woensdag 29 februari 2012

Silver Margin Requirements Hike: A Timeline

Today we had a pretty big decline in the price of silver and gold: almost a 7% decline. And by coincidence the timeline is precisely 5 months between each margin requirement hike.

The first big drop in the price of precious metals came on 02 May 2011.
The second big drop in the price of precious metals came on 23 September 2011 on top of another margin requirement hike and operation twist.
This time, something fishy is happening, but I can't tell what. Maybe another margin requirement hike?
Maybe because of Bernanke's testimony?

=> Bernanke Speech
=> Ron Paul at the Bernanke Testimony

The timing of course, is a pure coincidence. I'm wondering if they are trying to manipulate it down for a third time. We'll see...

Timeline of Margin Requirement Hikes in Silver/Gold (PSLV)

maandag 27 februari 2012

An analysis of MZM Velocity and 10 Year US Bond Yields

I recently discovered (autodidacticly) that MZM velocity correlates well with 10 Year US Bond Yields. To see the analysis go to: Treasuries are a bad deal

vrijdag 24 februari 2012

Japan: Equities to outperform Bonds

Marc Faber told us to buy Japanese equities last year, saying that government bonds in Japan would underperform equities. One of his stock picks was Nomura Holdings (NMR), which has a dividend of 2% and price to book ratio of 0.65. Its last quarter net earnings were $US 200 million, but has had big losses in the previous quarters. Nomura is a speculative play on Japanese equities, but I believe Japan is undervalued by investors.

I fully concur with Marc Faber to buy Japanese equities, and the best play for this is Nomura Holdings. If people start loving Japanese equities, Nomura will flourish as it is the primary brokerage service in Japan. To see why equities will outperform bonds, go here: Nomura Holdings: Japanese Equities to outperform Bonds.

donderdag 23 februari 2012

Strength in currency: a good thing?

Today I was thinking about the yen dropping against other currencies. Mostly, such things happen when governments print money. But also when countries post deficits in their current account balance.

The mechanics are as follows:
A country exports stuff to other countries and receives money in foreign currency. Let's say Japan exports Playstations to America and receives US dollars. Japan will of course want yen, and will exchange those US dollars into yen so that they can buy things with yen in their own country Japan.

If Japan exports more to the US as the US exports to Japan, then more money will flow to Japan than to the US. So more US dollars flow to Japan as yen flow to the US. Which means more US dollars need to be converted into yen, which makes the yen rise.

Conversely, when Japan has a trade deficit, like today, then the yen will drop against other currencies out there. So basically you want your currency to strengthen, which indicates that your balance sheet is improving.

Strength in currency:
Strength in currency has other positive effects. If your currency is higher than other currencies then you can buy more stuff. Let's say the oil price is $US 100/barrel. If the yen goes up against the US dollar, the oil price is still the same, but Japanese people can buy more oil, which means their import costs go down, which is good for their balance sheet.

People will say though, if your currency goes up, you will export less. I think this is a complete baloney! When your currency goes up, you can always reduce the prices of your goods that you sell to foreigners. You will have less revenue (because you sold for a lower price), but your currency went up (which means you didn't lose any money). You will still have the same real revenue as a company, currency adjusted. Of course, when you reduce the price of your goods sold, you should also reduce the wages of your employees, otherwise costs will go up. But the employees shouldn't have a problem with this, because they still have the same buying power as their currency just went up against other foreign currencies. And if they had money in the bank, that money just went up in value against other currencies.

Generally, companies will benefit though, because their import costs went down due to a strenghtening currency.

When your currency goes up you will always benefit:
1) You can buy more stuff (oil, food, gold...)
2) Exports will NOT go down as you can always reduce prices of your goods sold, and reduce wages of your employees. Import costs will go down as the currency went up against other currencies.
3) Employees aren't affected as their reduced wages are compensated by a higher currency. Their buying power stays the same.
4) Savings in their own currency will appreciate in value.

I would love to have a discussion with anyone who doesn't concur with this thesis.

woensdag 22 februari 2012

Working without salary

Look how people of Greece are now working without salary:

Allana Potash: Lowest Cost Producer

Agricultural prices have been bottoming out since 2012 after a large decline in 2011 as I already pointed out here. Similarly, many potash producers have seen a huge decline in their stock prices. Once the trend changes, it will be time to buy back into the potash sector. One of the best speculative investments out there is Allana Potash (ALLRF.pk).

To see why this is go to: Allana Potash: Undervalued Potash Producer of the Future

maandag 20 februari 2012

Vista Gold: Concordia turns into a catalyst

Vista Gold (VGZ) has been in the spotlights because of Eric Sprott's involvement in the company (5 million shares or 7% of the company). Recently Sun Valley Gold invested quite a big amount in Vista Gold (6 million shares).

Vista Gold's market cap is $US 250 million. The company has no debt and has a working capital of $US 25 million. Its management is very experienced (all around 30 years of experience).

To see my analysis go to: Why Vista Gold is Extremely Undervalued

Vista Gold (VGZ)

zondag 19 februari 2012

US Real Estate a Bargain?

On 20 January 2012, the National Association of Home Builders showed confidence in the housing market rose for a fourth month in January to the highest level since June 2007.

There are many reasons why I follow Marc Faber's market outlook and this is one of them. He is mostly right in his predictions.

A few months ago, Marc Faber told us that US real estate was a bargain. And look what happened, the housing market index improved. Housing starts also improved more than forecasted.
Housing Market Index

As a result the iShares Dow Jones US Real Estate (IYR) has been doing quite well over the last years.
iShares Dow Jones US Real Estate (IYR)

There has been evidence of houses in the US with multiple bedrooms, swimming pools, etc... that can be bought for only $US 150000. That is a real bargain if you compare that to where I live (Belgium), where you can only buy a medium sized appartment for $US 200000.

I don't recommend buying US real estate as I know interest rates in the US will go up. But compared to other countries (housing bubble in Belgium), real estate in the US is certainly not overpriced.

zaterdag 18 februari 2012

China: How Real Estate, Reserve Requirements, Yuan and US Treasuries interact

Real estate in China, which accounts for 13% of the Chinese economy, has been bottoming out since the beginning of 2012. China has been actively directing the bank reserve requirements and deposit rates since many years. What China is doing is not to be underestimated and I'll show this in this article: China: How Real Estate, Reserve Requirements, Yuan and US treasuries interact

vrijdag 17 februari 2012

Greece: The "Debt"-line is near

There has been much talk about Greece defaulting on 20 March 2012. I can't agree more on that statement. By 20 March, Greece needs to pay $US 18 billion in bond payments. In 2014 their $US 100 billion debt matures Here's why I think they won't be able to pay off their debt: Greece: The "Debt"-line is near

donderdag 16 februari 2012

PAGE: Pan Asia Gold Exchange

I found an interesting article about PAGE: Pan Asia Gold Exchange.


What caught my eye is that PAGE could literally obliterate the market manipulation as the US won't be able to play with margin requirements. If the US were to increase margin requirements, the price of gold in the US would go down, while the price of gold in China would be higher. Chinese would then sell their gold and buy US gold which makes the price go to equilibrium again.

Anoter important fact is that PAGE is 100% backed by gold, while GLD, COMEX etc... don't really have the gold.

Finally, PAGE will be the prerequisite for China to introduce the yuan as reserve currency.

Commodity performance year to date

Today Goldmoney presented a nice chart about the relative performance of several commodities.

Notable is that natural gas has done really bad, due to oversupply. While silver and platinum are the best performers.

Performance year to date of commodities

woensdag 15 februari 2012

Capacity Utilization at 78.5%

Capacity Utilization reported at 78.5%. I think that this is still bullish going forward for precious metals.

The uptrend is still intact, so no worries holding gold and silver. But I expected it to go up more, so I'm a bit disappointed...

See my analysis at: Seekingalpha

dinsdag 14 februari 2012

Adecoagro (AGRO): Agriculture in South America

At the beginning of 2012 agriculture prices are starting to turn around after the big correction that occured in 2011 (Chart 1). Speculators have started to add net long positions in agriculture due to drought concerns in South America.

Chart 1: Rogers Agriculture ETN (RJA)
A great play on agriculture is Adecoagro (AGRO), to find out, go to: Seekingalpha

maandag 13 februari 2012

Platinum gaining ground over Gold

As I wrote an article about Platinum a few days ago, Goldmoney.com has its eyes on the Platinum price too:

You can find the article here:
Goldmoney's article

Insider Trading Update

Today I present you notable bullish insider transactions for the last 13 weeks.

1) LaCie
2) Sears
3) Transocean
4) Wendy's
5) Dominion

To see the analysis go to: Seekingalpha

zaterdag 11 februari 2012

Coeur d'alene Mines Corporation: An Analysis

Coeur D`alene Mines Corporation (NYSE:CDE) is a very interesting silver play, which was on my list to buy. The Company’s properties are located primarily in the United States, Australia, and South America. They have 200 million ounces of silver ($US 6.6 billion) and 2.5 million ounces of gold ($US 4.3 billion) (proven and probable reserves). This translates to 60% silver and 40% gold. So Coeur D'alene Mines Corporation is essentially a silver play and that interests me because I'm bullish on silver.

Notable is that Sprott Asset Management significantly increased its position in Coeur D'alene Mines Corporation in September of 2011. On 06/30/2011, Sprott Asset Management reported holding 65,500 shares with a market value of $1,589,030. This comprised 0.21% of the total portfolio. On 09/30/2011, Sprott Asset Management reported holding 1,359,200 shares with a market value of $29,141,249. This comprised 3.65% of the total portfolio. The net change in shares for this position over the two quarters is 1,293,700. Since Sprott Asset Management bought in last year, the share price hasn't moved at all, so there is still time to buy in. Let's investigate why Sprott Asset Management has increased its position so much.

To find out visit: Seeking Alpha

Eric Sprott interview with Agoracom

Interesting interview on PSLV (Sprott Physical Silver Trust) with Eric Sprott.


The road to hyperinflation

Today president Obama disclosed the projected US budget deficit for 2012.

The projected deficit would reach $US 1.33 trillion in fiscal year 2012. While in December 2011 the trade deficit widened to $US 48.8 billion. For full year 2011 the deficit was $US 1.3 trillion.

Here's what the government forecasted previously (Chart 1). They forecasted a smaller deficit in 2012 of only $US 1.1 trillion. Clearly they got it entirely wrong because the deficit in 2012 is projected to be larger than 2011, namely $US 1.33 trillion. To see what this means go to: The road to hyperinflation.

vrijdag 10 februari 2012

Capstone Mining: The Future is Bright

I could not be more bullish on Capstone Mining (CS) today. Two years ago I heard Peter Schiff say that people should buy Capstone Mining at $US 3.2 a share before it was too late to buy it. Today, the price of Capstone mining is exactly $US 3.2 a share at a P/E around 12. So basically nothing happened to the share price and no dividend was paid to the shareholders. You would think that the company did nothing in those 2 years. But that is far from true. Find out on this link.

Chart 1: Capstone Mining (TSE:CS)

Baltic dry is forming a bottom

Looks like the BDI is forming a bottom. It could be that demand for industrial commodities is growing temporarily.

It is very important to know that the BDI doesn't correlate very well with commodity prices, but it correlates excellently with demand. If demand picks up in the coming months, we could see gains in stocks while people flee the dollar cash.

Baltic Dry Index

Baltic Panamax Index

Baltic Supramax Index

donderdag 9 februari 2012

Trade Gold for Platinum

Since 2011 the gold price has been rising a lot, while platinum was going down. One of the reasons for this drop is weaker industrial demand due to the economic crisis. Other reasons are unwinding of funds and China slowing down. Platinum can be classified as a precious metal due to its rarity (30 times rarer than gold), but it's also an industrial metal (high heat and corrosion resistance). So it doesn't hold up as well as gold, which is money. The reason why platinum should be more expensive as gold is because platinum is very difficult to mine. But there are many other reasons out there, to find out click here.

woensdag 8 februari 2012

Ride the Silver Boom with Endeavour Silver (EXK)

Gold has been riding a phase 2 bull market since it crossed over $US 1000/ounce since 2010. But silver is still in a phase 1 bull market. Nobody is buying silver, you can't buy silver in a bank. But the interest in silver is slowly arising and coming into a phase 2 bull market. As an anecdote I'll tell you a short story of my silver buying experience.

Last year I went on holiday to Hong Kong and the idea to buy silver crossed my mind. So I went to Hang Seng Bank to do the same. They told me they could only buy gold for me, not silver. I was not interested in gold, because I wanted to be invested in the real 10 bagger, which is silver. I asked if they had silver stocks then? Answer, they had none. They didn't have Silvercorp Metals on their Hong Kong stock exchange, which is the best silver producer in China. I was completely flabbergasted. Then next on, I told the clerk to give me gold. Her advice was: "Why buy gold? it is already so high". After hearing this, I immediately knew that the bull market in precious metals hadn't even begun... But let's get back to the silver story.

Historically, Mexico has been the world's largest silver producing country in the world with an annual production of 100 million ounces per annum. So all the silver is in Mexico, if silver goes up in price, Mexico will benefit the most from that. So you got to invest in a company that has its operations primarily in Mexico. Endeavour Silver (EXK) is such a company and is recommended by Peter Schiff (as he disclosed last year that he was (and still is) invested in this stock). To know more about Endeavour Silver please visit the link here.

maandag 6 februari 2012

Dominion Resources: A Play on Disparity in Natural Gas Prices Between America and Russia

I noticed that the spot natural gas price in America is going down while the Russian natural gas price is going up. Both natural gas prices started at $US 290 per thousand cubic metres gas in the beginning of 2007. Today Russian natural gas is 4 times more expensive than American natural gas. I wonder why this is...
Read my article to find out: Dominion: a play on natural gas disparity

European banks: Government Debt Exposure

Today I came across a very nice (and funny) presentation on how much government debt exposure these European banks have on their balance sheet.

You can find the presentation here: http://demonocracy.info/infographics/eu/debt_piigs/debt_piigs.html

bank government debt
Bank government debt exposure (Demonocracy.info)

Based on this picture you can almost predict which bank is the safest/riskiest bank to place your money in. The banks with the highest exposure to government debt are the banks that are the most risky when we are faced with a government debt collapse. Almost all of them are Spanish and Italian banks. If you do place your money in a bank, choose wisely! Or do what the wise man would do, don't choose, instead buy gold.

zondag 5 februari 2012

Cold weather in Europe

The cold weather has struck in Europe and demand for natural gas has picked up. Let me give a status update.

United Kingdom:

Preparations have been made across London to deal with what is forecast to be 5-10cm (up to 4in) of snow falling across England's capital city. Transport for London (TfL) said that over 100,000 tonnes of salt was ready to put on the roads, more than before.


In Austria, temperatures in the western city of Salzburg hovered around 7 degrees Fahrenheit (-14 Celsius) on Saturday, and a technical problem at a power plant left 10,000 households without heating on Saturday.

Boznia and Herzegovina:

Rescue helicopters evacuated dozens of people from snow-blocked villages in Bosnia and air-lifted in emergency food and medicine as a severe cold spell kept Eastern Europe in its icy grip. Two helicopters were used Wednesday to rescue people and supply remote villages in northern Bosnia. All together some 200-300 people are cut off. Some villages have had no electricity for two days and crews were working around-the-clock trying to fix power lines. The snow is about two meters high (6 feet) and we have cleared off paths that look more like tunnels.


In Ukraine, the cold led to more than 600 people being treated for frostbite and hypothermia within three days, according to officials. Nearly 24,000 people sought shelter during the same three days, and at least 30 people have died.


In Moscow, 15 people froze to death at the weekend, some because of exposure while intoxicated, city hall officials said. Overnight temperatures were -23 Celsius. All schools in Russia's central Siberian Khanty-Mantaisky region were closed because of daytime temperatures of -30 Celsius. Heavy snowfall in Russia's Kuban region, in the foothills of the Caucasian Mountains, left 17,800 people without power and closed airports and major highways. Overnight snow accumulation was 35 centimetres at some locations.

zaterdag 4 februari 2012

Gazprom benefiting from Europe's snow: OGZPY

Natural gas prices have been plummeting more than 50% since its peak in 2010 and is attributed to the huge oversupply in natural gas. More and more natural gas has been found while consumption doesn't keep up with supply. But as Marc Faber famously quotes: "The best time to buy commodities is when markets are glutted". This is because the prices are the most depressed during these times. One company that I highly recommend is Gazprom (OGZPY), due to its exposure to natural gas and oil. To see why I recommend to buy Gazprom please go to my article located here: Gazprom benefiting from Europe's snow: OGZPY

It's important to monitor the Russian natural gas price which can be found here:

Notable is that natural gas prices in America are plummeting, while Russian natural gas prices are going up.

vrijdag 3 februari 2012

Sun Hung Kai Properties: a good buy

Hong Kong is one of the best parts of Cina to invest in real estate. The Centa City Lead Index, which tracks the secondary private residential property price in Hong Kong is still in an uptrend, despite some weakness in 2011. 

Centa City
Centa City Lead Index

I highly recommend Sun Hung Kai Properties to benefit from this uptrend. This company is strong in Hong Kong and also has property in China: Shanghai, Beijing... So let's look at the Shanghai property index. The one year chart looks like it's bottoming out.
Shanghai Property
Shanghai Property Index

The long term chart of Sun Hung Kai Properties is bottoming out as well and correlates very well with the Shanghai Property Index chart.
Sun Hung Kai properties
Sun Hung Kai Properties SUHJY

And last but not least: Marc Faber bought Sun Hung Kai Properties at the end of last year as disclosed in this video.

donderdag 2 februari 2012

New Gold: The Perfect Storm for Growth

As the gold correction has almost run its course, it's time to once again benefit from the rise of gold by buying into gold mining stocks. One nice growth story is New Gold (NGD).

New Gold has 3 operating properties: Mesquite, Peak Mines and Cerro San Pedro Mine with altogether approximately $US 200 million net cash flow. The market cap of New Gold is $US 5.54 billion with a price to book value of 2.5. This corresponds with a P/E of 24.78. Cash costs of the projects are coming down, while production is steadily increasing. You could think this is very pricey, but the secret lies in its development projects of which the cash flow will grow at an exponential pace.

New Gold has 3 development projects: New Afton, El Morro and Blackwater. These properties will propel NGD exponentially. To see how, please visit my article at: Seekingalpha

woensdag 1 februari 2012

Marc Faber Slovenia Resource Conference 2008

For those who haven't seen the Slovenia resource conference in 2008 by Marc Faber, here it is. The most important chart in the presentation was the Zero hour graph (part 7), pointing to hyperinflation. Everyone needs to watch this to understand what is going on.