Archive for November, 2014
London Gold 'Tightens Significantly' on Outflow to Asia, Miner Hedging, Russia …
With the cost asked of gold borrowers rising to 0.4% annualized on 1-month loans – the highest level since a sharp spike in March 2001 – "Gold lease rates have continued rising," notes French investment and bullion bank Natixis, attributing the rise to …
Swiss, French call to bring home gold reserves as Dutch move 122 tons out of US
The financial crisis in Europe is prompting some nations to repatriate their gold reserves to national vaults. The Netherlands has moved $5 billion worth of gold from New York, and some are calling for similar action from France, Switzerland, and Germany.
Gold Prices Forecast to Average $826 from 2016-2019 But Rally "Will Be …BullionVault
122 Tons of Gold Secretly Repatriated to the NetherlandsCenter for Research on Globalization
Gold prices may surge if Swiss vote on reserves passesUSA TODAY
Reuters –The Bullion Desk –Bloomberg
all 435 news articles »
November 28, 2014 (Investorideas.com Mining stocks newswire) An aging world is a deflationary one, according to “The Demographic Cliff” author Harry Dent.
TSX Mining News: Garibaldi (TSX.V: GGI) Drill Tests New High-grade Area North Of Silver Eagle Discovery Hole
Vancouver, British Columbia – November 28, 2014 (Investorideas.com Mining stocks newswire) Garibaldi Resources Corp. (TSX.V: GGI) (the “Company” or “Garibaldi”) is pleased to report that high-grade silver mineralization has been confirmed through assays from channel sampling 150 meters north of Silver Eagle discovery hole SE-14-01 at the Rodadero North Project in central Sonora State, Mexico.
Gold Bullion 'Loses' Deutsche Bank from Physical Market as 'Clear Manipulation …
GOLD BULLION dropped and then swiftly recovered a $15 drop in Asian trade Thursday in one what long-time broker said was clearly "manipulation", but continued to trade below $1200 lunchtime in London as news broke that a leading bullion bank is …
Center for Research on Globalization
Gold Prices Forecast to Average $826 from 2016-2019 But Rally "Will Be …
"We expect investment demand for gold to wane," says a new outlook from French bank and London bullion market maker Societe Generale today, "exacerbated when the US begins to raise interest rates next year due to better economic conditions.
122 Tons of Gold Secretly Repatriated to the NetherlandsCenter for Research on Globalization
PRECIOUS-Gold eases as dollar strengthens, oil prices slideReuters
Gold prices may surge if Swiss vote on reserves passesUSA TODAY
Bloomberg –The Bullion Desk
all 218 news articles »
Despite the junior resource sector being near a major bottom and going through a bear market of epic proportions, I still believe that this may be one of the best times to add to quality positions. Nothing perfects one’s craft in the financial markets like a bear market. In a bear market one has to refine their skills in stock picking. The emergence of a new bull market is usually the most propitious time for outsized gains.
I was blessed in selecting two of the best performers in 2014 which was an extremely volatile and treacherous market for junior miners. In a bull cycle it is easy to pick winners as all stocks rise even the subpar ones. In a bear market it is extremely challenging as 90% of the stocks fail even the good ones who pass all stock selection rules. Nevertheless, I continue my mandate from my premium subscribers to scour the resource market for the most exciting opportunities that could be a winner in any market.
Investing in stocks is easy if you follow the rules that have proven to be successful over time. The number one rule is buying low and selling high. Many investors are chasing the US dollar and Large Cap Equities to record heights liquidating all their junior miners. Be careful of selling low and buying assets at record high valuations.
Similarly in 2011, the herd mentality pushed silver and gold to record values selling all their stocks before a multi-year correction ensued. See my article back in 2011 which was published on Seeking Alpha which warned about the precious metals market overheating and my video analysis from August 2011 forecasting a bottom in the S&P500.
The opposite tactic should now be considered of liquidating large cap equities, real estate and the US dollar and build positions in junior resource stocks that are extremely high quality and compelling takeout targets. Gold and silver could gap higher by the end of 2014 and the top notch juniors could skyrocket.
Its not just me that sees the value in gold, but entire nations. The Swiss voters on November 30th will decide to back the Franc with a 20% gold reserve with a pledge never to sell its gold again. If the Swiss approve this they would have to purchase 1,500 tons of the yellow metal. This is a significant amount considering the Russians bought close to 19 tons in October. Demand in China and India is still strong as evidenced by record coin sales and numismatic premiums rising.
If the Swiss decide to back their currency it could be a shot heard around the world and could spark a global rush to buy physical gold and silver by other nations. Eventually, that change in psychology could affect our junior mining positions trading at pennies on the dollar to see explosive gains.
Many Central Banks around the world have a zero or negative interest policy. This expansion of fiat currency on the market has never occurred before yet investors are flocking to the US dollar in record proportions. However, smart investors are already positioning ahead of the masses. When the US dollar bubble pops and follows other currencies lower, then gold and silver may appear as the new safe haven. It is at this time where our junior miners which are trading at pennies could be trading for dollars.
When this financial event occurs it will be too late to buy. One has to prepare ahead of the storm. What makes one wise in the market? Being able to see the developing storms ahead and acting upon it before it hits. The rebound in precious metals could be one of a series of gaps higher. Right now look for a rally to begin when the recent downtrend in gold since July is broken to the upside at $1205.
Look at a few of these junior miners which could be on the verge of a major move higher.
1)Take a look at this junior PGM Developer. This past week Antofagasta offered $.45 per share for junior miner Duluth Metals Twin Metals Ni-PGM deposit in Minnesota. The Twin Metals Deposit is similar to this junior as they are large PGM deposits in North America. Dundee put out a research note after the transaction which showed if the company was bought out at the same valuation as Duluth it would be more than double its current price.
2)This junior near Las Vegas, Nevada has recently hit some great high grade gold results which were the best holes drilled so far on the property and possibly the best hole I have heard from Nevada in a long time. Some of the smartest gold funds such as Tocqueville and Van Eck recently participated in a Private Placement at $1.20 Canadian. Despite the best results to date on the property, one can buy the stock at a cheaper price then the smart boys. The junior has a great exploration team and I am excited to hear of further results.
3)For more speculative investors looking for the potential of outsized gains I found a junior that is trading at a $4 million market cap but is sitting on possibly one of the best gold-copper porphyry discoveries in the entire world. More than half of the shares are in strong hands with the largest holder of 22% being CEF Capital. CEF Capital is owned 50% by Mr. Li Ka-shing (Asia’s richest man) and 50% by Canadian Imperial Bank. The company is currently trading at a huge discount to the last financing which was done at $.55. Remember there are many risks with a micro cap and an early stage exploration company. However, the quality of share structure with only 45 million shares outstanding and having one of the best gold copper porphyry discoveries I have ever seen has gotten me excited as well as a few others such as Eric Coffin and Bob Moriarity. I believe the majors such as Newmont or Freeport should look to invest in this discovery as it has hit multiple intercepts of more than 200 meters at greater than 1% copper equivalent. Eric Coffin, a respected writer from Hard Rock Analyst wrote a report on this company that was posted here and should be read.
Disclosure: I own all three companies and they are all website sponsors. Be aware of conflicts of interest and please always do your own due diligence.
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This is one of the most gripping videos to come out of the Ferguson riots yet.
Monday night, blogger Victor Maggio was out filming the mass destruction by the protest mob.
The video is intense…
At the 1:10 mark, a Ferguson Papa John’s manager confronts a looter with HER bare hands. (This was a woman!)
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From Mike “Mish” Shedlock at Global Economic Trend Analysis:
Rents are up 6.5% in San Francisco, and 4.5% in numerous other cities. Is this a leading indicator for a stronger inflation as measured by the CPI?
Please consider the Variant Perception article Higher Rents in the U.S. are a Strong Support for CPI.
Despite the subdued nature of U.S. CPI, some large components are turning up. Owners’ equivalent rent and rent of primary residence, which together account almost of a third of the CPI basket, are turning up strongly. A low vacancy rate and a relatively resilient U.S. economy is helping to drive rents higher, with San Francisco seeing the greatest rent increases, at 6.4% over the last year, and with many other cities, such as Nashville, Seattle, Denver, and Houston, all seeing increases of over 4.5%
Furthermore, our leading indicator for U.S. Shelter CPI, which includes apartment vacancy rates and the growth in the working-age population among its inputs, shows that the trend should continue. Higher rents are a strong support for headline CPI in the U.S.
Owners’ Equivalent Rent
Owners Equivalent Rent vs. CPI Shifted 18 Months
The red line in the above chart is not the CPI, but rather a “leading indicator for U.S. Shelter CPI, which includes apartment vacancy rates”
I took the above chart, clipped out the red CPI line, made a layer out of it in Photoshop, and then shifted the line back 18 months with reduced opacity so you can see both lines. Here is my result.
Owners Equivalent Rent vs. CPI Shifted 18 Months and Not Shifted
Straight up (no shift) caught most of the action correctly, except for years 2005-2006, right at the peak of the housing bubble. Also recall the energy spike in 2007.
Perhaps a shift forward some smaller number of months other than 18 would fit better. Let’s dive into the CPI data to see what if anything a bump in OER might mean.
CPI Housing Component
Here’s the Housing Component of the CPI straight from the October 2014 BLS CPI Report.
The last column above is the year-over-year increase in various housing components. Numbers are national. On average, if the largest cities are up 4.5% or so (excluding San Francisco), the national average of 2.7% for OER and 3.3% for rent seems reasonable enough.
CPI-U Consumer Price Index for All Urban Consumers is up 1.7% year-over-year even though housing is up 2.7%. So other things had to go down. Price for energy did just that.
Nonetheless, CPI will tend to move with OER simply because OER is the single largest component.
If rents continue to rise, CPI will likely go along for the ride, but I fail to see any leading direction in the OER itself (first chart) unless one can accurately project “planned rent hikes”.
With that thought in mind, let’s return once again to the claim “Our leading indicator for U.S. Shelter CPI, which includes apartment vacancy rates and the growth in the working-age population among its inputs, shows that the trend should continue.”
If vacancy rates are a leading indicator of planned rents hikes (a reasonable presumption), then the statement made by Variant Perception is likely an accurate one.
Yet, the overall impact on the CPI will at best be subdued, especially if wages do not follow. If more money goes for rent and Obamacare, less money will go elsewhere.
Consumers feeling the squeeze? You bet!
From Bill Bonner, Chairman, Bonner & Partners:
Today, we write about something that was hidden in our new book, Hormegeddon. Something hidden from the author, that is.
When you write a book you are supposed to be the master of your subject. That is especially true when you’ve practically invented the subject. But then, along comes someone who says:
“Don’t you see? You missed the most important point.”
Secret? What Secret?
When our colleague Porter Stansberry first wrote about the “secret” of the book, and how it was the secret to success, we were puzzled. We didn’t know what he was talking about. Secret? What secret?
We had merely noticed that public policies – pursued too ambitiously – were subject to a particularly nasty phenomenon, which we called “hormegeddon.” (A portmanteau word we came up with that blends the word “hormesis” – which describes when a small dose of an otherwise harmful substance has a beneficial effect – and the word “Armageddon.”)
We were so focused on this we failed to notice an even bigger and more important phenomenon – one that describes an important secret to success in individual lives and careers… and one that works in business and investing.
It is also the secret to civilization. Without it, civilization falls apart.
This secret was in plain view. But the book’s author – yours truly – had not noticed it. It took a clever reader to drag it out of the shadows and expose it to the light of day.
But now that the secret has been put on display, let’s examine it more closely. Let us prod it with a stick, turn it over on its back… and see what kind of beast it is.
A Preposterous Theory
Our knowledge of human life in prehistoric times is sketchy. We have a limited archeological record. We also have legends and stories. And we have inferences we can make from studying primitive tribes in remote areas of the globe, before civilization got hold of them.
What they tell us is that philosopher Jean-Jacques Rousseau was a fool.
When Ralph Waldo Emerson visited Europe, he had to be practically dragged to the home of Rousseau, whom he considered unworthy of homage.
In our book, we mention that Rousseau’s “social contract” theory of government is preposterous. You can’t have a contract with an unwilling, uninformed, and unwitting counterparty.
Contracts are made between relative equals, not between rulers and the ruled. You can’t make a valid contract with someone while you hold a gun to his head. Nor can you reserve the right to change the terms whenever you want.
But an even bigger imbecility is Rousseau’s theme of the noble savage. There was nothing noble about uncivilized man. He may have had some fine qualities, but he was also ignorant, murderous and cruel.
This is not to say that civilized human beings are not also ignorant, murderous, and cruel. The difference is that civilized people aim to be better than that; often, they succeed.
If you read the accounts of early explorers, you get a glimpse into what life was like before civilization emerged. For example, in the 18th century, an Englishman spent time with tribes people in what is today Canada.
He noted they would go on raiding parties, attacking other tribes. The idea was to kill the men (and take their scalps as proof) and to capture the women. The captured women were raped repeatedly over several weeks, dragged to another tribe and sold.
Today, these sorts of things still happen, but they are the work of mental defectives, sociopaths, or hardened criminals. Back then it was normal.
In another story, recounted briefly in Hormegeddon, a tribe of “native Americans” hiked for weeks through the forests of Quebec, taking along with them the aforementioned English explorer.
Finally, the group arrived at the shores of Hudson Bay, where they found an encampment of Inuit. The hunting party went right to work. To the surprise and horror of their companion, they killed every man, woman and child in camp… and then returned to their own territory.
This was apparently a routine summer activity.
Trappers and explorers also tell about how men captured from other tribes might be treated. Sometimes they were summarily killed. Sometimes they were tortured, with the entire tribe – especially the women – taking part in the entertainment.
Today’s civilizations still have people who still like torturing other people, but these practices are outlawed. Those who partake in these dark pleasures do so rarely and surreptitiously.
Civilization changed behavior. More important, it changed what people thought their behavior should be. That was the real meaning of the Ten Commandments that Moses brought down from the mountain.
These were the new rules of a civilized people. They were well adapted to the new phase of human life.
Later, Jesus of Nazareth squeezed the rules to get at their essential oil: “Do unto others as you would have them do unto you.”
That was the message of civilization. And you didn’t have to be a Christian to get it.
Hillel the Elder, a Jewish religious leader who lived around the same time as Christ, said the same thing in a different way: “What is hateful to you, do not do to anyone else.”
This new code – although oft ignored, oft transgressed and oft forgotten – flourished because it made civilization possible. And civilization made material progress possible.
If you are going to have civilization you can’t kill people just because they’re not of the same tribe. And you have to be ready to buy and sell with them. You have to respect their property. And they have to respect yours.
Transactions in this new world had to be win-win deals. Otherwise, people wouldn’t want to do business with you…
The Paradox of Civilization
The truth is there are no competing civilizations. There are competing cultures. And rival governments. And adversary nations. Different groups may speak different tongues. But they share a common civilization.
All civilized communities have the same essential feature: They rely upon persuasion rather than force.
The more force and violence they use, the less civilized they are. The less civilized they are, the less prosperous and technologically advanced they become. And the less advanced they are, the less able they are to exterminate a small group of English-speaking soldiers on the frontiers of civilization.
That is the paradox of civilization: The more civilized you are, the more you are capable of doing very uncivilized things.
It was often remarked in the 1920s and 1930s, for example, that Germany was the most civilized country in Europe. That is what made it possible for it to throw its weight around.
Which just goes to show that no matter how civilized you are, you never really get out of that “foul rag and bone shop of the heart.” Push the saint too hard; he will turn into a beast.
The West was able to conquer uncivilized peoples but not other civilized ones.
For example, it never brought China and Japan into submission. Colonials almost annihilated the tribes of the Great Plains, the Pampas, and the Outback. But civilized peoples were better able to defend themselves against germs, as well as against guns and steel.
The Key to Life
What is the secret?
Our friend and colleague Porter Stansberry saw it not merely as the foundation of civilization but as a piece of advice. It was like the owner’s manual for being a successful individual in a modern economy.
He began by quoting your editor: “The only way any transaction can take place is when both parties are making a profit.”
I didn’t think much about this idea at first… and probably didn’t really understand it either. But over time, I came to understand how and why this idea could explain nearly everything – especially people’s behavior.
I began to learn how understanding any business, any relationship, any transaction – it’s all about understanding the incentives. And that’s what Bill was talking about.
In other words, in every situation you simply have to ask: What’s in it for the other guy?
As Bill taught me, in every transaction you have to persuade someone. If you want to be successful in life, you do that not by trickery or force, but by offering a fantastic deal.
And if you understand that simple fact, and learn how to implement it, you really understand the key to life.
Crux note: Porter isn’t the only one who’s benefited from the secret in Bill’s new book… It also helped turn more than 50 of Bill’s other employees into millionaires.
If you’re looking to build real, lasting wealth for your family, you need to read Bill’s book. Click here to get your copy now.
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