Archive for May, 2015

A huge shock could be coming to the uranium 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.

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Bill Bonner: A warning from Argentina

From Bill Bonner, Chairman, Bonner & Partners:

A vision of Hell troubles our sleep.

It is the vision of what the United States will be like when the authorities have obliterated almost three millennia of monetary progress and have their boots on our necks.

Here’s Peter Bofinger, a leading German Keynesian economist, in Der Spiegel magazine:

With today’s technical possibilities, coins and notes are in fact an anachronism. They made payments incredibly difficult, with people wasting all sorts of time at the cashier as they wait for the person ahead of them to dig through their belongings to find some cash, and for the cashier to render change (rather than, for example, waiting for someone to find the right credit card, complete the transaction, and wait for approval). [… ]

But the additional time is not the largest benefit of the elimination of cash. It dries out the markets for moonlighting and drug trafficking. Almost a third of the euro cash in circulation consists of 500-euro notes. No one needs those for shopping; light-shy figures use them for their activities. [Also] it would be easier for central banks to impose their monetary policies. At this time, they cannot push interest rates appreciably below zero because the savers would hoard cash. If there is no cash, the zero bound is eliminated.

A Slide Back into Prehistory 

Yes, dear reader, it seems to be coming – a dreadful slide back beyond the darkest ages and into the mud and slime of prehistory.

Back then, modern “money” had not been invented. Using rudimentary credit and barter systems, you could only trade with people you knew – and on a limited scale.

Capitalism was impossible. Progress was unattainable. Wealth couldn’t be accumulated.

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

Then in India, in about the sixth century B.C., came silver coins – real cash. You didn’t need to know the person you were trading with. You didn’t know his family. Or his motives. Or his balance sheet.

And you didn’t have to keep track of who owed what to whom. You could just settle up – in specie.

This made modern commerce and industry possible.

This new wealth also provided people with a new kind of liberty. They could travel – and pay for food and lodging with this new money. They could invest… and use this new, private wealth to create even more wealth.

They could even raise armies… build fortifications… and challenge the power of the ruling elites.

“Suspicious Activities”

But now, governments are trying to abolish cash.

Leading economists want it banned, too. Limits on cash use are already in place in many countries.

In France, for instance, a law will come into force in September that will limit cash payments to €1,000 ($1,115).

And in the U.S., having a large amount of cash is already considered “suspicious activity,” subject to forfeiture without due process.

That’s right: Thanks to civil forfeiture laws, the feds can seize your property without having to convict you of a crime.

As the Washington Post reported here last year, police made 61,998 cash seizures – totaling $2.5 billion since 9/11 – without search warrants or indictments.

Why do the feds want to eliminate cash?

Isn’t it obvious?

They want to control you and your money.

Where did you get it? They’ll want to know. What will you do with it? They’ll want a say. Couldn’t you use it for something “bad”?

Heck, you might support “terrorists”… evade taxes… or buy a pack of cigarettes.

The possibilities are too rich to ignore. And the arguments are too persuasive to stop. Zero Hedge summarizes the “pros”:

  • Enhance the tax base, as most/all transactions in the economy could now be traced by the government 
  • Substantially constrain the parallel economy, particularly in illicit activities 
  • Force people to convert their savings into consumption and/or investment, thereby providing a boost to GDP and employment

Feeling the Feds’ Lash 

The arguments are hollow… but they’ll probably be convincing.

And for the first time in history, rulers will have a way of controlling people by cutting off their money.

Electronic money, run through a government-controlled banking system, allows the feds to put us where they want us – with bars on our cages and whips on our backs.

All transactions could be subject to approval. And every person would know that he could feel the feds’ lash at any time.

Under Argentina’s military dictatorship, about 13,000 people “disappeared.” That is, they were rounded up by government death squads, interrogated, murdered, and then thrown from planes into rivers.

How much easier it will be – and more humane – simply to cut off their money?

With modern face-recognition technology, the feds could identify almost anyone in any setting – at a café, a public meeting, or an ATM.

Then with a couple of strokes on a keyboard, the accounts could be frozen… or confiscated. The poor citizen would “disappear” in seconds – unable to participate in public life and forced to scrounge through trash cans to stay alive.

Who would dare to help him? Who would dare to support him?

Who would dare to speak out against this new diabolical system?

They, too, would be marked as undesirable… and disappeared.

Imagine the political candidate who suddenly discovers his backers have no money? Imagine the whistle-blower who suddenly has no whistle to blow?

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

A Warning from Argentina 

Are we hallucinating? Are we worrying about nothing?

In Argentina, following a coup d’état in 1976, the military junta first targeted leftist revolutionaries – who may have posed some real threat to the nation.

Then, in what became known as the “Dirty War,” the targets grew more diverse – with students, political adversaries, intellectuals, trade unionists, and anyone the junta wanted to get rid of caught in the net.

This period of terror only came to a close in 1983, after the generals unwisely invaded the Falkland Islands and proclaimed Argentine sovereignty over a British overseas territory.

The plain people are easily led into war – no matter how moronic the pretense. As they had hoped, the Argentines rallied behind their soldiers.

But the British, led by the “Iron Lady,” Margaret Thatcher, did not play the role the generals had expected.

Rather than negotiate a settlement, they sent a task force to the South Atlantic, including a nuclear submarine, two aircraft carriers, 42 fighter jets, a brigade of Royal Marine commandos, and an infantry brigade.

In a matter of weeks, the British submariners had sunk Argentina’s World War II-era cruiser the General Belgrano… as the Royal Marines, the soldiers of the 5th Infantry Brigade, and the RAF hammered away at the ill-prepared and ill-equipped Argentine troops shivering out in the South Atlantic.

This was too great a humiliation for the Argentines to take. The Union Jack went up once again over the Falklands, the military junta was thrown out of office, and the disappearances stopped.

Are Americans smarter than Argentines? Are their politicians more honest or more faithful to the rule of law? Does power corrupt less in the Northern Hemisphere than it does south of the equator?

We doubt it.



Crux note: Sooner or later, Bill says this whole “house of cards” will come crashing down. That’s why Bonner & Partners senior analyst Braden Copeland has updated his “Black List” report. It lays out the specific steps you can take right now to protect yourself ? and even profit ? when the next crash begins. Get your copy here.

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This country could be about to “flood” the oil market

From Bloomberg:

Iraq is taking OPEC’s strategy to defend its share of the global oil market to a new level.

The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.

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

While shipping schedules aren’t a promise of future production, they are indicative of what may come. The following chart graphs planned tanker loadings (in red) against exports.

oil export challenge

As in previous months, Iraq might not hit its June target – export capacity is currently capped at 3.1 million barrels a day, Deputy Oil Minister Fayyad al-Nimaa said on May 18. Still, any extra Iraqi supplies inevitably mean OPEC strays even further above its collective output target of 30 million barrels a day, Morgan Stanley says. The following chart shows OPEC increasing output in recent months against its current target.

opening the taps

Defying the threat from Islamic State militants, Iraq has been ramping up exports from both the Shiite south – where companies like BP Plc and Royal Dutch Shell Plc operate – and the Kurdish region in the north, which last year reached a temporary compromise with the federal government on its right to sell crude independently.

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

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If you’re looking for safe income today… this is where to find it

From Dr. David Eifrig, MD, MBA, editor, Income Intelligence:

No matter what type of income investor you are, worries about the broad economy dominate today’s markets.

The specter of rising interest rates hangs over every income-producing asset. And it’s true… the more yield investors can get from bonds, the less they’ll be interested in riskier sources of income, such as dividend-paying stocks.

But we think these fears are overdone today… and it gives us an excellent opportunity to pick up safe and stable income from a certain class of income-producing assets – no matter what happens in the broad economy.

I’m talking about real estate investment trusts, or REITs…

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

Regular readers know that a REIT is a special way to structure real estate holdings. A management company serves tenants, maintains buildings, and gets big tax breaks in exchange for agreeing to pass on the vast majority of its annual income to shareholders. (This allows it to pay fat dividends.)

This makes REITs a great way to invest in real estate assets without having to deal with the headache of personally managing them. And because REITs trade as shares in the stock market, you can sell your investment at any time… a normally difficult and time-consuming process as a personal property owner.

Today, some analysts suggest staying away from REITs because interest rates are bound to rise eventually.

The thinking goes as such… The economy is improving. As the economy improves, the Fed will raise rates. When the Fed raises rates, all interest rates will rise. That will make the yield on REITs look less attractive in comparison and raise borrowing costs for REIT operators. In turn, the share price of REITs may fall when interest rates rise.

Of course, those same analysts have been making these same claims since 2013. They’ve underperformed as a result. Nearly every step in that “logic” is hogwash.

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

First of all, market pundits have predicted that the Fed would raise rates for years now. It hasn’t happened yet. It’ll happen eventually, for certain. But slowing economic growth and the complete lack of any inflation will delay a Fed move even longer. The futures market expects an increase in rates of 0.2% by the end of the year. That’s not a big move.

Remember, the Fed only controls one single short-term interest rate called the Federal Funds rate. Raising this rate has some wider effects, but it’s the supply and demand of safe assets that truly determines interest rates. With so much wealth and so few low-risk assets in the world today, we think rates on medium- to long-term securities will stay low.

More important… REITs perform just fine in times of rising interest rates.

While many investors accept the “conventional wisdom” on interest rates and REITs, history doesn’t back it up.

From 1970 to the early 1990s, there were four periods of rising interest rates. REITs split the difference… rising in two of those periods and falling during two. Of course, take that with a grain of salt, because most modern REITs didn’t really take shape until 1993. But it’s clear there’s no strong historical relation between interest rates and REITs.

Looking from 1993 on, there have been three times rates have risen… The first, 1993 to 1995, saw REITs rise 21%. The second, from 1999 to 2000, saw REITs rise 17%. The third, from 2004 to 2007, saw REITs rise 99%. (All numbers include dividends.)

Anyone who says rising interest rates mean death for REITs simply hasn’t looked at the facts. And that’s exactly what we do in my Income Intelligence newsletter.

REITs rising rates

You’ll often see headlines these days like, “REITs Fall on Fed Statements.” REITs move with interest rates in the very short term. Little hiccups happen here and there as investors get spooked. But extrapolating a short-term move to long-term investment returns is a recipe for major blunders.

The trick is that REITs are real businesses with real fundamentals. Interest rates rise when the economy is hot and everything is running at full blast. During those times, it is true a treasury bond may look a little more attractive than a REIT on a yield basis, but with the economy growing, REITs see higher tenancy rates, higher rents, and bigger profits. Those factors trump the effect of higher interest rates.

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

Also recall that interest rates rise during periods of high inflation. When inflation becomes a concern, the Fed tries raising rates to choke it off. Not much hedges inflation better than real estate.

That’s why we’re happy to own REITs no matter where rates go over the long term.

We’re going to see short-term volatility from interest rates, but that’s a small price to pay. REITs are exactly the sort of counter-cyclical asset an income investor needs in his or her portfolio.

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig

P.S. I recently told my Income Intelligence subscribers about one of my favorite REITs to buy today. It features a safe yield of more than 4% today and operates in an industry that can grow 10 times or more in the next decade. It’s truly in the sweet spot of safety and growth. You can learn all the details with a risk-free trial subscription to Income Intelligence. Sign up right here. (This does not link to a long video).

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Perth-based gold explorer secures key Japanese stakeholder for South … – ABC Online

ABC Online
Perth-based gold explorer secures key Japanese stakeholder for South
ABC Online
Perth-based explorer Gold Road Resources has officially signed Japan's Sumitomo Metal Mining as a key stakeholder in its South Yamarna project in Western Australia. It marked the first time Japan has made a big investment in WA's gold sector and came …

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San Gold Receives No Third-Party Offers to Purchase or Invest – Canada NewsWire (press release)

San Gold Receives No Third-Party Offers to Purchase or Invest
Canada NewsWire (press release)
WINNIPEG, May 28, 2015 /CNW/ – San Gold Corporation (TSX-V: SGR) ("San Gold" or the "Company") announced today it did not receive any third party final bids by the deadline for the Company's previously announced Sale and Investor Solicitation Process …

Friday, May 29th, 2015 Invest, News, Wealth Comments Off on San Gold Receives No Third-Party Offers to Purchase or Invest – Canada NewsWire (press release)

3 Ways to Diversify Your Portfolio With Gold – U.S. News & World Report

U.S. News & World Report
3 Ways to Diversify Your Portfolio With Gold
U.S. News & World Report
Investment demand for gold rose 4 percent to 279 tons in the first quarter of 2015, according to the World Gold Council. The metal is currently trading around $1,208 per ounce, a 2.1 percent gain since the start of the year, but down from its 52-week

and more »

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Junior Producers Riding Exploration Success to Reratings: Raj Ray

May 28, 2015 ( Mining stocks newswire) In this interview with The Gold Report we learn that it’s not enough for junior gold producers to have strong management teams running thrifty, efficient operations.

Friday, May 29th, 2015 News Comments Off on Junior Producers Riding Exploration Success to Reratings: Raj Ray

TSX Mining News: Goldsource (TSX-V: GXS) Announces Construction Update at Eagle Mountain Gold Project

VANCOUVER, BC – May 28, 2015 ( Mining stocks newswire) Goldsource Mines Inc. (“Goldsource” or the “Company”) is pleased to announce that construction at its Eagle Mountain Gold Project (“Eagle Mountain”) located in Guyana, South America is progressing on schedule and currently on budget.

Friday, May 29th, 2015 News Comments Off on TSX Mining News: Goldsource (TSX-V: GXS) Announces Construction Update at Eagle Mountain Gold Project

Why Is This Junior Gold Developer in Quebec Outperforming GDXJ By Such a Wide Margin in 2015?

Investors are chasing stocks higher on margin, while commodities and precious metal investments are being ignored and trading at fractions of their true value.  We must learn from history about the negative correlation between commodities and stocks.  When one market rises the other usually falls.

Over the past four years we have seen a huge rise in the general equity markets while most of the junior gold miners have been forgotten. These bear markets in natural resources when financing dries up and mines are closed fuels the next bull market as the supply dries up.  The larger and more severe the decline, the greater the subsequent rise.  Exploration budgets for metals and energy have been cut drastically over the past few years.  Where will the new mines come from once demand picks up?

There have been very few successful discoveries like Integra Gold (ICG.V or ICGQF) has made at their Sigma-Lamaque Deposit in Val D’or, Quebec.  They continue to attract major capital and appear to be one of the most active and best performing junior gold developers in the industry as they are developing a high grade asset which could be economic even with declining gold prices. Look at the outperformance of Integra Gold  compared to the Junior Gold Mining ETF (GDXJ).

They recently released exploration discovery news that may be quite pivotal for this project as a takeout target.  See the news release by clicking here.  Integra intersected the thickest interval ever reported from the high grade Triangle Zone.  The geological modeling has confirmed multiple structures accounting for additional mineralization.  In addition, new zones were discovered below the resource estimate boundary.  This deposit appears to be growing in size and increasing grade, its open laterally and at depth.

In addition, Integra just announced a critical permit necessary for the beginning of underground development work at the Triangle Zone needed to complete a bulk sample.  Quebec is one of the top mining jurisdictions in the world when it comes to permitting and this approval represents the beginning of the next major phase of underground exploration.  What is crucial to note from the Press Release is all of the permitting work that was completed and what is expected as Integra moves closer to eventual production.

  • Federal Environmental Assessment — Completed Q3 2014
  • Provincial Environmental Assessment — N/A (projected daily throughput below threshold)
  • Triangle Zone Provincial CA for Underground Exploration — Completed Q2 2015
  • Triangle Zone Provincial CA for Underground Production — Expected Q2 2016
  • Parallel Zone Provincial CA for Underground Exploration/Production — Expected Q3 2015
  • Milling/Tailings/Waste Rock Provincial CA — Completed Q1 2015
  • Conversion of Triangle Zone exploration claims to mining leases — Expected Q2 2016
  • Public consultation (Val d’Or Community, First Nations, other stakeholders) — Phase II Completed Q1 2015

With the recent acquisitions in Canada of Osisko, Probe and Mega, I expect Integra could be a potential target and should continue to outperform the Junior Gold Miner ETF (GDXJ).  Notice the relative strength uptrend in the chart above.  That trend should continue as Integra makes great progress on the development of the Sigma-Lamaque Mine and Mill.

Integra has been in a strong uptrend since November of 2014.  Increasing accumulation in 2015 combined with the recent high volume MACD Reversal could lead to the next breakout at $.35.

See my latest interview with Integra’s Chairman George Salamis below.

Make sure to also read the article from the Vancouver Sun about Integra’s CEO Steve de Jong entitled, “Young CEO drives Quebec gold project forward”.  Steve has done a remarkable job of attracting capital and generating interest in Integra during a very challenging gold market.

Disclosure: I own shares and warrants in Integra.  They are a website sponsor.  Do your own due diligence as I am not a financial advisor.


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