  The signing of this bill is a huge accomplishment by Ucore and a sign that some politicians in the US understand the importance of this project.  The bill would allow Ucore to finance the infrastructure and construction costs up to $145 million by the State.

Ucore has broken above its 200 day at $.27 and 50 day at $.29 as savvy investors may be realizing the significance of de-risking the asset financially and technically.

Ucore recently announced that they awarded a $2.5 million drilling contract that will start in mid July.  This is needed for the upcoming feasibility study and it is exciting to see Ucore rapidly advancing this rare asset derisking the asset both financially and technically.  This may be the first predominant heavy rare earth mine in the United States.

See my recent interview with Ucore CEO Jim Mckenzie below…

Disclosure: I am a shareholder and Ucore is a website sponsor.  Be aware of any conflict of interests. Please do your own due diligence.  This is not a solicitation to buy or sell stock.  For entertainment purposes only.

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Saturday, June 28th, 2014 Invest, News, Trade Comments Off on U.S. Must Secure Heavy Rare Earths From This Alaskan Mine

Three junior miners that could soar even if the price of gold goes nowhere

From The Gold Report: 

According to Lawrence Roulston, the continuing woes of the junior gold sector present a tremendous opportunity to those with the knowledge, savvy and will necessary to take advantage. In this interview with The Gold Report, the publisher of the Resource Opportunities newsletter showcases three companies with management teams that never relent in adding value to their projects.

The Gold Report: Given how troubled the junior gold space has been since 2011, why should investors continue to place their money there rather than the Dow Jones Industrials, which go from strength to strength?

Lawrence Roulston: The simple answer is that there are extraordinary bargains to be had in the junior resource space right now. We’re seeing a bifurcation in the sector as the quality companies are beginning to move up, while the majority of companies are still on a downtrend. Anyone who can differentiate between the good companies and the others has the potential to make a lot of money.

TGR: You’ve argued that it’s a fool’s errand trying to predict the near-term outlook for metals prices, especially gold, as there are too many variables involved, and the variables change too quickly. Should investors therefore base their decisions on an assumed future gold price of roughly $1,250/ounce ($1,250/oz)?

LR: When I look at a company in the gold space I’m using that number as a baseline. When I examine companies, I consider them first and foremost as investments in projects and management. Metal prices are a secondary consideration. If it doesn’t make sense at $1,250/oz, then it’s not a good investment. If the gold price rises, that’s a bonus.

TGR: Gold prices and gold equities have spiked in recent weeks due to rising tensions in Ukraine and the chaos in Iraq. How should investors regard these events?

LR: I think they are primarily short-term reactions. These events cause prices to rise one day and fall the next. And they are really hard to predict.

TGR: A gold price of under $1,300/oz, as compared to over $1,900/oz in 2011, makes the all-in production cost crucial. In today’s market, how high can production costs go and still remain acceptable?

LR: That’s a tough and a complex question. The all-in sustaining cost incorporates a large amount of capital expenditure that is spent to get the mine into production. In the long term, of course, it’s very important. If the capital is already committed and the company is generating profits on the basis of its cash cost, it makes sense for the company to continue operating in the short term.

It all comes down to margins. Most of my attention is devoted to companies that are in the development stage, not the production stage. Mine developers must be able to demonstrate substantial margins based on the current gold price.

TGR: Is an all-in cost of $1,000/oz still doable, or must costs be lower than that?

LR: I look at specific companies, and I tend to evaluate them based less on all-in sustaining costs and more from the perspective of discounted net cash flow.

TGR: You have declared, “We do not need higher metal prices to make money in the mining business. We just need to own companies with high-quality metal deposits.” How do you define high quality?

LR: Important determinants are grade, metallurgy and size. Grade is really a function of the specific circumstances of any given deposit. A big open-pit deposit at 1 gram per ton (1 g/t) may make a lot of sense. In an underground situation you probably need a much higher grade, perhaps as high as 8–10 g/t. But grade is only one factor. Metallurgy is important: How is the metal recovered? There is a big range of costs across the different recovery techniques. In some cases, it simply isn’t economic to recover the metal. Size is important too, as well as the ability to meet a production level that will result in interest from larger companies.

It’s really hard for a small company to develop a single mine and make money off it. The real money is made when those deposits are rolled up into larger, multi-mine producing companies. I ask the question, “Will a particular deposit be of interest to a midtier or a larger production company in terms of size, production profile, location and other relevant criteria.”

TGR: Since 2011, many gold companies have come to grief because they accumulated ounces for their own sake. When larger companies are looking to buy smaller companies and their assets, what are they looking for?

LR: Barrick Gold Corp. (ABX:TSX; ABX:NYSE) wrote off $5.1 billion ($5.1B) from the value of Pascua-Lama, and Kinross Gold Corp. (K:TSX; KGC:NYSE) wrote off $3.2B from the value of Red Back. These are both big, low-grade deposits. So these kinds of deposits have gone out of style.

And yet a bidding war broke out for Osisko Mining Corp. (OSK:TSX), which was eventually bought for $3.5B by Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) and Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE). Osisko’s primary asset was the Canadian Malartic mine in Quebec, which produces gold at only 1 g/t. So the blanket condemnation of low-grade deposits doesn’t really make sense. Potential buyers are most interested in the specific characteristics of any particular deposit. High-grade deposits are back in style, but the challenge is finding deposits that are both large and high grade.

TGR: You’ve noted that 12 of the companies your newsletter follows have raised a total of $184 million ($184M) so far this year. Besides high-quality deposits, what else do these companies have in common?

LR: Quality management is the crucial attribute of all companies able to raise money in this market. People committed to success. People with skills and experience but also the drive and determination sufficient to overcome obstacles and move projects forward. We hear a lot of people complaining about how difficult it is to raise money today. That attitude is just not going to cut it. There is money available. Management just has to justify to the potential investors that they will achieve a decent return commensurate with the level of risk.

We need managements than can recognize the benefits of a market like this. Many of the companies I follow look at current conditions and see opportunities rather than challenges. Opportunities such as buying high-quality deposits from distressed companies.

TGR: When we speak of quality management, does this require individuals who have proven they can bring a mine into production or sell it to a larger company for a healthy profit?

LR: The fact that a management team has achieved success in the past is a pretty good indicator of its ability to repeat this success. Many analysts consider track record the determining factor in management. I agree.

But it’s also important to look for rising stars. One of the great joys I’ve had in my career has been identifying the young people who will become the success stories of the future. That involves a lot of hard work: meeting them face to face and really understanding where they’re coming from and what their plans are. This is a good way to make good profits in mining investment because the companies with established management trade at a premium. Investors who find companies with rising stars benefit from a much lower share-price starting point.

TGR: As you mentioned, many people complain how difficult it is to raise money today. Of course it is difficult, and given this fact, how important is it for companies to have financing experts in management or on their boards?

LR: It is critically important. A really successful management team needs a range of skills, and that range of skills is typically much broader than one or even several people can have independently. You need a team that boasts engineering and geological skills, financial skills, as well as someone who can coordinate these skills and keep the project on track.

In today’s market, it’s very difficult for small mining companies to acquire all these necessary skills. One solution is collective management: a pool of people managing several different companies. This enables them to collectively have all the required skills and to spread the costs over a number of companies.

TGR: Which gold junior operating in Canada is your favorite right now?

LR: Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX). The company has had tremendous exploration success in Québec. It made a substantial gold discovery at Martiniere and continues to expand its limits, adding size and scale.

TGR: Where in Quebec are Balmoral’s properties located?

LR: Balmoral has huge holdings that extend for about 80 kilometers into the Sunday/Detour Lake deformation zone of the Abitibi Greenstone Belt. Its properties are south of James Bay, just on the other side of the Ontario border. On the Ontario side, Detour Gold Corp. (DGC:TSX) is producing over 100,000 ounces (100 Koz) of gold quarterly from a resource in the order of 30 million ounces (30 Moz).

Balmoral has decided, quite wisely, to focus on Martiniere, much of which remains unexplored.

TGR: In addition to gold at Martiniere, Balmoral also has the Grasset nickel-platinum group metal (PGM) project. How does the latter make Balmoral more prospective?

LR: Grasset is really a standalone project. I’m just guessing here, but it’s the sort of thing it might be able to spin off or sell. Balmoral is likely to remain a gold company because that will result in a higher valuation than base metals.

TGR: Balmoral announced June 4 a $4M bought-deal, flow-through private placement. How does that set it up for financing?

LR: Balmoral has enough money to get through 2015 and possibly beyond.

TGR: When can we expect an initial resource estimate for Martiniere?

LR: Probably by the end of the summer drilling season, but keep in mind Balmoral has only begun to define that deposit.

TGR: How do you rate Balmoral’s management?

LR: Very high. CEO Darin Wagner has had considerable success, including the sale of West Timmins Mining to Lake Shore Gold Corp. (LSG:TSX) for $424M in 2009. Other members of the geological and management team have had a considerable degree of exploration success.

TGR: What’s your favorite gold play in South America?

LR: Columbus Gold Corp. (CGT:TSX.V). Its Paul Isnard project in French Guiana has 58.1 million tons at 2.22 g/t gold: 4.15 Moz. Nordgold N.V. (NORD:LSE) is to acquire a majority position in Paul Isnard in exchange for funding it through to feasibility.

TGR: The company announced May 5 that the Paul Isnard resource is to be re-evaluated by a different engineering company. Should investors be worried?

LR: I think it’s just a blip. I’ve spent time talking to the company, and the re-evaluation should have no material impact on the overall size and quality of Paul Isnard. I expect that the revised resource number should come back very close to what was announced previously.

Nordgold made a $4.2M option payment May 23. If Columbus had any concern over the validity of the resource, I’m sure it would have asked for a deferral on that payment until the matter had been resolved, but it didn’t. It’s very clear that Nordgold is comfortable with the resource.

TGR: Whenever The Gold Report asks experts about the best junior gold projects in the world, their lists invariably include Columbus. And yet the company’s shares trade at only $0.45, and its market cap is only around $54M. How do you explain this?

LR: One of the challenges that Columbus faces with investors is that they don’t really know much about French Guiana. They don’t appreciate that it is a department of France ruled by French law and thus a very secure place for investment and very favorable for mine development.

Another factor is uncertainty or misunderstanding the joint venture with Nordgold. When a junior the size of Columbus has a deposit of such size, investors expect a takeover by a larger company. But Columbus’ joint venture with Nordgold probably lessens the likelihood of Columbus being taken out. As it stands, Columbus is in the strong position of becoming a significant gold producer without much risk on the financial side.

TGR: Which junior gold company do you like in the United States?

LR: Klondex Mines Ltd. (KDX:TSX; KLNDF:OTCBB) in Nevada. The company just bought the high-grade producing Midas mine from Newmont Mining Corp. (NEM:NYSE). Many of the majors are going through asset rationalizations, and this presents company-making opportunities to juniors like Klondex.

TGR: How is the acquisition of Midas company-making?

LR: It’s an excellent complement to Klondex’s Fire Creek gold project 100 miles to the south, which is effectively in production. Fire Creek still needs a full-scale development permit, but Klondex is operating under a bulk-sampling permit with the ore being trucked to Midas. The Fire Creek ore is exceptionally high-grade: 284 Koz at 41.5 g/t Measured and Indicated and 424 Koz at 23.3 g/t Inferred. This means that the trucking cost is essentially inconsequential.

The Midas acquisition is a perfect fit. The Midas operating team is quite accomplished at high-grade underground mining situations, such as Fire Creek.

TGR: According to Klondex’s April preliminary economic assessment (PEA), the all-in cost of Fire Creek gold is $636/oz. Impressive?

LR: It’s a very attractive number based on the fact that no mill will be needed on site.

TGR: At the start of this interview, you mentioned the “extraordinary bargains” available today in the junior gold space. Which qualities distinguish a bargain?

LR: Many companies are bargains today, but a year from now they’re still going to be bargains. When investors are trying to determine whether a low share price is really an opportunity, they should look for a trigger that will create a higher share price in the foreseeable future.

It comes back to management advancing projects and adding value, for instance, Klondex buying Midas, which gave it a short-term path to production for Fire Creek. Or Balmoral, which applied some really smart geological thinking to make a significant discovery and push up share price. Just sitting back waiting for the market to recover is not a viable business plan.

TGR: Is it possible that we might fairly soon get to the point where we stop talking about companies that clearly aren’t going anywhere and focus entirely on companies with genuine prospects and that this new focus could engender a general recovery in the junior gold space?

LR: I would very much like to see investor focus shifting to companies with real merit. There are 2,000 companies in the North American junior resource space. Having so many diffuses investor attention and diffuses the talent pool to the point where most don’t have realistic prospects of success. A number of struggling juniors have already gone into the marijuana business or other areas outside of mining. More power to them.

We need fewer companies with a greater concentration of talent providing a better focus for investors. It is now more important than ever for mining investors to be selective in their investments because only a few mining companies are going to prosper while most will continue to lose value until we see a general turnaround, which might take another year or two.

TGR: Lawrence, thank you for your time and your insights.

Lawrence Roulston is an expert in the identification and evaluation of exploration and development companies in the mining industry. He is a geologist, with engineering and business training, and more than 20 years of experience in the resource industry. He has generated an impressive track record for Resource Opportunities, a subscriber-supported investment newsletter.

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on Three junior miners that could soar even if the price of gold goes nowhere

This is one of the biggest problems in the world today. Believe it or not, rapper Ice-T has the solution.

From James Altucher in The Altucher Confidential:

This guy I didn’t know texted me out of nowhere and said, “You name drop too much when you write. People who take writing seriously don’t like that.”

I should’ve just ignored it, but I thought it was funny the way he said, “people”.

I said, “Are you their elected representative to tell me this?”

He ignored me. He said, “Like the way you said ‘I met Jay Leno’ in one of your stories.”

I said, “Well, the article was about Jay Leno. And I didn’t say I met him. It was about him.”

“Still,” he said. ”Don’t be defensive.”

I looked the guy up. He wrote for one of the sites I regularly write for. We have 16 mutual Facebook friends. Which means we’re friends, I guess.

A few weeks later he texted me again.

“I need $1,000,” he wrote.

“Does this ever work. Asking for it like this?” he said.

Then a few hours later he wrote. “Forget I said that. Ignore it.”

Which brings me to Ice-T. Because I’m going to blatantly name-drop.

I just did his podcast! Yay! Claudia (my entourage) and I went over to his place, knocked on his door, walked in, and there he was!

In 1984, I watched the first battle scene in the movie Breakin’ probably 500 times. I wanted to learn all the moves. And there was a rapper on the stage doing the first rap I had ever heard. My brain exploded when I heard it. What was that!? I loved it.

And I practiced all the moves in front of a mirror so I could do them. I watched the scene over and over. Listening to that rapper each time.

Ice-T was the rapper! 30 years ago.

Within seconds of walking into his place, we were all getting along. Talking about a million different things. I was almost nervous we were using too much good “talking energy” without having the recording on.

On the podcast, we got right into it. And we agreed on what I thought was important for me to always bounce back whenever I’ve been totally lost and down…

Being physically healthy, surrounding yourself with people you love and respect, honesty, creativity, doing what you love, achievement. What I usually call my “daily practice.”

I told him I was going to steal some of his lines. Like about life in general: “You can’t guide it, you gotta ride it.”

I definitely plan on using that in a talk and not attributing it to him at all.

In his podcast, which came out Tuesday, there are some other lines I said I was going to steal. Claudia wrote them all down.

Oh! I told him I wrote a book with my wife, “The Power of No”

He said, “In that case, I have a story to tell you. When I first started getting successful as a rapper I was getting non-stop pains in my stomach. I went to a gastroenterologist and they did all the tests and he said I was fine. He said, go to the doctor down the hall, he’s a psychiatrist.”

“So I went down there and the psychiatrist asked me to talk. So for 30 minutes I talked non-stop. He said, ‘ok, I have a prescription for you’. He wrote something down on a piece of paper and slid it over to me.”

“It had one word on it.

“‘NO’

“The doctor said, ‘You just spent 30 minutes telling me about everyone else’s problems. Whenever you say yes to someone you inherit all of their problems.’”

I said to Ice, “Ok, I’m totally stealing that last line.” WHENEVER YOU SAY YES TO SOMEONE YOU INHERIT ALL OF THEIR PROBLEMS.

He laughed and said, “That’s ok. We’re stealing each other’s game throughout this podcast here.”

He said, “So I had to start learning how to say ‘NO.’ My health depended on it.”

And it’s really true. The “NO” part of our brain is directly connected to every other part of our health and life. Without it, we suffer. We can’t inherit the problems of the world without taking care of ourselves first.

NO. Claudia and I wrote an entire book about this, coming out July 15.

He told me another fun story.

“When I was a kid I saw this guy who was all flashy with his Bentleys and jewelry and he was a player, so I wanted to be like him. He had no legs, but he had a lot of money and cars and everything seemed to be going for him.

“I went up to him and said, ‘I want to be like you. How can I get what you have?”

“The guy, a pimp, said, ‘Would you let me cut off your hand for two million dollars?”

“‘No’, I told him.”

And I’ll save the rest of that story for podcast listeners. But it was a very true story in the deepest sense of the word ‘true’.

I was glad I had a chance to share my philosophy of what helps me through the day. The idea of physical, emotional, mental, and spiritual health. He very much agreed.

And I’m glad he’s going to come on my podcast because I want to drill down on all the pieces of his career that fascinate me.

Thirty years ago, almost to the day, I learned to breakdance just by watching him do the very first rap I had ever heard.

We spent 2 hours talking about money, achievement, music, happiness, and life in general. And how worlds as superficially distant as ours are actually very close when values align.

And in this post I’m totally name-dropping him.

Because I’m happy right now and the day I let others try to define me is the day I lose track of my own definition of myself.

People will always try to define you with their own limitations and restrictions. Remove those and you are a bird free from a cage.

And NO, guy, you can’t have $1,000.

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on This is one of the biggest problems in the world today. Believe it or not, rapper Ice-T has the solution.

If you’re bullish on gold, this chart could make your day, week, and year

From Chris Kimble of Kimble Charting Solutions:

 

Clint Eastwood made the phrase “make my day” popular. If this pattern read is correct, it could make the day, week and year for investors bullish gold!

Gold’s decline over the past three years had it testing dual support tied into key highs and lows dating all the way back to the 1980′s!

As gold is testing this dual support zone, it also looks to be forming a base pattern, which could be a bullish inverse head & shoulders pattern, with the right shoulder coming into play at support.

Should gold rally off this support and break above its neckline… it could make the “year” for gold bulls!

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on If you’re bullish on gold, this chart could make your day, week, and year

Obama SHOCKER: Secret memo confirms our worst fears about drones

From Joseph Miller via Infowars.com:

Joseph Miller is the pen name for a ranking Department of Defense official with a background in U.S. special operations and combat experience in Iraq and Afghanistan. He has worked in strategic planning.

On Monday, the White House memo used to justify drone attacks on U.S. citizens was released, and it appears to confirm the worst suspicions of its libertarian critics. The Obama administration had sought to keep the memo secret, and now we know why: Because there are no checks and balances; there are no classified courts. Indeed, the memo reveals that the president of the United States ordered the targeting killing of U.S. citizens overseas – in violation of their constitutional right to due process – sans any type of oversight outside of the executive.

The 41-page Department of Justice memorandum outlining the administration’s attempt to justify the killing of U.S. citizens accused of plotting acts of terrorism abroad was released on Monday under order of the U.S. Court of Appeals for the Second Circuit in New York. The court did so in response to a Freedom Of Information Act request submitted by both the American Civil Liberties Union and The New York Times.

The memo, entitled “Re: The Applicability of Federal Criminal Laws and the Constitution to Contemplated Lethal Operations against Shaykh Anwar al-Aulaqi,” was written by the Office of Legal Counsel at the U.S. Department of Justice and was addressed to Attorney General Eric Holder.

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on Obama SHOCKER: Secret memo confirms our worst fears about drones

This could be the dumbest “analysis” on gold you’ll read this year

From Mike Shedlock at Global Economic Trend Analysis:

Bad economic analysis abounds. Some of it is so bad you wonder if the authors understand how any markets work, not just the topic of discussion.

For example, please consider Gold Euphoria Won’t Last With Yellen’s Rally Fading, a truly remarkable exercise because it took three Bloomberg writers to produce.

Here are some snips, followed by my comments.

After the biggest gold slump in three decades left investors heartbroken, they’re following Taylor Swift’s advice and never, ever getting back together.

Janet Yellen, the one person able to make the lovers reconcile, did her best. Prices surged the most since September the day after the Fed chair signaled last week that low interest rates are here to stay. Traders and analysts surveyed by Bloomberg News aren’t expecting the euphoria to last.

For starters, there is no euphoria in gold. Arguably, one of the best measures of sentiment on gold is articles like the one above.

Here is a look at Yellen’s “Fading Rally.”

Yellen’s Rally Fading

Supposedly it makes sense to discuss “gold’s fading rally” but not countless other “fading rallies” some of which are actually fading…

Let’s march on.

Prices will average $1,250 an ounce next quarter, about 5 percent less than now, according to the median of 15 estimates. The analysts were surveyed before and after the Fed’s June 18 outlook, and the forecast was unchanged. Even after a 28 percent plunge in 2013, the bears are emboldened by this year’s records in equity markets, and gold assets in exchange-traded products have shrunk to the smallest since 2009.

Hmm… As another measure of alleged euphoria, please note “gold assets in exchange-traded products have shrunk to the smallest since 2009.

Also note that the median forecast is for another plunge, on top of the reported 28% plunge in 2013!

Is that euphoria or extreme pessimism?

By the way, since when are median expectations of analysts anything to believe?

“The surge in gold can’t sustain itself,” Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York, said June 20. “It was a temporary spike because of a confluence of events: Iraq and Yellen. People will be looking at other areas for excitement. Holdings are down, so people are leaving gold in search of something better.”

How Markets Work

Curiously, Selkin helps manage $3 billion, but does not seem to understand how markets work.

People are not “leaving gold.” It is in fact impossible to leave gold, or any other asset for that matter, short of dumping it in the ocean.

With any financial asset, someone always has to hold it. If I sell gold, someone else has to buy it. If I sell shares of Microsoft, someone else has to buy them. The same is true with cash. Every cent the Fed prints has to be held by someone.

Selkin does not understand the driving force for gold, the reasons to own it, and apparently how markets work in general.

American buying is slowing. Sales of American Eagle gold coins by the U.S. Mint totaled 252,500 ounces this year, 60 percent less than in the first six months of last year and the lowest for the period since 2008, data on its website show.

Hedge funds are holding a net-long position of 66,572 futures and options contracts, U.S. government data show. That’s down 52 percent since this year’s peak in March.

Mint sales are down 60% and hedge funds holding futures holdings are down 52%.

Euphoria or pessimism? You make the call.

What the Future Holds

I do not know the future price of gold, nor does anyone else. But I do know the fundamental drivers as well as the reasons to hold gold. And neither of those has changed.

I also know truly inane economic reporting when I see it, and the Bloomberg article quoted above is a perfect example.

For further discussion, please see Plague of Gold Bears Now Say “Gold Unsafe at Any Price”; What’s the Real Long-Term Driver for Gold?

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on This could be the dumbest “analysis” on gold you’ll read this year

This is the biggest scam in the world. It’s probably not what you think.

The powers that be DO NOT want you to know about this, as this system is what has kept them at the top of the financial food-chain for the last 100 years.

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Friday, June 27th, 2014 Invest, News, Wealth Comments Off on This is the biggest scam in the world. It’s probably not what you think.

BIG energy news: The U.S. gov’t just did something it hasn’t done in 40 years

From Andy Tully at OilPrice.com:

For the first time in almost 40 years, the U.S. Commerce Department has given two American companies permission to export ultralight oil, known as condensate.

The beneficiaries of the move so far are Texas-based Pioneer Natural Resources Co. and Enterprise Products Partners LP. The decision, reported June 24 by The Wall Street Journal, is expected to prompt requests from other companies to export their oil.

Congress banned the export of most U.S. crude oil, except under special circumstances and with specific licensing, in response to the economically crippling Arab oil embargo on shipments of oil to Western countries that supported Israel during the Yom Kippur War of 1973.

Since then, only refined petroleum products such as gasoline and diesel could be exported. Exports of all crude or refined oil to Canada continued without interruption if an exporter had a special permit.

Today, though, so much U.S. oil is being extracted from shale that the price of ultralight oil has dropped appreciably, leading U.S. oil producers to petition for a relaxation of the export ban, arguing that foreign customers would pay more for their product than refiners in the United States.

Pioneer Natural Resources explains that ultralight condensate is minimally processed to remove only its much lighter components such as butane and therefore was refined enough to qualify it for export.

The Commerce Department’s hasn’t announced the reported decision – it said June 24 there had been “no change in policy on crude oil exports” – but already there’s been reaction in Congress, both pro and con.

Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy Committee, said the decision represents “a reasonable first step that reflects the new reality of our energy landscape,” and she urged the administration to lift the ban altogether.

Sen. Edward Markey, D-Mass., criticized the decision, saying exporting oil puts the United States on a “slippery slope” at a time of great instability in Iraq and Libya and when tensions are high with Russia over its dispute with neighboring Ukraine over Russian gas.

“Congress put this oil export ban in place,” Markey said. “It should be Congress that decides when and how to change it, not through a private ruling by the Commerce Department without public debate.”

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on BIG energy news: The U.S. gov’t just did something it hasn’t done in 40 years

Porter Stansberry: Everything you “know” about this asset is wrong. Here’s the real story.

From Porter Stansberry in DailyWealth:

It was one of the greatest conversations of my life…

I had the rare opportunity to sit down and talk with legendary oil tycoon T. Boone Pickens for more than an hour on stage at the recent Stansberry Society conference last month in Dallas.

I’ve never spoken to someone with more wisdom. Pickens, now 86 years old, is still living a better, more active and challenging life than most of the people I know under the age of 40. He’s a national treasure.

I thought for weeks leading up to the conference about the most challenging and valuable questions I could ask him. I knew he wouldn’t discuss specific stock picks – few active managers would comment in public on any particular stock. Instead, I decided to ask Pickens about his opinion of the two most-hated energy assets in the world today: coal and uranium. Which, if either, would he invest in now?

The answer? Both.

Of the two, coal is the most attractive to us for a simple reason: Coal remains the world’s leading energy source, and its consumption continues to grow by about 2% annually.

Politicians can (and will) say whatever they like about global warming and reducing emissions. But if they want the lights to stay on, then the coal trains had better run. We view the current divergence between the obvious and critical role coal plays in the global economy and the nearly universally negative outlook people have for it as the single greatest contrarian opportunity today.

It would be hard to find a more hated asset on the planet. Since its inception in 2008, the Market Vectors Coal Fund (KOL) – a basket of 33 international coal stocks – is down more than 50%. It’s trading near the lows it set during the crisis of late 2008/early 2009. By comparison, the S&P 500 is up by nearly 40% over the same period.

Lots of people these days would like for us to abandon coal. They have a lot of reasons to dislike coal. Notably, it’s dirty. Burning coal for power generation creates more pollutants than other fuels, like uranium and natural gas. And with natural gas selling at historically low prices, it makes a lot of sense to opt for it over coal.

That’s one reason most people think of coal as an industrial relic of the 19th century, waiting for obsolescence.

They couldn’t be more wrong…

Last year, coal produced 39% of net U.S. power generation. The environmentalists’ beloved solar energy accounted for 0.23% of U.S. power generation.

Coal and natural gas are simply more economical than other options. According to the Bloomberg New Energy Finance data service, a megawatt/hour (MWh) of coal energy currently costs around $82. Natural gas costs $84 per MWh. Offshore wind and heliostat solar – two darlings of the “renewable energy” crowd – cost $189 and $254 per MWh, respectively. Until these costs change, the chart above may as well be set in stone.

And globally, coal fuels more than half of all energy consumption. The world burns nearly 150 quadrillion British thermal units (a measure of heat) of coal each year. That figure is growing steadily.

Remember, coal is also used in steelmaking. In industry parlance, coal for power plants is often called “steam” coal. “Metallurgical” (or simply “met”) coal is used for making steel. Globally, demand for both types of coal is expected to increase a combined 58% over the next 20 years.

Emerging markets, notably China and India, will be responsible for nearly all of that additional demand. India will double its consumption of coal over the next 30 years. China is already the world’s largest consumer of coal, burning roughly four times as much as the U.S. each year. China continues to build a new coal-fired power plant each week. Chinese consumption of coal will most likely double in the next 30 years.

Environmentalists and the Environmental Protection Agency (EPA) will probably be surprised how little influence their “boycotts” and regulations will have. When you look at how much China and India are driving demand (in the following chart), it’s clear… any environmental benefit from tough U.S. coal regulations will only be a drop in the global pollution bucket.

Technology will surely play a role in reducing pollution. But to believe that technology will allow coal to be replaced around the world as a fundamental power source is nonsense…

But while environmentalism is no threat to coal’s place in the global energy complex… cheap natural gas has been devastating…

Exactly two years ago, the June 2012 Investment Advisory focused on the rivalry between natural gas and coal. We pointed out that thanks to drilling innovations like hydraulic fracturing (fracking) and horizontal drilling, the U.S. was suddenly drowning in natural gas. Since many power plants can run on either natural gas or coal, cheap natural gas is bad news for steam-coal producers.

King coal’s dominant position as the fuel for electric generation has never been more threatened,” we wrote at the time. Coal companies would suffer if the shale-gas boom could keep natural gas prices at less than $4 per mmBtu. And that’s what has happened. In recent years, coal stocks have collapsed in the face of cheap gas.

But what investors today are missing is that natural resources are inherently cyclical. As the market abandons a natural resource for dead, prices drop to reflect lowered demand. Production follows. But low prices eventually attract more demand… causing prices and production to boom again.

So far, natural gas has spent all of 2014 at more than $4 per mmBtu. Rising natural gas prices are making coal look more attractive today.

Natural gas prices surged to $6 per mmBtu in February after the harsh winter. They’re now a little more than $4 per mmBtu. Coal prices – after adjusting for lower power-plant efficiency and higher transportation prices – are right around that same level.

The magic number for the next coal rally could be a natural gas price of more than $5 per mmBtu.

That’s the level that will drive a “significant” return to coal from natural gas, according to a recent Bank of America Merrill Lynch report. As natural gas prices climb and stay above $5 per mmBtu, we’ll see coal-fired power plants come back online.

And the tipping point may be even lower than $5…

“Natural gas prices approaching $4.50/mmBtu are making even the least-competitive Appalachia coal basins viable in some cases,” the Bloomberg financial news service recently reported. “In addition, the gap between coal prices expressed in mmBtu in the Powder River… and Illinois basins and gas has widened since [the fourth quarter], ensuring greater certainty in demand in those regions.”

Why do we think there’s a decent chance for an increase in gas prices?

Right now, no global market for natural gas prices exists. Natural gas costs more than $16 per mmBtu in parts of Asia and $11 in Europe. It’s no surprise that the world is clamoring to get its hands on the U.S.’s abundant and cheap natural gas reserves.

Looking at the facts of the global market for coal and its key role in electricity production globally, we agree with T. Boone Pickens and commodity investing expert Rick Rule, who told the audience at our Dallas conference last month that coal is a “when” investment – not an “if” investment.

In short: We know that the price of coal will eventually rise substantially.

In some regions, mining coal costs a lot more than the current price. So miners will either stop production or go out of business. As a result, sooner or later, stockpiles will dwindle, supplies will disappear, and prices will soar as shortages “suddenly” cause the market to panic.

We’re not at the panic point yet. But investors have obviously abandoned coal. That’s fantastic for us.

The chart below shows the Dow Jones U.S. Coal Index – a basket of domestic coal-producing stocks. The last time extreme pessimism ruled the day, investors brave enough to step in and buy could have ridden the rebound for a stunning 1,200% gain from 2000 to 2008. (Keep in mind, we’re not predicting four-digit gains. We simply want to show how dramatic the cyclical swings can be.)

Before the bull run started in 2000, coal stocks had lost more than half their value. Today, coal stocks have suffered similar devastation. Coal companies Cliffs Natural Resources (CLF), Peabody Energy (BTU), and Alpha Natural Resources (ANR) are down 83%, 76%, and 95%, respectively.

And back in 2000, as now, every elected official seemed to be on an anti-coal soapbox. The utilities scrambled to settle billion-dollar government lawsuits on Clean Air Act claims.

Today, the government has been increasing regulations faster than at any time in history. When it’s not pressuring the miners, it’s focused on the coal users. And yet… even as coal prices fell and mining companies failed… the U.S. produced 1.1 billion tons of coal in 2013.

While the industry faces some headwinds, we feel the coal markets could be forming a bottom. And as we learned in the years following the last coal crash… with nearly 40% of the country’s power grid tied to coal, share prices beaten down by regulatory backlash are not going to permanently cripple the coal markets.

It’s only a matter of time. Coal is a “when” investment, not an “if.”

Regards,

Porter Stansberry

Crux note: TONIGHT is your last chance…

At 8 p.m. Eastern time, Porter is going to pull the curtain back on his most powerful investing secret – the Alpha Strategy. In this live, completely FREE webinar, Porter will show you how to safely generate 100%+ gains from the unused cash in your brokerage account. All you need to do is sign up for free right here.

Friday, June 27th, 2014 Invest, News, Wealth Comments Off on Porter Stansberry: Everything you “know” about this asset is wrong. Here’s the real story.

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