THE TIPPING POINT
March 01, 2008
The markets continue to prove that they are still on the tipping point. Every week it’s the same bad news written by a different pen. As the markets plunge multiple percentage points every week, we continue our monthly declines.
When these big companies (banks and insurers) announce news and move the market down, I find myself squeezing my always loyal stressball (it’s the only consistent thing in my working life). To stay ahead and keep the hair on the top of your head, I recommend monitoring a handful of the largest financial companies in the United States very closely over the next two quarters. As the new President takes over, all of the financial mistakes will be uncovered and more importantly remedied. I am very confident a shift is approaching. The financial companies which lay the foundation for growth in North America and the world will stabilize and grow, allowing other industries to do so as well - at much higher levels than today.
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aua
Can you tell me whether this stock has a chance greater than a snow ball in hell. This should be renamed "Frustration"
Re: THE TIPPING POINT
great review on the tipping point BB, many investors and pro's in the business are saying were headed for a turnaround in the juniors, what do you say about that?
Re: THE TIPPING POINT
so are the markets still on the tipping point BB,
looks like they have turned around for the moment, what are your thoughts on Pinnacle's new featured company?? what would be the main risk associated with it, and the main upside.. i'm sure many people would like your opinion on it,
Re: Titaf of TTA
I was more familliar with the Canadian listing side of things, I remember when they shot to the moon some months back , I considered investing in them then and have been watching the loosly over the past few months, I saw the private placement, decent, but.. alot of their info is 'read between the lines' It is hard to invest in a company you don't exactly understand, or exactly know what they are planning..
The proceeds of the private placement will be used to enhance marketing and training programs, software development and for working capital.
maybe you have a better handle than myself,
Titaf
will, Does anyone have any insite on Titan Trading Analytics? It was a trading forex company that Pinnacle was considering as a featured company over the last couple of months.
Re: THE TIPPING POINT
Sorry, but beg to differ. we feel strongly we are rapidly approaching the end of an era (and the end of the American empire, BTW)
Credit is not money and the biggest credit bubble ever is unwinding (soon a great popping noise will be heard round the world followed by a giant sucking sound as the credit toilet is flushed, along with all fiat curriencies and the economies depending on it)
friends, BUY GOLD/SILVER!!! and keep your heads down.
BELIEVING YOUR OWN EYES.........................SILVER
Believing your Own Eyes
SILVER WEEKLY COMMENTARY
April 8, 2008
By : Theodore Butler
TED BUTLER'S ARCHIVES
Investmentrarities.com
From the beginning, I have steadfastly maintained that a silver commitment should be made for the long term, after one has done sufficient investigation into the facts surrounding the commodity. Now, more than ever, I believe that to be the correct approach.
Over the past few years, the price of silver has climbed impressively, enriching many and validating the bullish case. However, that doesn’t mean you should accept only what you want to hear or read. You can’t profit on that which has already occurred. Profit accrues on what happens in the future and how you are positioned to take advantage.
Even if you were fortunate enough to initially invest at much lower than current prices, you should be on guard for changing supply and demand circumstances that might dictate that the silver price is no longer undervalued. After all, the time to consider selling is when you feel the price becomes overvalued compared to the fundamentals.
A long-term holding is much like a long journey, a travel that will occupy a good portion of your life. Sometimes the journey will be successful and bring financial and intellectual rewards, other times not. Long-term investment journeys, like other life paths, can be adhered to or changed, depending on your readings of the mile markers and signposts along the way. Obviously, if you start getting signs that danger lies ahead, a change may be in order. Likewise, confirmation that you are on the right path should encourage you to stay the long-term course.
Ending a silver investment based upon the many periodic short-term price sell-offs has been generally a mistake, even though those sell-offs can be unnerving. So what signs, aside from price action, should you look at along the way, to reinforce you are on the correct long-term path? What and how seem pretty straight-forward to me. You look at the facts and you rely on your common sense to observe and interpret those facts compared to your original motivation for buying silver. Do the facts, as you see them, confirm or undermine your original decision for buying silver?
The first thing I see is a current retail investment tightness or shortage in silver for the first time in history. I also see that the US Mint has run out Silver Eagles, for the first time ever, amid record retail demand. I don’t know if this tightness or shortage will continue. I just know it has occurred for the very first time in my, or anyone else’s, lifetime. I don’t know if this retail tightness will lead to a wholesale tightness, but my common sense suggest to me that it easily could.
The next thing I see is that, also for the first time, there was no liquidation in the metal holdings of the silver ETF in the face of a fairly sharp sell-off. In fact, there has been a significant increase in those holdings very recently, which is also unprecedented. This suggests to me that deep and strong hands of the wholesale variety are interested in buying and holding silver, in spite of temporary price weakness.
Next, I see evidence that the retail shortage is unique to silver. I am aware of no reports of retail gold shortages. I also see no signs that the US Mint is having trouble keeping up with gold coin demand, or that gold coin sales are anywhere near a record high. If anything, Gold Eagle sales are very much closer to record lows, not highs. This is not a knock on gold. It could be that things will change and gold retail sales will suddenly soar like silver sales, but this exercise is about observing facts and signposts.
Further, I see many credible reports of the widespread melting of gold by the public in response to the higher prices and tough economic times. A recent prominent story in the NY Times enlightened me to jewelry parties (much like Tupperware parties) where women came together in a social setting, with a gold-buying representative present, to weigh and evaluate old gold jewelry to be melted and write a check out on the spot. I am aware of and have read no such stories of unusual silver melting or silver parties.
Take a moment and try to transport yourself back a few years ago, when silver was in the sub $5 price range (and gold around $300). If someone suggested that silver would be in the $17 to $20 price range at this time, most observers would have sworn that would bring silver for melting out of the woodwork, causing a glut of metal. Few would have suggested a surge in gold melting at current prices. Even fewer would have predicted a surge in silver investment demand. Here we have a five-fold increase in the price of silver, and instead of a glut of household silver available for melt, we face an unprecedented tightness and record demand.
My expectation was that there was less above ground silver than gold. Furthermore, there was less silver in the world every day, due to silver‘s industrial consumption. I always knew that silver offered more relative value than gold, no matter what the current price of each was. I thought there would be a shortage in silver, while it would be impossible for there to be a gold shortage.
This has been a signature issue of mine from the very beginning. I hope and expect that gold continues to increase in price, but I don’t have to hope silver will outperform gold, as the facts demand that out-performance. Gold investors are doing themselves a disservice by not over-weighting their metal exposure to silver. Make the switch now, based upon the clear evidence right in front of you. Don’t wait until silver’s price performance has made itself clear. It will be much more costly to switch later, after the majority see the real facts.
If and when the time comes when it appears the silver journey is reaching its final destination, amid credible evidence of serious surplus and net selling and the resolution of the concentrated short position, prudence will dictate a reevaluation. I know of no such current evidence.
What is most important is how you reconcile what you see with your own silver journey. This is you and your family’s financial future at stake. It is your own journey. Do you see any signposts that undermine your original decision to buy silver for the long term? Even more to the point, ask yourself this question - in light of what you see with your own eyes, do you have enough silver?
Simple Questions
There continues to be a running discussion on pool and unallocated silver programs. Those who issue or sell such accounts continue to insist that real silver backs every dollar deposited by investors. But all that has been forthcoming has been words, not proof. As I have previously written, it is important to "trust, but verify."
Unfortunately, I am aware of no issuer that has actually verified that real silver backs any pool or unallocated account. And to do so would be a snap. Just list the serial numbers and weights of the 1000 oz bars backing these programs. If Barclays can do it for the 184 million ounces in their silver ETF, why can’t the issuers of the pool and unallocated accounts do so as well?
Here are some simple questions for investors and potential investors in pool or unallocated silver programs. What’s in it for the issuers of such accounts? How do they make money if they actually buy real silver, store it for you, and don’t charge storage fees? Are they in business to do you a favor at no profit to themselves? Would you do that if you were them? If you can’t answer these simple questions, and lacking the published serial numbers, a reasonable person would have to conclude that there can’t be real silver backing these programs.
Theodore Butler
Investmentrarities.com
(No one can safely predict the future and it’s possible that Israel Friedman’s Butler’s analysis will prove incorrect. Silver can go up, but silver can go down. It is up to you to read, analyze, and arrive at your own conclusions. Prudence requires we emphasize that precious metals may or may not prove to be suitable for your consideration.)
Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author.
Commodity Bull Ready to Charge Again
Commodity Bull Ready to Charge Again by Sean Brodrick 04-09-08
Sean Brodrick
The last few weeks have been the roller coaster ride from hell for commodities, an up-and-down whirlwind that has left many traders feeling turned inside-out.
But I think there are strong signs that a commodity correction may be coming to a close. If you're not long yet, you might want to consider putting some money to work.
After all, the inflationary forces and fundamentals that are driving commodity prices higher are still in place. Has the Fed stopped pumping money into the system? Have we stopped importing inflation from China? For that matter, have the Chinese given up on buying new air conditioners, cars, and eating more and better food? No, no and NO!
Today, I want to give you an update on natural resources. First, let's talk about the continued strength we're seeing across the board in the futures markets ...
1) Strength in gold despite bearish "fundamentals."
Consumers' appetites for gold seem to drop as prices go above $900 an ounce, and there's talk of the U.S. dollar finding a bottom. And yet, gold ended last week rebounding from its recent sell-off and looks poised for another run at its highs. When commodities go higher in the face of forces that usually drive them lower, that's pretty bullish!
Of course, it's also worth noting that the fundamental supply-and-demand issues pushing gold higher aren't going away anytime soon:
* Global gold production fell to a 10-year low of 2,444 metric tonnes in 2007, according to Gold Fields Mineral Service. This year, production will likely drop again. While China is producing more gold — up 12% — South Africa's output is falling off a cliff, down 8.1%. Gold miners are exploring frantically, but the mother lodes are getting harder to find. This should drive consolidation in the industry going forward as the big companies gobble up the smaller fish to replace their reserves.
If approved by the U.S. Congress, the IMF's planned sale of 14.2 million ounces of gold should be readily absorbed by the market. If approved by the U.S. Congress, the IMF's planned sale of 14.2 million ounces of gold should be readily absorbed by the market. * The huge rush of gold buying by the ETFs is helping drive the market. Demand from exchange-traded funds and other funds that hold physical metal was up 16% in 2007, after jumping 25% in 2006. Now, exchange-traded funds that hold physical gold — GLD and IAU in the U.S., GOLD in Australia, GLD in Johannesburg, GBS in France and Britain — hold more gold than many central banks. What's more, a new gold ETF in India is planned for this year.
* Petrodollars are pouring into gold! Gold demand in the Middle East rose 30% in 2007. In Dubai, gold sales climbed 23.8% to $2.6 billion. In Saudi Arabia, gold demand rose 15.2% to 120.2 metric tonnes while sales value rose 33.3% to $3.2 billion.
Speaking of petrodollars ...
2) Like it or not, we live in a global, petroleum-based economy.
Oil inventories are building week after week, and yet crude prices are trending higher. Why? As the name implies, oil futures trade on the perception and anticipation of the future. Oil has climbed to record highs as futures traders bid up the price. Oil has climbed to record highs as futures traders bid up the price.
We talked about the supply-and-demand issues facing gold a moment ago. Oil is facing similar issues, but the potential severity is multiplied a thousand-fold!
Like it or not, we live in a global, petroleum based economy. If a real disruption in the supply of oil were to occur, the Fed could pump a trillion dollars into Wall Street, and still the NYSE would still collapse.
Even if the unthinkable never happens, traders look at the following data and project it out into the future ...
* Mexico is one of our major foreign oil suppliers. But the situation in Mexico's aging, under-financed oil fields is going from bad to worse. Production began to fall in 2005, and Mexico may have to import light crude for its refineries by 2011, according to Energy Minister Georgina Kassel. Without new production, daily oil exports may plummet to 289,000 barrels in 2016 from 1.67 million last year.
* Russia is one of the world's biggest oil exporters. But Russian oil output may fall this year for the first time in a decade. Output fell 0.7% in January and 0.9% in February, to 9.79 million barrels a day.
* Global demand for oil continues to rise. The International Energy Agency expects demand to rise 2% this year to 87.54 million barrels a day. That's over 1,000 barrels a second!
3) A worsening global agriculture crisis.
I've told you in recent columns how billions of people in China and India are changing their diets — eating more and better food. The Chinese ate just 44 pounds of meat per capita in 1985. They now eat over 110 pounds a year. Each pound of beef takes about 7 pounds of grain to produce, which puts even more pressure on grain prices. Internal Sponsorship
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As a result ...
* Global wheat stockpiles are at 26-year lows and U.S. wheat stocks are at 59-year lows. Soybean stockpiles are also at multi-decade lows. Now, the same thing is happening in rice. World rice stockpiles are at their lowest levels since the 1980s, and the United Nations forecasts that exports will drop 3.5% this year.
* As of last December, 37 countries faced food crises, and 20 had imposed some sort of food-price controls.
* The prices of the world's three main grains — rice, wheat and corn — have all more than doubled in the past year. Over the past eight years, the price of food worldwide has increased 75%; the price of wheat has gone up a dramatic 200%. The rate of inflation is accelerating. In a recent report, the United Nations predicted that food prices are likely to remain high for a decade.
As you might imagine, all this is putting a tremendous upward squeeze on agriculture commodities ... and fattening the bottom lines of agriculture companies. But that's not all ...
4) Basic materials are soaring, too!
Korean steel giant Posco just agreed to a tripling of the price of coking coal, the kind used to make steel. That sets the bar for industry much higher. Meanwhile, iron ore prices jumped by between 65% and 71% for the 12 months starting in April as demand from Chinese steelmakers outpaced global supplies.
And copper is going higher, too — Citigroup boosted its 2008 forecast for copper prices by 15%, citing rip-roaring demand from, you guessed it, China.
How do we line up a surge in demand in basic materials with calls we're hearing for a global recession? Answer: We don't!
Somebody is obviously wrong — you can't have demand and prices soaring at the same time that a global recession is taking place. Me, I'm following the money — I'm betting on commodities.
All Member Performance
Just look at this one-year performance table. Gold is up 34% ... pretty good, until you compare it to soybeans (57.4%), heating oil (73.5%), crude oil (78.8%) or wheat (85.8%)!
The trend is your friend, and I think this trend could continue a good while longer. It turns out I'm not the only one ...
A Fund Manager Worth Listening to
Recently, I had a good chat with Frank Holmes — CEO and chief investment officer of U.S. Global Investors. I often recommend his mutual funds in Money and Markets because I like his investing style.
For example, he says that rather than inflation, "What we're seeing is the end now of mass deflation."
We've seen inflationary cycles before — for example, in the oil embargo of the 1970s — but this time, Frank believes, inflation is demand driven, not supply driven.
For example, he says: "Now we're seeing food inflation. That's partly our policy of ethanol. The rest of the world is eating wheat and corn," he says, while we're trying to run our cars on grain.
"We can resolve that," Frank says. "The bigger picture that most people fail to grasp is the significance of the super-cycle. In the 1970s, there were 3 billion people on Earth. Now, there are 6.5 billion people. In fact, we have 3 billion people just living in city centers."
By 2030, there should be 8.3 billion people on Earth, and six out of 10 of them will live in cities!
And the countries where that population boom is taking place are countries where people covet the Western lifestyle.
"In 1970, China and India had no global footprint," Frank points out. "Today, they're approaching 20% of global GDP."
And that footprint could get a lot larger. Those two countries contain 40% of the world's population.
"There is an economic infrastructure revolution taking place," Frank says. "In January, China and India announced their next 5-year plans, with trillions of dollars in infrastructure spending."
Clearly, these spending plans are lighting a fire under commodity prices.
Before this super-cycle is over, Frank says he expects to see copper — currently around $4 per pound — at $6 or even $8 a pound. Meanwhile, he points to a lack of planting in soft commodities and a lack of exploration in hard commodities as forces that will drive the cost of both much, much higher over the long term.
And as for oil, he's looking for a pullback, but he also doesn't think we've seen the high prices for the year, either. The long-term picture hasn't changed.
I tend to agree with Frank's outlook. And beyond the signs of strength in commodities, the long-term forces driving prices higher are irrefutable. Here's ...
How to Play It
I think a couple of Frank's no-load U.S. Global funds are great plays in the global commodity super-cycle. The basket of commodities held by the CRB Index is trending higher ... and looks ready to take another run at its recent highs!
For example, the Global Resources Fund (symbol PSPFX) runs the gamut of commodities.
And the Global MegaTrends Fund (MEGAX) is stacked with companies that should benefit from the infrastructure build-out — stocks including Schlumberger, First Solar, Chicago Bridge & Iron, and more.
Or if you wanted to use an exchange-traded fund, you could check out the PowerShares DB Commodity Index Tracking Fund ETF (DBC).
A quick glance at a chart of the widely-tracked Reuters/Jeffries CRB Index of 19 commodities shows you that while it has pulled back from its recent highs, it is still trending strongly higher.
In fact, that pullback looks like a good opportunity to get onboard — before this profit train leaves the station.
Yours for trading profits,
Sean
Re: THE TIPPING POINT
Basket9,
I agree with the report but I do feel we have a few more months of tough times. Perhaps not as crazy as January and March but still some turbulence then a lull and then in 2009 a bull market.
Re: THE TIPPING POINT
very sound review Blue Barron, in my opinion we are coming out of the Tipping Point, the markets are stabilizing, i can feel it...