China: Turning US Treasuries Into Hard Assets

A month ago I indicated in this article that China is massively buying copper. It seems that this trend hasn't stopped yet, and it won't stop anytime soon. The LME copper warehouse stocks level has been trending down since late last year (Chart 1), which incidentally coincided with China decreasing its margin requirements on banks, which I discussed in this article.

Today, China posted one of the largest deficits in their history, to see why this is, go to: China converting US treasuries into hard assets.

Euro VS US Dollar

There has been a lot of talk about Greece and how the euro is going to collapse. To debunk this myth, I want to give some statistics. This article is a thesis on why it's better to own the euro than the US dollar in my perspective. The only reason why the USD is so strong is because it's the reserve currency of the world. 

There are many reasons why a currency goes up or down. Following list gives the most important ones:

• Current account balance of the country
• Total national debt of the country
• Inflation rate
• Interest rate

To see this analysis, go to: Euro VS USD

Natural Gas Market between West and East

Natural gas prices around the world, in contrast to oil prices, do not have the same price level. For example, natural gas prices in Russia (Chart 1) have been steadily going up in price since 2010 (almost up 100%), while natural gas prices in the United States (Chart 2) have been going down since 2010 (almost down 50%).

Chart 1: Natural Gas Price (Russia) US dollars/1000 cubic metres of gas

Chart 2: Natural Gas Price (U.S.) US dollars/1000 cubic metres of gas

To illustrate how this can affect domestic natural gas companies we will compare the biggest natural gas producers of Russia and the United States in valuation and price level. These companies are Gazprom (OGZPY) and Chesapeake Energy (CHK) respectively (Chart 3).

Chart 3: Comparison between Gazprom (OGZPY) and Chesapeake Energy (CHK)

Since 2010, Gazprom has outperformed Chesapeake Energy by 15% and will continue to do so if the price trends of natural gas in Russia and the United States keep going their way.

Gazprom's net sales grew 31% and net income grew 41% from 2010 to 2011, while Chesapeake Energy's natural gas and oil sales were stagnant and net income available to common stockholders even dropped 20% from 2010 to 2011.

This is again, evidence that Gazprom will outperform Chesapeake Energy if this trend in natural gas prices continues onwards.

Marc Faber bullish on Vietnam

As I already stated here Marc Faber once again confirms that Vietnam is a good place to invest in now. Emerging markets have bottomed out.

Marc Faber bullish on Vietnam

Zero Hour Debt in 2013

Let's give an update on the Zero Hour Debt chart, which basically tells us that the economy will get into stagflation and later on in hyperinflation. The reasoning behind this is that we will need an unlimited amount of  debt to have growth in the economy. If we don't print money, we will have negative nominal GDP and this is what the federal reserve is terrified of, because when the economy contracts, the whole system collapses (cfr. Chris Martenson's Crash Course). I highly recommend everyone to watch Chris Martenson's Crash Course on his website.

The chart below has been produced by another Seekingalpha contributor on August 2011 and goes to 2009. We are now in 2012 and it's time to update the chart.

To see the latest on Zero Hour Debt, go to: Zero Hour Debt in 2013

Zero Hour Debt