Archive for May, 2015

The dollar will die with a whimper, not a bang

From Jim Rickards, Editor, Jim Rickards’ Strategic Intelligence:

The same force that made the dollar the world’s reserve currency is working to dethrone it.

July 22, 1944, marked the official conclusion of the Bretton Woods Conference in New Hampshire. There, 730 delegates from 44 nations met at the Mount Washington Hotel in the final days of the Second World War to devise a new international monetary system.

The delegates there were acutely aware that the failures of the international monetary system after the First World War had contributed to the outbreak of the Second World War. They were determined to create a more stable system that would avoid beggar-thy-neighbor currency wars, trade wars and other dysfunctions that could lead to shooting wars.

It was at Bretton Woods that the dollar was officially designated the world’s leading reserve currency — a position that it still holds today. Under the Bretton Woods system, all major currencies were pegged to the dollar at a fixed exchange rate. The dollar itself was pegged to gold at the rate of $35.00 per ounce. Indirectly, the other currencies had a fixed gold value because of their peg to the dollar.

Other currencies could devalue against the dollar, and therefore against gold, if they received permission from the International Monetary Fund (IMF). However, the dollar could not devalue, at least in theory. It was the keystone of the entire system — intended to be permanently anchored to gold.

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

From 1950–1970 the Bretton Woods system worked fairly well. Trading partners of the U.S. who earned dollars could cash those dollars in to the U.S. Treasury and be paid in gold at the fixed rate.

In 1950, the U.S. had about 20,000 tons of gold. By 1970, that amount had been reduced to about 9,000 tons. The 11,000-ton decline went to U.S. trading partners, primarily Germany, France and Italy, who earned dollars and cashed them in for gold.

The U.K. pound sterling had previously held the dominant reserve currency role starting in 1816, following the end of the Napoleonic Wars and the official adoption of the gold standard by the U.K. Many observers assume the 1944 Bretton Woods conference was the moment the U.S. dollar replaced sterling as the world’s leading reserve currency. In fact, that replacement of sterling by the dollar as the world’s leading reserve currency was a process that took 30 years, from 1914 to 1944.

The real turning point was the period July–November 1914, when a financial panic caused by the start of the First World War led to the closures of the London and New York stock exchanges and a mad scramble around the world to obtain gold to meet financial obligations. At first, the United States was acutely short of gold. The New York Stock Exchange was closed so that Europeans could not sell U.S. stocks and convert the dollar sales proceeds into gold.

But within a few months, massive U.S. exports of cotton and other agricultural produce to the U.K. produced huge trade surpluses. Gold began to flow the other way, from Europe back to the U.S. Wall Street banks began to underwrite massive war loans for the U.K. and France. By the end of the First World War, the U.S. had emerged as a major creditor nation and a major gold power. The dollar’s percentage of total global reserves began to soar.

Scholar Barry Eichengreen has documented how the dollar and sterling seesawed over the 20 years following the First World War, with one taking the lead from the other as the leading reserve currency and in turn giving back the lead. In fact, the period from 1919–1939 was really one in which the world had two major reserve currencies — dollars and sterling — operating side by side.

Finally, in 1939, England suspended gold shipments in order to fight the Second World War and the role of sterling as a reliable store of value was greatly diminished apart from the U.K.’s special trading zone of Australia, Canada and other Commonwealth nations. The 1944 Bretton Woods conference was merely recognition of a process of dollar reserve dominance that had started in 1914.

The significance of the process by which the dollar replaced sterling over a 30-year period has huge implications for you today. Slippage in the dollar’s role as the leading global reserve currency is not necessarily something that would happen overnight, but is more likely to be a slow, steady process.

Signs of this are already visible. In 2000, dollar assets were about 70% of global reserves. Today, the comparable figure is about 62%. If this trend continues, one could easily see the dollar fall below 50% in the not-too-distant future.

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

It is equally obvious that a major creditor nation is emerging to challenge the U.S. today just as the U.S. emerged to challenge the U.K. in 1914. That power is China. The U.S. had massive gold inflows from 1914-1944. China has massive gold inflows today.

Officially, China reports that it has 1,054 metric tonnes of gold in its reserves. However, these figures were last updated in 2009, and China has acquired thousands of metric tonnes since without reporting these acquisitions to the IMF or World Gold Council.

Based on available data on imports and the output of Chinese mines, it is possible to estimate that actual Chinese government and private gold holdings exceed 8,500 metric tonnes, as shown in the chart below.

Assuming half of this is government owned, with the other half in private hands, then the actual Chinese government gold position exceeds 4,250 metric tonnes, an increase of over 300%. Of course, these figures are only estimates, because China operates through secret channels and does not officially report its gold holdings except at rare intervals.

Rickards Die 1

China’s gold acquisition is not the result of a formal gold standard, but is happening by stealth acquisitions on the market. They’re using intelligence and military assets, covert operations and market manipulation. But the result is the same. Gold is flowing to China today, just as gold flowed to the U.S. before Bretton Woods.

China is not alone in its efforts to achieve creditor status and to acquire gold. Russia has doubled its gold reserves in the past five years and has little external debt. Iran has also imported massive amounts of gold, mostly through Turkey and Dubai, although no one knows the exact amount, because Iranian gold imports are a state secret.

Other countries, including BRICS members Brazil, India and South Africa, have joined Russia and China to build institutions that could replace the balance of payments lending of the International Monetary Fund (IMF) and the development lending of the World Bank. All of these countries are clear about their desire to break free of U.S. dollar dominance.

Sterling faced a single rival in 1914, the U.S. dollar. Today, the dollar faces a host of rivals — China, Russia, India, Brazil, South Africa, Iran and many others. In addition, there is the world super-money, the special drawing right (SDR), which I expect will also be used to diminish the role of the dollar. The U.S. is playing into the hands of these rivals by running trade deficits, budget deficits and a huge external debt.

What are the implications for your portfolio? Once again, history is highly instructive.

RELATED: Is this China’s plan to destroy the U.S. Dollar?

During the glory years of sterling as a global reserve currency, the exchange value of sterling was remarkably stable. In 2006, the U.K. House of Commons produced a 255-year price index for sterling that covered the period 1750–2005.

Rickards Die 2

The index had a value of 5.1 in 1751. There were fluctuations due to the Napoleonic Wars and the First World War, but even as late as 1934, the index was at only 15.8, meaning that prices had only tripled in 185 years.

But once the sterling lost its lead reserve currency role to the dollar, inflation exploded. The index hit 757.3 by 2005. In other words, during the 255 years of the index, prices increased by 200% in the first 185 years while the sterling was the lead reserve currency, but went up 5,000% in the 70 years that followed.

Price stability seems to be the norm for money with reserve currency status, but once that status is lost, inflation is dominant.

The decline of the dollar as a reserve currency started in 2000 with the advent of the euro and accelerated in 2010 with the beginning of a new currency war. That decline is now being amplified by China’s emergence as a major creditor and gold power. Not to mention the actions of a new anti-dollar alliance consisting of the BRICS, Iran and others. If history is a guide, inflation in U.S. dollar prices will come next.

In his 1925 poem The Hollow Men, T. S. Eliot writes: “This is the way the world ends/ Not with a bang but a whimper.” Those waiting for a sudden, spontaneous collapse of the dollar may be missing out on the dollar’s less dramatic, but equally important slow, steady decline. The dollar collapse has already begun. The time to acquire inflation insurance is now.

Regards,

Jim Rickards

P.S. There is a new way to use monetary distortions to your financial advantage. I’ve developed a proprietary system called “IMPACT” to teach ordinary investors how to profit by as much as 1,000% from the seesawing in global currency markets. Best of all, you don’t need to invest in the forex market or the stock market or do anything risky like sell covered calls. Read on here to see how to use Jim’s new system with your regular online brokerage account.

Sunday, May 31st, 2015 Invest, News, Wealth Comments Off on The dollar will die with a whimper, not a bang

This unusual situation in stocks is about to end

From Chris Kimble at Kimble Charting Solutions:

The tug of war between the bulls and bears has created an unusual situation this year… a historically tight trading range!

The chart below reflects that the Dow Jones has traded within a 6.68% high-to-low trading range this year. That is the fourth-tightest trading range through May in the past 115 years.

CLICK ON CHART TO ENLARGE

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

The inset table to the right looks at future performance of the Dow following narrow trading ranges through May. As you can see, most of the time the market has ended the year to the upside. Will it be different this time?

The chart below shows that the S&P 500 is being squeezed between a long-term resistance line (1) and a long-term support line (2).

CLICK ON CHART TO ENLARGE

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

This chart reflects that the tug of war between the bulls and bears could end very soon, as it wouldn’t take much of a move in either direction to either break support or resistance.

Is the Fibonacci 161% extension level based upon the 2007 highs and 2009 lows the cause for this tight range year-to-date? Regardless of what the reason is, odds are very high this narrow range will end soon!

Of late, I am seeing some negative divergences in our “Shoe Box” indicator that I haven’t seen in a good while. Should this tool break down along with Advance/Decline lines, it would indicate some weakness in the near future will take place.

Sunday, May 31st, 2015 Invest, News, Wealth Comments Off on This unusual situation in stocks is about to end

What two of the world’s best investors think about gold

By Brian Hunt and Ben Morris, editors, DailyWealth Trader: 

They’re not all household names like Warren Buffett…

But they’re superstars in the money-management business… And you can learn a lot by looking at how they’re investing.

One of the main goals in our DailyWealth Trader service is to pass along insights, strategies, and actionable ideas from top money managers. These elite investors have decades of experience, high-level contacts, huge research budgets, and long track records of success.

We’d be fools not to “look over their shoulders” for investment ideas…

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

So today, we’re sharing an important idea held by two of the best in the business: Paul Singer and Ray Dalio.

Singer runs the $24 billion fund, Elliott Management. His fund averaged 14% annual returns from 1977 to 2012, with only two down years. Singer has degrees in both law and psychology… And he’s well known for investing in debt from bankrupt companies.

Singer is extremely concerned about the state of the world’s monetary system right now. Many governments have taken on debts and obligations they can’t pay back with sound money. They plan to pay back their debts with debased, devalued money. Singer also believes extremely low interest rates have encouraged people to speculate and make bad investments.

Given all this risk, Singer sees gold as a great hedge against a potential financial crisis… And he’s urging investors to own some.

Regular readers know we see gold as a form of “real money”… and one of the ultimate ways to protect yourself against a financial crisis. (You can read a full explanation in this educational essay.)

Dalio calls gold a currency, like the dollar or the euro… It’s an alternate form of cash.

Dalio is one of the world’s most respected big-picture economic thinkers… and one of the most successful. In 1975, Dalio founded Bridgewater Associates. The firm has averaged 13% annual returns… And Dalio has grown Bridgewater into the world’s largest hedge fund. It now manages around $170 billion in assets.

Lots of investors don’t remember a time when folks didn’t believe in paper currencies and needed an alternative. But Dalio makes the important point that there’s nothing new in the investment world. Just because it hasn’t happened in our lifetimes doesn’t mean it’s impossible.

Gold was used as money throughout history… And as Dalio explained in an interview with the Council on Foreign Relations, folks could turn to gold again in a currency crisis. The precious metal could be seen as an economic “barometer.”

Dalio said, “It’s not sensible not to own gold.” He doesn’t suggest putting all of your money into gold. But if you don’t own some, he says, “you don’t know history and you don’t know the economics of it.”

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

We agree with Dalio and Singer. We suggest holding some portion of your investment assets in gold as part of your “catastrophe prevention plan.” Because gold could soar in a crisis scenario, having some of your portfolio allocated to gold could save you from a huge drop in net worth.

As you may know, gold soared from $250 an ounce in 2001 to $1,900 in 2011… And it has since fallen by about 37% to around $1,200 an ounce. It has been holding steady at that level for two years now… And it has likely bottomed. (We detailed one big reason we think gold has bottomed here.)

Two of the world’s smartest, most successful money managers encourage investors to own gold… And we see this as an ideal time to buy, near multiyear lows.

The best way for most folks to own gold is in “bullion” form… buying physical gold coins or bars. Buy some gold today… Store it somewhere safe… And hold it the rest of your life.

You may never need your gold. But like car or home insurance, if you do need it, you’ll be glad to have it.

Sunday, May 31st, 2015 Invest, News, Wealth Comments Off on What two of the world’s best investors think about gold

Gold, Silver Climb in May; US Mint Bullion Sales Weaken – CoinNews.net


The Inquisitr
Gold, Silver Climb in May; US Mint Bullion Sales Weaken
CoinNews.net
Gold prices notched their first monthly increase in four on Friday but they also marked a second straight week of losses. On Friday, gold for August delivery added a dollar, or less than 0.1%, to settle at $1,189.80 an ounce on the Comex division of
Gold Prices Are Sinking Pretty QuicklyThe Inquisitr
Gold prices to rise next week despite strong US dollarInternational Business Times UK
When will the selling in gold stop?Hindu Business Line

all 4 news articles »

Sunday, May 31st, 2015 Invest, News, Wealth Comments Off on Gold, Silver Climb in May; US Mint Bullion Sales Weaken – CoinNews.net

Controversial post: This is how the dollar will die

From Jim Rickards, Editor, Jim Rickards’ Strategic Intelligence:

The same force that made the dollar the world’s reserve currency is working to dethrone it.

July 22, 1944, marked the official conclusion of the Bretton Woods Conference in New Hampshire. There, 730 delegates from 44 nations met at the Mount Washington Hotel in the final days of the Second World War to devise a new international monetary system.

The delegates there were acutely aware that the failures of the international monetary system after the First World War had contributed to the outbreak of the Second World War. They were determined to create a more stable system that would avoid beggar-thy-neighbor currency wars, trade wars and other dysfunctions that could lead to shooting wars.

It was at Bretton Woods that the dollar was officially designated the world’s leading reserve currency — a position that it still holds today. Under the Bretton Woods system, all major currencies were pegged to the dollar at a fixed exchange rate. The dollar itself was pegged to gold at the rate of $35.00 per ounce. Indirectly, the other currencies had a fixed gold value because of their peg to the dollar.

Other currencies could devalue against the dollar, and therefore against gold, if they received permission from the International Monetary Fund (IMF). However, the dollar could not devalue, at least in theory. It was the keystone of the entire system — intended to be permanently anchored to gold.

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

From 1950–1970 the Bretton Woods system worked fairly well. Trading partners of the U.S. who earned dollars could cash those dollars in to the U.S. Treasury and be paid in gold at the fixed rate.

In 1950, the U.S. had about 20,000 tons of gold. By 1970, that amount had been reduced to about 9,000 tons. The 11,000-ton decline went to U.S. trading partners, primarily Germany, France and Italy, who earned dollars and cashed them in for gold.

The U.K. pound sterling had previously held the dominant reserve currency role starting in 1816, following the end of the Napoleonic Wars and the official adoption of the gold standard by the U.K. Many observers assume the 1944 Bretton Woods conference was the moment the U.S. dollar replaced sterling as the world’s leading reserve currency. In fact, that replacement of sterling by the dollar as the world’s leading reserve currency was a process that took 30 years, from 1914 to 1944.

The real turning point was the period July–November 1914, when a financial panic caused by the start of the First World War led to the closures of the London and New York stock exchanges and a mad scramble around the world to obtain gold to meet financial obligations. At first, the United States was acutely short of gold. The New York Stock Exchange was closed so that Europeans could not sell U.S. stocks and convert the dollar sales proceeds into gold.

But within a few months, massive U.S. exports of cotton and other agricultural produce to the U.K. produced huge trade surpluses. Gold began to flow the other way, from Europe back to the U.S. Wall Street banks began to underwrite massive war loans for the U.K. and France. By the end of the First World War, the U.S. had emerged as a major creditor nation and a major gold power. The dollar’s percentage of total global reserves began to soar.

Scholar Barry Eichengreen has documented how the dollar and sterling seesawed over the 20 years following the First World War, with one taking the lead from the other as the leading reserve currency and in turn giving back the lead. In fact, the period from 1919–1939 was really one in which the world had two major reserve currencies — dollars and sterling — operating side by side.

Finally, in 1939, England suspended gold shipments in order to fight the Second World War and the role of sterling as a reliable store of value was greatly diminished apart from the U.K.’s special trading zone of Australia, Canada and other Commonwealth nations. The 1944 Bretton Woods conference was merely recognition of a process of dollar reserve dominance that had started in 1914.

The significance of the process by which the dollar replaced sterling over a 30-year period has huge implications for you today. Slippage in the dollar’s role as the leading global reserve currency is not necessarily something that would happen overnight, but is more likely to be a slow, steady process.

Signs of this are already visible. In 2000, dollar assets were about 70% of global reserves. Today, the comparable figure is about 62%. If this trend continues, one could easily see the dollar fall below 50% in the not-too-distant future.

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

It is equally obvious that a major creditor nation is emerging to challenge the U.S. today just as the U.S. emerged to challenge the U.K. in 1914. That power is China. The U.S. had massive gold inflows from 1914-1944. China has massive gold inflows today.

Officially, China reports that it has 1,054 metric tonnes of gold in its reserves. However, these figures were last updated in 2009, and China has acquired thousands of metric tonnes since without reporting these acquisitions to the IMF or World Gold Council.

Based on available data on imports and the output of Chinese mines, it is possible to estimate that actual Chinese government and private gold holdings exceed 8,500 metric tonnes, as shown in the chart below.

Assuming half of this is government owned, with the other half in private hands, then the actual Chinese government gold position exceeds 4,250 metric tonnes, an increase of over 300%. Of course, these figures are only estimates, because China operates through secret channels and does not officially report its gold holdings except at rare intervals.

Rickards Die 1

China’s gold acquisition is not the result of a formal gold standard, but is happening by stealth acquisitions on the market. They’re using intelligence and military assets, covert operations and market manipulation. But the result is the same. Gold is flowing to China today, just as gold flowed to the U.S. before Bretton Woods.

China is not alone in its efforts to achieve creditor status and to acquire gold. Russia has doubled its gold reserves in the past five years and has little external debt. Iran has also imported massive amounts of gold, mostly through Turkey and Dubai, although no one knows the exact amount, because Iranian gold imports are a state secret.

Other countries, including BRICS members Brazil, India and South Africa, have joined Russia and China to build institutions that could replace the balance of payments lending of the International Monetary Fund (IMF) and the development lending of the World Bank. All of these countries are clear about their desire to break free of U.S. dollar dominance.

Sterling faced a single rival in 1914, the U.S. dollar. Today, the dollar faces a host of rivals — China, Russia, India, Brazil, South Africa, Iran and many others. In addition, there is the world super-money, the special drawing right (SDR), which I expect will also be used to diminish the role of the dollar. The U.S. is playing into the hands of these rivals by running trade deficits, budget deficits and a huge external debt.

What are the implications for your portfolio? Once again, history is highly instructive.

RELATED: Is this China’s plan to destroy the U.S. Dollar?

During the glory years of sterling as a global reserve currency, the exchange value of sterling was remarkably stable. In 2006, the U.K. House of Commons produced a 255-year price index for sterling that covered the period 1750–2005.

Rickards Die 2

The index had a value of 5.1 in 1751. There were fluctuations due to the Napoleonic Wars and the First World War, but even as late as 1934, the index was at only 15.8, meaning that prices had only tripled in 185 years.

But once the sterling lost its lead reserve currency role to the dollar, inflation exploded. The index hit 757.3 by 2005. In other words, during the 255 years of the index, prices increased by 200% in the first 185 years while the sterling was the lead reserve currency, but went up 5,000% in the 70 years that followed.

Price stability seems to be the norm for money with reserve currency status, but once that status is lost, inflation is dominant.

The decline of the dollar as a reserve currency started in 2000 with the advent of the euro and accelerated in 2010 with the beginning of a new currency war. That decline is now being amplified by China’s emergence as a major creditor and gold power. Not to mention the actions of a new anti-dollar alliance consisting of the BRICS, Iran and others. If history is a guide, inflation in U.S. dollar prices will come next.

In his 1925 poem The Hollow Men, T. S. Eliot writes: “This is the way the world ends/ Not with a bang but a whimper.” Those waiting for a sudden, spontaneous collapse of the dollar may be missing out on the dollar’s less dramatic, but equally important slow, steady decline. The dollar collapse has already begun. The time to acquire inflation insurance is now.

Regards,

Jim Rickards

P.S. There is a new way to use monetary distortions to your financial advantage. I’ve developed a proprietary system called “IMPACT” to teach ordinary investors how to profit by as much as 1,000% from the seesawing in global currency markets. Best of all, you don’t need to invest in the forex market or the stock market or do anything risky like sell covered calls. Read on here to see how to use Jim’s new system with your regular online brokerage account.

Saturday, May 30th, 2015 Invest, News, Wealth Comments Off on Controversial post: This is how the dollar will die

Millions of barrels of oil are about to "vanish." Here’s why…

From Bloomberg:

Millions of barrels of untapped oil that U.S. shale drillers discovered during the boom years are about to disappear from their inventories.

Six years ago, the industry pushed the Securities and Exchange Commission to make it easier for companies to claim proved reserves for wells that wouldn’t be drilled for years. Some prospects considered sure-things when crude was $95 a barrel are money losers at today’s $60. When crude crashed in 2008, 44 U.S. companies wiped 630 million barrels from their books.

Now, the stakes are higher. Of all the proved reserves of oil and natural gas liquids found by the 44 companies since 2008, more than half – 5.4 billion barrels out of the 9.7 billion – is attributed to wells that don’t exist yet, according to data compiled by Bloomberg.

“We’re going to see a lot of proved undeveloped reserves get vaporized,” said Ed Hirs, a managing director at Houston-based Hillhouse Resources, an independent energy company, who also teaches energy economics at the University of Houston. “It could easily be 10 or 20 years before some of these wells get drilled if prices stay at these levels.”

The shale boom has pushed U.S. oil production to the highest it has been in more than 40 years and slashed the country’s reliance on imported fuel. The untapped resources are viewed by investors and lenders as a sign of a company’s growth potential, and helped the industry attract more than $230 billion in bonds, loans and share sales since the end of 2008.

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

Growing Reserves

While undrilled prospects have always been part of oil companies’ inventories, they’ve become a much larger share since the SEC changed the rules. Undeveloped properties account for 43 percent of proved reserves for the 44 companies, the data show, up from 26 percent at the end of 2008.

The SEC limits proved reserves to those resources that companies are reasonably certain can be profitably extracted with existing technology. The estimates are based on prices, geology, engineering and the historical performance of similar wells.

Fracking pioneers such as Devon Energy and Chesapeake Energy, both based in Oklahoma City, were among the oil and natural gas producers that lobbied to make it easier to book undeveloped reserves. Before the rule changed, untapped wells typically needed to be close to a producing property.

Fracking Pioneers

Devon and Chesapeake were among the first companies to unlock oil and gas trapped in deep underground layers of shale using a combination of horizontal drilling and hydraulic fracturing, which frees hydrocarbons with a high-pressure blast of water, sand and chemicals. The oil industry argued that these techniques made shale formations predictable across wide expanses, and that the SEC should allow the untapped wells further from producing properties should still count as proved.

The regulator agreed, with a catch: To count the undrilled properties as proved reserves, the companies had to tap them within five years or erase them from their books.

“This was a big gift the SEC gave all the shale players,” said Art Berman, a petroleum geologist who worked for Amoco for 20 years and is now an independent energy consultant in Houston. “Suddenly, you were able to book all these new reserves. It gave the industry a whole new lease on life in terms of being able to attract capital.”

Judith Burns, an SEC spokeswoman, declined to comment. Representatives for Devon and Chesapeake also declined to comment.

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

Untapped Reserves

At EOG Resources, the world’s top shale oil producer, more than 69 percent of its U.S. oil and liquids reserves have yet to be drilled, compared with 22 percent at the end of 2008, the last year before the new rule went into effect, according to company filings. For Continental Resources, founded and run by billionaire Harold Hamm, it’s 61 percent, up from 24 percent.

K Leonard, a spokeswoman for Houston-based EOG, didn’t return calls and e-mails seeking comment. Kristin Thomas, a spokeswoman for Continental in Oklahoma City, declined to comment.

The five-year clock is ticking on those undeveloped wells. Oil has fallen 45 percent since June, and companies have cut spending and slowed development. The SEC rules also prohibit booking proved reserves for money-losing wells. Profitability is determined by averaging the price on the first day of each month during the calendar year. In 2014, it was about $95 a barrel. So far this year, it’s about $52.

West Texas Intermediate for July delivery lost 25 cents to $60.47 a barrel in electronic trading on the New York Mercantile Exchange at 10:11 a.m. London time Friday.

New Prospects

Some of those wells may never be drilled, while others may return to inventories if prices rise. A company’s deletions may be offset by the addition of new prospects, purchased properties or an increase in the estimated amount of crude each well will produce.

Even though drilling costs are coming down, it may no longer be economical to tap all of the undeveloped wells, said Julie Hilt Hannink, head of energy research at CFRA, an accounting advisory firm in New York.

Drilling plans “could be predicated on $100 oil,” and wells won’t be developed unless prices rise, she said.

When crude plunged 77 percent to $34 a barrel in 2008, the 44 drillers deleted 7.8 percent from their proved oil and liquids reserves, according to data compiled by Bloomberg.

RELATED: Is this China’s plan to destroy the U.S. Dollar?

Natural Gas

The same thing happened again in 2012, when natural gas prices fell to the lowest in a decade, and the 44 producers revised their reserves of the fuel lower by 18 percent. The 44 companies are all U.S.-based members of the Bloomberg Intelligence North America Independent Explorers and Producers Index that have reserves information dating back to 2008.

Reserve reports for 2015 won’t be published until early next year, and will be the first real test of how the undeveloped wells stand up to lower prices.

“The oil hasn’t disappeared,” said Hirs of Hillhouse Resources. “It’s always been in the ground, but the company that booked the reserves may not be around anymore to drill it.”

Saturday, May 30th, 2015 Invest, News, Wealth Comments Off on Millions of barrels of oil are about to "vanish." Here’s why…

Heads up… This unusual situation in stocks is about to end

From Chris Kimble at Kimble Charting Solutions:

The tug of war between the bulls and bears has created an unusual situation this year… a historically tight trading range!

The chart below reflects that the Dow Jones has traded within a 6.68% high-to-low trading range this year. That is the fourth-tightest trading range through May in the past 115 years.

CLICK ON CHART TO ENLARGE

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

The inset table to the right looks at future performance of the Dow following narrow trading ranges through May. As you can see, most of the time the market has ended the year to the upside. Will it be different this time?

The chart below shows that the S&P 500 is being squeezed between a long-term resistance line (1) and a long-term support line (2).

CLICK ON CHART TO ENLARGE

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

This chart reflects that the tug of war between the bulls and bears could end very soon, as it wouldn’t take much of a move in either direction to either break support or resistance.

Is the Fibonacci 161% extension level based upon the 2007 highs and 2009 lows the cause for this tight range year-to-date? Regardless of what the reason is, odds are very high this narrow range will end soon!

Of late, I am seeing some negative divergences in our “Shoe Box” indicator that I haven’t seen in a good while. Should this tool break down along with Advance/Decline lines, it would indicate some weakness in the near future will take place.

Saturday, May 30th, 2015 Invest, News, Wealth Comments Off on Heads up… This unusual situation in stocks is about to end

Two investment "superstars" want you to own this currency now

By Brian Hunt and Ben Morris, editors, DailyWealth Trader: 

They’re not all household names like Warren Buffett…

But they’re superstars in the money-management business… And you can learn a lot by looking at how they’re investing.

One of the main goals in our DailyWealth Trader service is to pass along insights, strategies, and actionable ideas from top money managers. These elite investors have decades of experience, high-level contacts, huge research budgets, and long track records of success.

We’d be fools not to “look over their shoulders” for investment ideas…

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

So today, we’re sharing an important idea held by two of the best in the business: Paul Singer and Ray Dalio.

Singer runs the $24 billion fund, Elliott Management. His fund averaged 14% annual returns from 1977 to 2012, with only two down years. Singer has degrees in both law and psychology… And he’s well known for investing in debt from bankrupt companies.

Singer is extremely concerned about the state of the world’s monetary system right now. Many governments have taken on debts and obligations they can’t pay back with sound money. They plan to pay back their debts with debased, devalued money. Singer also believes extremely low interest rates have encouraged people to speculate and make bad investments.

Given all this risk, Singer sees gold as a great hedge against a potential financial crisis… And he’s urging investors to own some.

Regular readers know we see gold as a form of “real money”… and one of the ultimate ways to protect yourself against a financial crisis. (You can read a full explanation in this educational essay.)

Dalio calls gold a currency, like the dollar or the euro… It’s an alternate form of cash.

Dalio is one of the world’s most respected big-picture economic thinkers… and one of the most successful. In 1975, Dalio founded Bridgewater Associates. The firm has averaged 13% annual returns… And Dalio has grown Bridgewater into the world’s largest hedge fund. It now manages around $170 billion in assets.

Lots of investors don’t remember a time when folks didn’t believe in paper currencies and needed an alternative. But Dalio makes the important point that there’s nothing new in the investment world. Just because it hasn’t happened in our lifetimes doesn’t mean it’s impossible.

Gold was used as money throughout history… And as Dalio explained in an interview with the Council on Foreign Relations, folks could turn to gold again in a currency crisis. The precious metal could be seen as an economic “barometer.”

Dalio said, “It’s not sensible not to own gold.” He doesn’t suggest putting all of your money into gold. But if you don’t own some, he says, “you don’t know history and you don’t know the economics of it.”

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

We agree with Dalio and Singer. We suggest holding some portion of your investment assets in gold as part of your “catastrophe prevention plan.” Because gold could soar in a crisis scenario, having some of your portfolio allocated to gold could save you from a huge drop in net worth.

As you may know, gold soared from $250 an ounce in 2001 to $1,900 in 2011… And it has since fallen by about 37% to around $1,200 an ounce. It has been holding steady at that level for two years now… And it has likely bottomed. (We detailed one big reason we think gold has bottomed here.)

Two of the world’s smartest, most successful money managers encourage investors to own gold… And we see this as an ideal time to buy, near multiyear lows.

The best way for most folks to own gold is in “bullion” form… buying physical gold coins or bars. Buy some gold today… Store it somewhere safe… And hold it the rest of your life.

You may never need your gold. But like car or home insurance, if you do need it, you’ll be glad to have it.

Saturday, May 30th, 2015 Invest, News, Wealth Comments Off on Two investment "superstars" want you to own this currency now

This key uranium player is about to shock the market

From Dave Forest at Pierce Points: 

Things appeared to be stabilizing in the global uranium market the last several months. With prices for the metal settling into a comfortable groove between $36 and $44 per pound.

But that peace could soon be shattered, according to reports from major nuclear player Japan yesterday.

The Japan Times reported that the country’s key nuclear operator Tokyo Electric Power Co. (Tepco) is preparing to sell part of its uranium stockpiles. With documents obtained from the utility suggesting that more than 750 tonnes of uranium could be sold over the coming months.

SEE ALSO: Dr. Ron Paul Describes Exactly What America’s Next Crisis Will Look Like

Tepco is considering the move in order to reduce costs associated with holding ever-growing uranium stockpiles. The company has not consumed any uranium since 2011, shortly after the Fukushima disaster resulted in a complete nuclear shutdown across Japan.

That stoppage has left uranium piling up in storage, as Tepco continues to take delivery of mine supplies purchased under long-term contracts. The company now holds 17,570 tonnes of uranium — up from 16,805 tonnes prior to Fukushima.

Tepco says it wants to reduce those stocks to pre-Fukushima levels. Implying that it could divest up to 765 tonnes.

That’s equivalent to 1.69 million pounds of uranium. Or about 1% of yearly demand worldwide — suggesting that this divestment alone shouldn’t be a showstopper for prices.

But Tepco also said it may take further steps to reduce its uranium stocks — including terminating uranium purchase contracts it currently holds with miners globally.

READ MORE: Why America is NOT Normal – Dr. Ron Paul’s 8 facts prove how bad things really are

Such a development would represent a significant reduction in demand. And might be enough to cause a drag on the global market.

The firm said it is looking to make all of these moves by the end of the fiscal year, this coming March. Watch for news about stockpile divestments, and purchase contracts cancellations coming soon.

Saturday, May 30th, 2015 Invest, News, Wealth Comments Off on This key uranium player is about to shock the market

GoldMoney customers find reasons to buy

May 29, 2015 (Investorideas.com Mining stocks newswire) GoldMoney customers have been bucking the general market trend and buying up the yellow metal this week.

Saturday, May 30th, 2015 News Comments Off on GoldMoney customers find reasons to buy

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