This is very bullish for Eldorado Gold (ELD.TO) when it hit 52-week high today in Canadian dollar.
Monday, December 29, 2008
Eldorado Gold Hit 52 Week High Today
This is very bullish for Eldorado Gold (ELD.TO) when it hit 52-week high today in Canadian dollar.
Sunday, December 21, 2008
O Holy Night
O holy night, the stars are brightly shining;
It is the night of our dear Savior's birth!
Long lay the world in sin and error pining,
Till He appeared and the soul felt its worth.
A thrill of hope, the weary world rejoices,
For yonder breaks
a new and glorious morn.
Fall on your knees,
O hear the angel voices!
O night divine,
O night when Christ was born!
O night divine, O night,
O night divine!
Led by the light of Faith serenely beaming,
With glowing hearts by His cradle we stand.
So led by light of a star sweetly gleaming,
Here came the wise men from Orient land.
The King of Kings lay thus
in lowly manger, In all our trials
born to be our Friend!
He knows our need, To our weakness no stranger;
Behold your King!
Before the lowly bend!
Behold your King! your King!
before Him bend.
Truly He taught us to love one another;
His law is love and His gospel is peace.
Chains shall He break for the slave is our brother
And in His name all oppression shall cease.
Sweet hymns of joy in grateful chorus raise we,
Let all within us praise His holy name!
Christ is the Lord,
Oh praise His name forever,
His pow'r and glory evermore proclaim
His pow'r and glory
evermore proclaim.
Friday, December 12, 2008
Our One and Only Savior
by Franklin Graham
When people are looking for dramatic change, it’s human nature for them to seek some sort of savior—someone who is powerful and compassionate enough to rescue them from their sins.
As long as they are blinded by sin, though, people seek salvation in the wrong places. They desperately need someone to lead them to the one and only Savior. “There is no God apart from me, a righteous God and a Savior; there is none but me. Turn to me and be saved, all you ends of the earth; for I am God, and there is no other” (Isaiah 45:21–22).
Christmas is when we celebrate the birth of our Savior on the pages of history. When the baby Jesus was born in a stable in Bethlehem, the Word became flesh. As the angel announced more than 2,000 years ago: “Today in the town of David, a Savior has been born to you; he is Christ the Lord” (Luke 2:11). Jesus Christ showed us the Way, died for our sins, rose from the grave and poured out the Holy Spirit to establish His church.
He taught us plainly that the only way we can be saved is by repenting of our sins and trusting in Him as our Savior. “I am the way and the truth and the life. No one comes to the Father except through me” (John 14:6).
That’s the message my father and I have always preached. Despite what the world may say or wish, there is no other way to be saved. There are many ways to share the Gospel—just look at all the different ministries of the Billy Graham Evangelistic Association—but they all bring people to Jesus Christ, our one and only Savior.
Americans have just been through a presidential election. Both parties made extravagant promises that won’t be easily kept, but the promise of eternal life is always kept by the Savior for those who come to Him for forgiveness.
Our hope is never placed in men or governments, but in God alone. We will pray for guidance for our leaders as the Bible commands, while knowing that the Lord works through worldly rulers to accomplish His greater, sovereign purpose. The king’s heart is like channels of water in God’s hands, the Bible says, and “He directs it … wherever He pleases” (Proverbs 21:1).
As you celebrate the birth of the Savior in the next few days, rejoice that God “the Father has sent His Son to be the Savior of the world. If anyone acknowledges that Jesus is the Son of God, God lives in him, and he in God” (1 John 4:14–15).
Thanks be to God for our glorious Savior, the Lord Jesus Christ!
When people are looking for dramatic change, it’s human nature for them to seek some sort of savior—someone who is powerful and compassionate enough to rescue them from their sins.
As long as they are blinded by sin, though, people seek salvation in the wrong places. They desperately need someone to lead them to the one and only Savior. “There is no God apart from me, a righteous God and a Savior; there is none but me. Turn to me and be saved, all you ends of the earth; for I am God, and there is no other” (Isaiah 45:21–22).
Christmas is when we celebrate the birth of our Savior on the pages of history. When the baby Jesus was born in a stable in Bethlehem, the Word became flesh. As the angel announced more than 2,000 years ago: “Today in the town of David, a Savior has been born to you; he is Christ the Lord” (Luke 2:11). Jesus Christ showed us the Way, died for our sins, rose from the grave and poured out the Holy Spirit to establish His church.
He taught us plainly that the only way we can be saved is by repenting of our sins and trusting in Him as our Savior. “I am the way and the truth and the life. No one comes to the Father except through me” (John 14:6).
That’s the message my father and I have always preached. Despite what the world may say or wish, there is no other way to be saved. There are many ways to share the Gospel—just look at all the different ministries of the Billy Graham Evangelistic Association—but they all bring people to Jesus Christ, our one and only Savior.
Americans have just been through a presidential election. Both parties made extravagant promises that won’t be easily kept, but the promise of eternal life is always kept by the Savior for those who come to Him for forgiveness.
Our hope is never placed in men or governments, but in God alone. We will pray for guidance for our leaders as the Bible commands, while knowing that the Lord works through worldly rulers to accomplish His greater, sovereign purpose. The king’s heart is like channels of water in God’s hands, the Bible says, and “He directs it … wherever He pleases” (Proverbs 21:1).
As you celebrate the birth of the Savior in the next few days, rejoice that God “the Father has sent His Son to be the Savior of the world. If anyone acknowledges that Jesus is the Son of God, God lives in him, and he in God” (1 John 4:14–15).
Thanks be to God for our glorious Savior, the Lord Jesus Christ!
Thursday, December 11, 2008
Jim Rogers: $200 oil By 2013.
Jim Rogers, the famous investor and author on commodities, said on Thursday that he bought oil last week as crude prices collapsed to near four-year lows and that the world is running out of known oil reserves. Rogers rose to fame in the investment world as co-founder with George Soros the Quantum Fund in 1970. The fund returned 4,200 percent over the next decade, compared with a 50 percent gain in the S&P 500 index.
Rogers said in New York that he also closed his bets against the U.S. stock market in October, and plans to use the dollar's rally as an opportunity to exit dollar-denominated assets.
Rogers said he is the world's worst market timer and a horrible short-term trader, but a sharp sell-off in oil prices suggested a bottom. "Oil collapsed last week. Whenever you've had that sort of selling climax throughout any period in history, you are usually well-rewarded to buy it. It may not be the final bottom, but a bottom, so I'm buying oil again," he said.
Rogers, who remains bullish on commodities, estimated known world oil reserves at today's consumption rate are about 16 years, which indicates crude prices will again trend higher. "We're going to see $200 oil at some point, it may be by 2013. It's a sad fact but the world is running out of known oil," he said.
Many of Rogers's investments reflect a bearish view of the U.S. economy, which he said is poised to enter a period of stagnation, just as Japan suffered during its "lost decade" in the 1990s.
"We have unbelievable mistakes every week coming out of Washington, just as Japan did in the 1990s, just as America did in the 1930s," he said. "This could turn into a gigantic mess."
Rogers attributed his grim outlook to worries about the size of the U.S. government's growing deficit and the unwillingness on the part of authorities to let banks fail. He said he expected the U.S. economy to be in bad shape for a considerable time.
He also said he plans to get out of U.S. securities he's owned for more than two decades if there is a rally soon. "The market will probably rally for a while into January or March, and then we'll have more problems next year and perhaps into 2010," he said.
"I plan to get out of all of my U.S. dollars at some time throughout this rally. The dollar is a terribly flawed currency, and perhaps a doomed currency," he said.
Rogers said that he is investing on growth areas in China and Taiwan, such as shares in water treatment, tourism and agriculture. He is bullish on Asia because the region has savers and thus creditor nations.
Rogers said in New York that he also closed his bets against the U.S. stock market in October, and plans to use the dollar's rally as an opportunity to exit dollar-denominated assets.
Rogers said he is the world's worst market timer and a horrible short-term trader, but a sharp sell-off in oil prices suggested a bottom. "Oil collapsed last week. Whenever you've had that sort of selling climax throughout any period in history, you are usually well-rewarded to buy it. It may not be the final bottom, but a bottom, so I'm buying oil again," he said.
Rogers, who remains bullish on commodities, estimated known world oil reserves at today's consumption rate are about 16 years, which indicates crude prices will again trend higher. "We're going to see $200 oil at some point, it may be by 2013. It's a sad fact but the world is running out of known oil," he said.
Many of Rogers's investments reflect a bearish view of the U.S. economy, which he said is poised to enter a period of stagnation, just as Japan suffered during its "lost decade" in the 1990s.
"We have unbelievable mistakes every week coming out of Washington, just as Japan did in the 1990s, just as America did in the 1930s," he said. "This could turn into a gigantic mess."
Rogers attributed his grim outlook to worries about the size of the U.S. government's growing deficit and the unwillingness on the part of authorities to let banks fail. He said he expected the U.S. economy to be in bad shape for a considerable time.
He also said he plans to get out of U.S. securities he's owned for more than two decades if there is a rally soon. "The market will probably rally for a while into January or March, and then we'll have more problems next year and perhaps into 2010," he said.
"I plan to get out of all of my U.S. dollars at some time throughout this rally. The dollar is a terribly flawed currency, and perhaps a doomed currency," he said.
Rogers said that he is investing on growth areas in China and Taiwan, such as shares in water treatment, tourism and agriculture. He is bullish on Asia because the region has savers and thus creditor nations.
Wednesday, December 10, 2008
An unnecessary quarrel
From Asia Time - By David Gosset
The ability to take the big picture into consideration and develop a strategic vision for the long term is what defines genuine leadership, but the current tension between the European Union (EU) and China over Tibet shows this is exactly what the EU is lacking.
This year, Beijing has proved it is a cooperative and responsible member of the international community on three different but highly significant occasions. The Beijing Summer Olympic Games in August were in the words of Jacques Rogge, the president of the International Olympic Committee, "truly exceptional".
After the crisis in Georgia
, Moscow did not succeed in bringing Beijing on side to recognize the breakaway Georgian states of Abkhazia and South Ossetia. By refusing to back Moscow, Beijing avoided perpetuating the sterile antagonism between the West and the Sino-Russian axis. Last but not least, during the recent financial turmoil, Beijing has been a key factor of stability. Despite China's constructive and balanced behavior, the EU ends 2008 by an unnecessary quarrel with one of the main pillars of the 21st century's global order.
By officially displaying strong support to Tenzin Gyatso, the 14th Dalai Lama, some European politicians want to believe that they are doing the right thing. They are, in fact, demonstrating shortsightedness, ignorance and, to a certain extent, irresponsibility.
In a midst of a complex financial and economic crisis which is calling for more Sino-European synergy and global coordination, some myopic officials are taking the EU further away from the positive dynamics of the Chinese renaissance, arguably the most significant story of our time.
At the end of 2007, French President Nicolas Sarkozy told Xinhua, the state-run Chinese news agency, "My ambition is to make 2008 a great Euro-Chinese year." It would have been indeed highly relevant since exactly 30 years ago Beijing adopted the policies of "reform and opening-up" leading one-fifth of mankind on the road to relative prosperity and progress.
Instead, 2008 ends with a crisis between the European Union and China. In a sharp contrast, the fifth round of the Strategic Economic Dialogue (SED) between Washington and Beijing has produced constructive outcomes.
The immediate events which led to the dispute between Brussels and Beijing are well known. In March, the French government chose to lead the protest against what it framed as China's "crackdown" in Tibet.
Bernard Kouchner, the French Minister of Foreign Affairs, declared that the European Union should consider the idea of boycotting the opening ceremony of the Olympic Games. In April, the disruption of the Olympic torch relay in Paris sparked a boycott of French products by the Chinese people. On November 13, the president of France, which currently holds the rotating EU presidency, announced he would meet with the Dalai Lama in Poland on the occasion of the 25th anniversary of Lech Walesa's Nobel Peace Prize. On November 26, Beijing postponed the 11th EU-China Summit scheduled for December 1 in the French city of Lyon.
Beijing's decision is not the product of impulsive haste but the result of internal discussion, careful political consideration and geopolitical calculation. It is also an expression of China's strength and confidence. Beijing simply can not passively observe trends or events which threaten its territorial integrity and social stability.
European capitals can not feign to be surprised by such a rational approach and have to expect from Beijing resolute and proportionate response to any external provocation. On this issue, China's government can rely on massive backing from the Chinese population. An online survey which has received already more than 63,000 votes showed that about 97% of netizens reacted with indignation at Sarkozy's meeting with the Dalai Lama.
Most of the commentators in the West consider that the Chinese side is to be blamed for the current difficulties between the EU and China. They view the Dalai Lama as a spiritual guide who is fighting against a "cultural genocide" and is leading the Tibetan people toward a better future. This simplistic and romantic view is simply not accurate.
Pretending that the Dalai Lama is purely a spiritual leader is deceptive and illusory. As the head of the Tibetan "government-in-exile" in Dharamsala, India
, the Dalai Lama is a political figure with a political agenda. When, in the 1960s, the Central Intelligence Agency (CIA) organized Tibetan military movements to fight against the People's Liberation Army - the CIA also subsidized the Dalai Lama - its goal was not to protect Buddhist spirituality, but to manipulate the Tibetans for political and geopolitical gains.
On December 4, speaking in the European parliament, the Dalai Lama defined his role, "I consider myself to be the free spokesperson in exile of the Tibetan people." This is obviously a political statement. In the same speech he added, "While I firmly reject the use of violence as a means in our struggle, we certainly have the right to explore all other political options available to us."
There was no distinction between religion and politics in traditional Tibet, especially since the 5th Dalai Lama, Lozang Gyatso (1617-1682). The West has to rethink its perception of historical Tibet and go beyond an utopian representation of the "Roof of the World".
It is within the People's Republic of China (PRC) that the Tibetans freed themselves from theocracy. European politicians who favor European secularism, or what the French call laicite, the separation between religion and politics, are often those who show the strongest support to the Dalai Lama, the very symbol of a system where politics is subordinated to religion.
The expression "cultural genocide" - which has been used by the Dalai Lama himself - is supposed to describe the present conditions in the Tibet Autonomous Region is absurd and carries some baseless accusations which can not be conducive to harmony. Tibet is currently changing rapidly but this change does not equate with "cultural genocide". In fact, the region is going through a process of socio-economic modernization which benefits the majority of the population. This process is far from perfect but does allow the Tibetans within the PRC to reinterpret their tradition and to preserve the best of their culture.
Those who are now publicly championing the Dalai Lama are also taking the risk of hurting the Tibetan people's future. At 73 years old, the Dalai Lama accepts the fact that the Tibet Autonomous Region is a part of a sovereign country, the PRC. He insists on peaceful means to push for more Tibetan autonomy within the PRC.
However, the Dalai Lama is surrounded by younger people who consider his "Middle Way" a failure. They are already considering more radical means to achieve the creation of an independent Tibet. When some Western institutions officially endorse the Dalai Lama, Tibetan extremists can believe that the West would support their struggle whatever the means and the end. This is, of course, not the case. In that sense, European politicians are misleading the Tibetan people and being irresponsible by exposing them to a tragic no-win situation.
Western officials often admit privately that they meet the Dalai Lama under the pressure of their public opinions. They could imitate Taiwan's leader Ma Ying-jeou who has just ruled out a visit to the island by the Dalai Lama by saying: "The timing is not appropriate". It is only by working, cooperating, patiently negotiating with Beijing that one can effectively contribute to the general progress of the 1.3 billion citizens of the PRC, and among them, of course, the Tibetan people.
Unfortunately, the tension between the EU and China could continue in 2009. In the first half of the coming year, the Czech Republic will chair the rotating presidency of the European Union. A representative of the "new Europe" which joined the EU in 2004, Prague tends to have a very critical approach of Beijing, ignoring all the differences between the Soviet Union and China but also the post-Maoist transformation of Chinese society. Beijing has noticed that the Czech Prime Minister Mirek Topolanek has just received the Dalai Lama.
It is now urgent for the European Union to find ways to avoid unnecessary quarrels with its Chinese partner. It is time to focus on what really matters: a more adequate global governance requires strong cooperation between the EU and China, and beyond, a constructive triangulation between Washington, Brussels and Beijing.
The ability to take the big picture into consideration and develop a strategic vision for the long term is what defines genuine leadership, but the current tension between the European Union (EU) and China over Tibet shows this is exactly what the EU is lacking.
This year, Beijing has proved it is a cooperative and responsible member of the international community on three different but highly significant occasions. The Beijing Summer Olympic Games in August were in the words of Jacques Rogge, the president of the International Olympic Committee, "truly exceptional".
After the crisis in Georgia
, Moscow did not succeed in bringing Beijing on side to recognize the breakaway Georgian states of Abkhazia and South Ossetia. By refusing to back Moscow, Beijing avoided perpetuating the sterile antagonism between the West and the Sino-Russian axis. Last but not least, during the recent financial turmoil, Beijing has been a key factor of stability. Despite China's constructive and balanced behavior, the EU ends 2008 by an unnecessary quarrel with one of the main pillars of the 21st century's global order.
By officially displaying strong support to Tenzin Gyatso, the 14th Dalai Lama, some European politicians want to believe that they are doing the right thing. They are, in fact, demonstrating shortsightedness, ignorance and, to a certain extent, irresponsibility.
In a midst of a complex financial and economic crisis which is calling for more Sino-European synergy and global coordination, some myopic officials are taking the EU further away from the positive dynamics of the Chinese renaissance, arguably the most significant story of our time.
At the end of 2007, French President Nicolas Sarkozy told Xinhua, the state-run Chinese news agency, "My ambition is to make 2008 a great Euro-Chinese year." It would have been indeed highly relevant since exactly 30 years ago Beijing adopted the policies of "reform and opening-up" leading one-fifth of mankind on the road to relative prosperity and progress.
Instead, 2008 ends with a crisis between the European Union and China. In a sharp contrast, the fifth round of the Strategic Economic Dialogue (SED) between Washington and Beijing has produced constructive outcomes.
The immediate events which led to the dispute between Brussels and Beijing are well known. In March, the French government chose to lead the protest against what it framed as China's "crackdown" in Tibet.
Bernard Kouchner, the French Minister of Foreign Affairs, declared that the European Union should consider the idea of boycotting the opening ceremony of the Olympic Games. In April, the disruption of the Olympic torch relay in Paris sparked a boycott of French products by the Chinese people. On November 13, the president of France, which currently holds the rotating EU presidency, announced he would meet with the Dalai Lama in Poland on the occasion of the 25th anniversary of Lech Walesa's Nobel Peace Prize. On November 26, Beijing postponed the 11th EU-China Summit scheduled for December 1 in the French city of Lyon.
Beijing's decision is not the product of impulsive haste but the result of internal discussion, careful political consideration and geopolitical calculation. It is also an expression of China's strength and confidence. Beijing simply can not passively observe trends or events which threaten its territorial integrity and social stability.
European capitals can not feign to be surprised by such a rational approach and have to expect from Beijing resolute and proportionate response to any external provocation. On this issue, China's government can rely on massive backing from the Chinese population. An online survey which has received already more than 63,000 votes showed that about 97% of netizens reacted with indignation at Sarkozy's meeting with the Dalai Lama.
Most of the commentators in the West consider that the Chinese side is to be blamed for the current difficulties between the EU and China. They view the Dalai Lama as a spiritual guide who is fighting against a "cultural genocide" and is leading the Tibetan people toward a better future. This simplistic and romantic view is simply not accurate.
Pretending that the Dalai Lama is purely a spiritual leader is deceptive and illusory. As the head of the Tibetan "government-in-exile" in Dharamsala, India
, the Dalai Lama is a political figure with a political agenda. When, in the 1960s, the Central Intelligence Agency (CIA) organized Tibetan military movements to fight against the People's Liberation Army - the CIA also subsidized the Dalai Lama - its goal was not to protect Buddhist spirituality, but to manipulate the Tibetans for political and geopolitical gains.
On December 4, speaking in the European parliament, the Dalai Lama defined his role, "I consider myself to be the free spokesperson in exile of the Tibetan people." This is obviously a political statement. In the same speech he added, "While I firmly reject the use of violence as a means in our struggle, we certainly have the right to explore all other political options available to us."
There was no distinction between religion and politics in traditional Tibet, especially since the 5th Dalai Lama, Lozang Gyatso (1617-1682). The West has to rethink its perception of historical Tibet and go beyond an utopian representation of the "Roof of the World".
It is within the People's Republic of China (PRC) that the Tibetans freed themselves from theocracy. European politicians who favor European secularism, or what the French call laicite, the separation between religion and politics, are often those who show the strongest support to the Dalai Lama, the very symbol of a system where politics is subordinated to religion.
The expression "cultural genocide" - which has been used by the Dalai Lama himself - is supposed to describe the present conditions in the Tibet Autonomous Region is absurd and carries some baseless accusations which can not be conducive to harmony. Tibet is currently changing rapidly but this change does not equate with "cultural genocide". In fact, the region is going through a process of socio-economic modernization which benefits the majority of the population. This process is far from perfect but does allow the Tibetans within the PRC to reinterpret their tradition and to preserve the best of their culture.
Those who are now publicly championing the Dalai Lama are also taking the risk of hurting the Tibetan people's future. At 73 years old, the Dalai Lama accepts the fact that the Tibet Autonomous Region is a part of a sovereign country, the PRC. He insists on peaceful means to push for more Tibetan autonomy within the PRC.
However, the Dalai Lama is surrounded by younger people who consider his "Middle Way" a failure. They are already considering more radical means to achieve the creation of an independent Tibet. When some Western institutions officially endorse the Dalai Lama, Tibetan extremists can believe that the West would support their struggle whatever the means and the end. This is, of course, not the case. In that sense, European politicians are misleading the Tibetan people and being irresponsible by exposing them to a tragic no-win situation.
Western officials often admit privately that they meet the Dalai Lama under the pressure of their public opinions. They could imitate Taiwan's leader Ma Ying-jeou who has just ruled out a visit to the island by the Dalai Lama by saying: "The timing is not appropriate". It is only by working, cooperating, patiently negotiating with Beijing that one can effectively contribute to the general progress of the 1.3 billion citizens of the PRC, and among them, of course, the Tibetan people.
Unfortunately, the tension between the EU and China could continue in 2009. In the first half of the coming year, the Czech Republic will chair the rotating presidency of the European Union. A representative of the "new Europe" which joined the EU in 2004, Prague tends to have a very critical approach of Beijing, ignoring all the differences between the Soviet Union and China but also the post-Maoist transformation of Chinese society. Beijing has noticed that the Czech Prime Minister Mirek Topolanek has just received the Dalai Lama.
It is now urgent for the European Union to find ways to avoid unnecessary quarrels with its Chinese partner. It is time to focus on what really matters: a more adequate global governance requires strong cooperation between the EU and China, and beyond, a constructive triangulation between Washington, Brussels and Beijing.
Tuesday, December 9, 2008
Raymond James picks its best bets for 2009
on the 2009 list according to FP Trading desk are:
Bird Construction Income Fund TSE:BDT.UN $14.50,
Bonavista Energy Trust TSE:BNP.UN %15.10,
Canadian Apartment CAP) REIT TSE:CAR.UN $13.08,
Canadian Natural Resources TSE:CNQ $41.66,
GLV Inc. TSE:GLV.B $6.42,
Gran Tierra Energy Inc.TSE:GTE $2.86,
Hathor Exploration Ltd.CVE:HAT $2.8,
International Royalty Corp.TSE:IRC $1.50,
Ritchie Bros. Auctioneers TSE:RBA $24.64,
Trinidad Drilling TSE:TDG $4.01,
Yamana Gold Inc TSE:YRI $6.61.
Bird Construction Income Fund TSE:BDT.UN $14.50,
Bonavista Energy Trust TSE:BNP.UN %15.10,
Canadian Apartment CAP) REIT TSE:CAR.UN $13.08,
Canadian Natural Resources TSE:CNQ $41.66,
GLV Inc. TSE:GLV.B $6.42,
Gran Tierra Energy Inc.TSE:GTE $2.86,
Hathor Exploration Ltd.CVE:HAT $2.8,
International Royalty Corp.TSE:IRC $1.50,
Ritchie Bros. Auctioneers TSE:RBA $24.64,
Trinidad Drilling TSE:TDG $4.01,
Yamana Gold Inc TSE:YRI $6.61.
Monday, December 1, 2008
Marc Faber Says Time to Buy Gold Exploration Stocks
Celebrated contrarian investment advisor Dr. Marc Faber told Bloomberg television last weekend that he was buying gold exploration stocks as well as gold producers because prices were ridiculously cheap.
Dr. Faber wrote the book Tomorrow’s Gold earlier in this decade and has long been a holder of physical gold as a hedge against inflation and a meltdown in the global financial system. But he has previously not recommended buying exploration stocks, arguing that they could fall in price and that many companies could go out of business.
...Granted the link between the gold price and exploration stocks - remember the latter own the rights to potential future gold field development rights or claims - then such a price hike would mean an even bigger increase in the value of exploration stocks. That these stocks have been beaten down to almost nothing in the recent stock market crash just makes them a better buy.
Dr. Faber is the first major commentator to make this call - and it comes against the worst performance in this sector in 40 years. Of course, for a contrarian there could not be a better buy indicator. Dr. Faber is about to score another big hit for his investment record. If he was a hunter he would need a castle to house all his trophies by now!
Dr. Faber wrote the book Tomorrow’s Gold earlier in this decade and has long been a holder of physical gold as a hedge against inflation and a meltdown in the global financial system. But he has previously not recommended buying exploration stocks, arguing that they could fall in price and that many companies could go out of business.
...Granted the link between the gold price and exploration stocks - remember the latter own the rights to potential future gold field development rights or claims - then such a price hike would mean an even bigger increase in the value of exploration stocks. That these stocks have been beaten down to almost nothing in the recent stock market crash just makes them a better buy.
Dr. Faber is the first major commentator to make this call - and it comes against the worst performance in this sector in 40 years. Of course, for a contrarian there could not be a better buy indicator. Dr. Faber is about to score another big hit for his investment record. If he was a hunter he would need a castle to house all his trophies by now!
Friday, November 28, 2008
Fluor (FLR) in good shape
Bounced off double bottom and being above 50 days AVG. MACD is also indicating momentum. It looks good.
Wednesday, November 26, 2008
Thanksgiving
May everyone have a most blessed Thanksgiving and remember where all our blessings come from.
I hope that this Thanksgiving & Christmas Season bring you & yours much Love, Joy Health & Happiness. May God Bless You Today, Tomorrow & Always!
I hope that this Thanksgiving & Christmas Season bring you & yours much Love, Joy Health & Happiness. May God Bless You Today, Tomorrow & Always!
Sunday, November 23, 2008
Thursday, November 20, 2008
Peter Schiff Was Right 2006 - 2007
Mr. Peter Schiff was so right.
Where are the other people today who laughed and mocked Mr. Schiff?
Where are the other people today who laughed and mocked Mr. Schiff?
Saturday, November 15, 2008
US plan opens Alaska salmon run to development
ANCHORAGE, Alaska, Nov 14 (Reuters) - Nearly 2 million acres of U.S. federal land in southwestern Alaska best known for its rich salmon runs and abundant wildlife will be available for development under a new management plan released on Friday by the U.S. Bureau of Land Management.
The management plan covers up to 1.9 million acres of mostly flat terrain near Bristol Bay and adjacent Goodnews Bay that, up to now, had been off-limits to development.
Mining giant Anglo American and Vancouver-based Northern Dynasty Minerals Ltd are proposing to build a huge copper, gold and molybdenum mine -- the Pebble project -- on state land in the region.
The Pebble project has drawn fierce opposition for the potential damage it may cause to Bristol Bay salmon runs, the world's largest. At the same time, the Bush administration and Alaska state government are advocating offshore oil and gas development near Bristol Bay.
Gary Reimer, manager for the BLM's Anchorage district, said the new plan establishes a framework for permits and regulations should any development be proposed, but that it is unlikely that the BLM land in the management plan will be the site of any major new development.
"Do we believe this would lead to anything of any size? No," Reimer said. "Of the 1.9 million (acre) area, there is very little mineral potential."
Environmentalists disagree and characterize the new plan as part of a strategy to open up the entire area to mining and drilling. Fishing and Native groups have also fought the new plan since it was proposed in draft form a year ago.
Jeremiah Millen, field representative for the Alaska Wilderness League, disputed the idea that the BLM land will not attract developers, saying that the agency used outdated economic data in its analysis and underestimated the lure of the minerals and petroleum resources.
"You can guarantee that, by opening an additional almost 2 million acres out there, there will be a rush to development," said Millen, noting that the plan does not provide specific protections to salmon habitat and fishing-dependent communities.
When work on the land-management plan started in 2004, the area under study covered 3.6 million acres, but some of the land was transferred into state ownership or into the hands of various Alaska Native corporations, according to the BLM.
More such conveyances are expected and could whittle the total area of BLM-controlled land in the region to 1.5 million acres, the agency said.
The management plan covers up to 1.9 million acres of mostly flat terrain near Bristol Bay and adjacent Goodnews Bay that, up to now, had been off-limits to development.
Mining giant Anglo American and Vancouver-based Northern Dynasty Minerals Ltd are proposing to build a huge copper, gold and molybdenum mine -- the Pebble project -- on state land in the region.
The Pebble project has drawn fierce opposition for the potential damage it may cause to Bristol Bay salmon runs, the world's largest. At the same time, the Bush administration and Alaska state government are advocating offshore oil and gas development near Bristol Bay.
Gary Reimer, manager for the BLM's Anchorage district, said the new plan establishes a framework for permits and regulations should any development be proposed, but that it is unlikely that the BLM land in the management plan will be the site of any major new development.
"Do we believe this would lead to anything of any size? No," Reimer said. "Of the 1.9 million (acre) area, there is very little mineral potential."
Environmentalists disagree and characterize the new plan as part of a strategy to open up the entire area to mining and drilling. Fishing and Native groups have also fought the new plan since it was proposed in draft form a year ago.
Jeremiah Millen, field representative for the Alaska Wilderness League, disputed the idea that the BLM land will not attract developers, saying that the agency used outdated economic data in its analysis and underestimated the lure of the minerals and petroleum resources.
"You can guarantee that, by opening an additional almost 2 million acres out there, there will be a rush to development," said Millen, noting that the plan does not provide specific protections to salmon habitat and fishing-dependent communities.
When work on the land-management plan started in 2004, the area under study covered 3.6 million acres, but some of the land was transferred into state ownership or into the hands of various Alaska Native corporations, according to the BLM.
More such conveyances are expected and could whittle the total area of BLM-controlled land in the region to 1.5 million acres, the agency said.
Thursday, November 13, 2008
Bush: Intervention not "cure-all" for crisis
THE PRESIDENT: Thank you very much. Please be seated. Thank you. Larry, thank you for the introduction. Thank you for giving Laura and me a chance to come to this historic hall to talk about a big issue facing the world. And today I appreciate you giving me a chance to come and for me to outline the steps that America and our partners are taking and are going to take to overcome this financial crisis.
And I thank the Manhattan Institute for all you have done. I appreciate the fact that I am here in a fabulous city to give this speech. (Applause.) People say, are you confident about our future? And the answer is, absolutely. And it's easy to be confident when you're a city like New York City. After all, there's an unbelievable spirit in this city. This is a city whose skyline has offered immigrants their first glimpse of freedom. This is a city where people rallied when that freedom came under attack. This is a city whose capital markets have attracted investments from around the world and financed the dreams of entrepreneurs all across America. This is a city that has been and will always be the financial capital of the world. (Applause.)
And I am grateful to be in the presence of two men who serve ably and nobly New York City -- Mayor Koch and Mayor Giuliani. Thank you all for coming. Glad you're here. (Applause.) I thank the Manhattan Institute Board of Trustees and its Chairman Paul Singer for doing good work, being a good policy center. (Applause.) And before I begin, I must say, I would hope that Ray Kelly would tell New York's finest how much I appreciate the incredible hospitality that we are always shown here in New York City. You're the head of a fabulous police force, and we thank you very much, sir. (Applause.)
We live in a world in which our economies are interconnected. Prosperity and progress have reached farther than any time in our history. Unfortunately, as we have seen in recent months, financial turmoil anywhere in the world affects economies everywhere in the world. And so this weekend I'm going to host a Summit on Financial Markets and the World Economy with leaders from developed and developing nations that account for nearly 90 percent of the world economy. Leaders of the World Bank, the International Monetary Fund, the United Nations, and the Financial Stability Forum are going to be there, as well. We'll have dinner at the White House tomorrow night, and we'll meet most of the day on Saturday.
The leaders attending this weekend's meeting agree on a clear purpose -- to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future. We also agree that this undertaking is too large to be accomplished in a single session. The issues are too complex, the problem is too significant to try to solve, or to come up with reasonable recommendations in just one meeting. So this summit will be the first of a series of meetings.
It will focus on five key objectives: understanding the causes of the global crisis, reviewing the effectiveness of our responses thus far, developing principles for reforming our financial and regulatory systems, launching a specific action plan to implement those principles, and reaffirming our conviction that free market principles offer the surest path to lasting prosperity. (Applause.)
First, we're working toward a common understanding of the causes behind the global crisis. Different countries will naturally bring different perspectives, but there are some points on which we can all agree:
Over the past decade, the world experienced a period of strong economic growth. Nations accumulated huge amounts of savings, and looked for safe places to invest them. Because of our attractive political, legal, and entrepreneurial climates, the United States and other developed nations received a large share of that money.
The massive inflow of foreign capital, combined with low interest rates, produced a period of easy credit. And that easy credit especially affected the housing market. Flush with cash, many lenders issued mortgages and many borrowers could not afford them. Financial institutions then purchased these loans, packaged them together, and converted them into complex securities designed to yield large returns. These securities were then purchased by investors and financial institutions in the United States and Europe and elsewhere -- often with little analysis of their true underlying value.
The financial crisis was ignited when booming housing markets began to decline. As home values dropped, many borrowers defaulted on their mortgages, and institutions holding securities backed by those mortgages suffered serious losses. Because of outdated regulatory structures and poor risk management practices, many financial institutions in America and Europe were too highly leveraged. When capital ran short, many faced severe financial jeopardy. This led to high-profile failures of financial institutions in America and Europe, led to contractions and widespread anxiety -- all of which contributed to sharp declines in the equity markets.
These developments have placed a heavy burden on hardworking people around the world. Stock market drops have eroded the value of retirement accounts and pension funds. The tightening of credit has made it harder for families to borrow money for cars or home improvements or education of the children. Businesses have found it harder to get loans to expand their operations and create jobs. Many nations have suffered job losses, and have serious concerns about the worsening economy. Developing nations have been hit hard as nervous investors have withdrawn their capital.
We are faced with the prospect of a global meltdown. And so we've responded with bold measures. I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown. At Saturday's summit, we're going to review the effectiveness of our actions.
Here in the United States, we have taken unprecedented steps to boost liquidity, recapitalize financial institutions, guarantee most new debt issued by insured banks, and prevent the disorderly collapse of large, interconnected enterprises. These were historic actions taken necessary to make -- necessary so that the economy would not melt down and affect millions of our fellow citizens.
In Europe, governments are also purchasing equity in banks and providing government guarantees for loans. In Asia, nations like China and Japan and South Korea have lowered interest rates and have launched significant economic stimulus plans. In the Middle East, nations like Kuwait and the UAE have guaranteed deposits and opened up new government lending to banks.
In addition, nations around the world have taken unprecedented joint measures. Last month, a number of central banks carried out a coordinated interest rate cut. The Federal Reserve is extending needed liquidity to central banks around the world. The IMF and World Bank are working to ensure that developing nations can weather this crisis.
This crisis did not develop overnight, and it's not going to be solved overnight. But our actions are having an impact. Credit markets are beginning to thaw. Businesses are gaining access to essential short-term financing. A measure of stability is returning to financial systems here at home and around the world. It's going to require more time for these improvements to fully take hold, and there's going to be difficult days ahead. But the United States and our partner are taking the right steps to get through this crisis.
In addition to addressing the current crisis, we will also need to make broader reforms to strengthen the global economy over the long term. This weekend, leaders will establish principles for adapting our financial systems to the realities of the 21st century marketplace. We will discuss specific actions we can take to implement these principles. We will direct our finance ministers to work with other experts and report back to us with detailed recommendations on further reasonable actions.
One vital principle of reform is that our nations must make our financial markets more transparent. For example, we should consider improving accounting rules for securities, so that investors around the world can understand the true value of the assets they purchase.
Secondly, we must ensure that markets, firms, and financial products are properly regulated. For example, credit default swaps -- financial products that insure against potential losses -- should be processed through centralized clearinghouses instead of through unregulated, "over the counter" markets. By bringing greater stability to this large and important financial sector, we reduce the risk to our overall financial systems.
Third, we must enhance the integrity of our financial markets. For example, authorities in every nation should take a fresh look at the rules governing market manipulation and fraud -- and ensure that investors are properly protected.
Fourth, we must strengthen cooperation among the world's financial authorities. For example, leading nations should better coordinate national laws and regulations. We should also reform international financial institutions such as the IMF and the World Bank, which are based largely on the economic order of 1944. To better reflect the realities of today's global economy, both the IMF and World Bank should modernize their governance structures. They should consider extending greater voter -- voting power to dynamic developing nations, especially as they increase their contributions to these institutions. They should consider ways to streamline their executive boards, and make them more representative.
In addition to these important -- to these management changes, we should move forward with other reforms to make the IMF and World Bank more transparent, accountable, and effective. For example, the IMF should agree to work more closely with member countries to ensure that their exchange rate policies are market-oriented and fair. And the World Bank should ensure its development programs reflect the priorities of the people they are designed to serve -- and focus on measurable results.
All these steps require decisive actions from governments around the world. At the same time, we must recognize that government intervention is not a cure-all. For example, some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations, and still experienced problems almost identical to our own.
History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market. (Applause.) We saw this in the case of Fannie Mae and Freddie Mac. Because these firms were chartered by the United States Congress, many believed they were backed by the full faith and credit of the United States government. Investors put huge amounts of money into Fannie and Freddie, which they used to build up irresponsibly large portfolios of mortgage-backed securities. And when the housing market declined, these securities, of course, plummeted in value. It took a taxpayer-funded rescue to keep Fannie and Freddie from collapsing in a way that would have devastated the global financial system. And there is a clear lesson: Our aim should not be more government -- it should be smarter government.
All this leads to the most important principle that should guide our work: While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people. (Applause.)
This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure. It's true this crisis included failures -- by lenders and borrowers and by financial firms and by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe.
Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity -- the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.
Free market capitalism is far more than economic theory. It is the engine of social mobility -- the highway to the American Dream. It's what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. It's what transformed America from a rugged frontier to the greatest economic power in history -- a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod.
Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan, an island with few natural resources, to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself into one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore and Hong Kong and Taiwan into global economic players. Today, the success of the world's largest economies comes from their embrace of free markets.
Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in its -- in their cars.
The record is unmistakable: If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go. (Applause.) And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success.
Just as important as maintaining free markets within countries is maintaining the free movement of goods and services between countries. When nations open their markets to trade and investment, their businesses and farmers and workers find new buyers for their products. Consumers benefit from more choices and better prices. Entrepreneurs can get their ideas off the ground with funding from anywhere in the world. Thanks in large part to open markets, the volume of global trade today is nearly 30 times greater than it was six decades ago -- and some of the most dramatic gains have come in the developing world.
As President, I have seen the transformative power of trade up close. I've been to a Caterpillar factory in East Peoria, Illinois, where thousands of good-paying American jobs are supported by exports. I've walked the grounds of a trade fair in Ghana, where I met women who support their families by exporting handmade dresses and jewelry. I've spoken with a farmer in Guatemala who decided to grow high-value crops he could sell overseas -- and helped create more than 1,000 jobs.
Stories like these show why it is so important to keep markets open to trade and investment. This openness is especially urgent during times of economic strain. Shortly after the stock market crash in 1929, Congress passed the Smoot-Hawley tariff -- a protectionist measure designed to wall off America's economy from global competition. The result was not economic security. It was economic ruin. And leaders around the world must keep this example in mind, and reject the temptation of protectionism. (Applause.)
There are clear-cut ways for nations to demonstrate the commitment to open markets. The United States Congress has an immediate opportunity by approving free trade agreements with Colombia, Peru*, and South Korea. America and other wealthy nations must also ensure this crisis does not become an excuse to reverse our engagement with the developing world. And developing nations should continue policies that foster enterprise and investment. As well, all nations should pledge to conclude a framework this year that leads to a successful Doha agreement.
We're facing this challenge together and we're going to get through it together. The United States is determined to show the way back to economic growth and prosperity. I know some may question whether America's leadership in the global economy will continue. The world can be confident that it will, because our markets are flexible and we can rebound from setbacks. We saw that resilience in the 1940s, when America pulled itself out of Depression, marshaled a powerful army, and helped save the world from tyranny. We saw that resilience in the 1980s, when Americans overcame gas lines, turned stagflation into strong economic growth, and won the Cold War. We saw that resilience after September the 11th, 2001, when our nation recovered from a brutal attack, revitalized our shaken economy, and rallied the forces of freedom in the great ideological struggle of the 21st century.
The world will see the resilience of America once again. We will work with our partners to correct the problems in the global financial system. We will rebuild our economic strength. And we will continue to lead the world toward prosperity and peace.
Thanks for coming and God bless. (Applause.)
END 2:22 P.M. EST
And I thank the Manhattan Institute for all you have done. I appreciate the fact that I am here in a fabulous city to give this speech. (Applause.) People say, are you confident about our future? And the answer is, absolutely. And it's easy to be confident when you're a city like New York City. After all, there's an unbelievable spirit in this city. This is a city whose skyline has offered immigrants their first glimpse of freedom. This is a city where people rallied when that freedom came under attack. This is a city whose capital markets have attracted investments from around the world and financed the dreams of entrepreneurs all across America. This is a city that has been and will always be the financial capital of the world. (Applause.)
And I am grateful to be in the presence of two men who serve ably and nobly New York City -- Mayor Koch and Mayor Giuliani. Thank you all for coming. Glad you're here. (Applause.) I thank the Manhattan Institute Board of Trustees and its Chairman Paul Singer for doing good work, being a good policy center. (Applause.) And before I begin, I must say, I would hope that Ray Kelly would tell New York's finest how much I appreciate the incredible hospitality that we are always shown here in New York City. You're the head of a fabulous police force, and we thank you very much, sir. (Applause.)
We live in a world in which our economies are interconnected. Prosperity and progress have reached farther than any time in our history. Unfortunately, as we have seen in recent months, financial turmoil anywhere in the world affects economies everywhere in the world. And so this weekend I'm going to host a Summit on Financial Markets and the World Economy with leaders from developed and developing nations that account for nearly 90 percent of the world economy. Leaders of the World Bank, the International Monetary Fund, the United Nations, and the Financial Stability Forum are going to be there, as well. We'll have dinner at the White House tomorrow night, and we'll meet most of the day on Saturday.
The leaders attending this weekend's meeting agree on a clear purpose -- to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future. We also agree that this undertaking is too large to be accomplished in a single session. The issues are too complex, the problem is too significant to try to solve, or to come up with reasonable recommendations in just one meeting. So this summit will be the first of a series of meetings.
It will focus on five key objectives: understanding the causes of the global crisis, reviewing the effectiveness of our responses thus far, developing principles for reforming our financial and regulatory systems, launching a specific action plan to implement those principles, and reaffirming our conviction that free market principles offer the surest path to lasting prosperity. (Applause.)
First, we're working toward a common understanding of the causes behind the global crisis. Different countries will naturally bring different perspectives, but there are some points on which we can all agree:
Over the past decade, the world experienced a period of strong economic growth. Nations accumulated huge amounts of savings, and looked for safe places to invest them. Because of our attractive political, legal, and entrepreneurial climates, the United States and other developed nations received a large share of that money.
The massive inflow of foreign capital, combined with low interest rates, produced a period of easy credit. And that easy credit especially affected the housing market. Flush with cash, many lenders issued mortgages and many borrowers could not afford them. Financial institutions then purchased these loans, packaged them together, and converted them into complex securities designed to yield large returns. These securities were then purchased by investors and financial institutions in the United States and Europe and elsewhere -- often with little analysis of their true underlying value.
The financial crisis was ignited when booming housing markets began to decline. As home values dropped, many borrowers defaulted on their mortgages, and institutions holding securities backed by those mortgages suffered serious losses. Because of outdated regulatory structures and poor risk management practices, many financial institutions in America and Europe were too highly leveraged. When capital ran short, many faced severe financial jeopardy. This led to high-profile failures of financial institutions in America and Europe, led to contractions and widespread anxiety -- all of which contributed to sharp declines in the equity markets.
These developments have placed a heavy burden on hardworking people around the world. Stock market drops have eroded the value of retirement accounts and pension funds. The tightening of credit has made it harder for families to borrow money for cars or home improvements or education of the children. Businesses have found it harder to get loans to expand their operations and create jobs. Many nations have suffered job losses, and have serious concerns about the worsening economy. Developing nations have been hit hard as nervous investors have withdrawn their capital.
We are faced with the prospect of a global meltdown. And so we've responded with bold measures. I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown. At Saturday's summit, we're going to review the effectiveness of our actions.
Here in the United States, we have taken unprecedented steps to boost liquidity, recapitalize financial institutions, guarantee most new debt issued by insured banks, and prevent the disorderly collapse of large, interconnected enterprises. These were historic actions taken necessary to make -- necessary so that the economy would not melt down and affect millions of our fellow citizens.
In Europe, governments are also purchasing equity in banks and providing government guarantees for loans. In Asia, nations like China and Japan and South Korea have lowered interest rates and have launched significant economic stimulus plans. In the Middle East, nations like Kuwait and the UAE have guaranteed deposits and opened up new government lending to banks.
In addition, nations around the world have taken unprecedented joint measures. Last month, a number of central banks carried out a coordinated interest rate cut. The Federal Reserve is extending needed liquidity to central banks around the world. The IMF and World Bank are working to ensure that developing nations can weather this crisis.
This crisis did not develop overnight, and it's not going to be solved overnight. But our actions are having an impact. Credit markets are beginning to thaw. Businesses are gaining access to essential short-term financing. A measure of stability is returning to financial systems here at home and around the world. It's going to require more time for these improvements to fully take hold, and there's going to be difficult days ahead. But the United States and our partner are taking the right steps to get through this crisis.
In addition to addressing the current crisis, we will also need to make broader reforms to strengthen the global economy over the long term. This weekend, leaders will establish principles for adapting our financial systems to the realities of the 21st century marketplace. We will discuss specific actions we can take to implement these principles. We will direct our finance ministers to work with other experts and report back to us with detailed recommendations on further reasonable actions.
One vital principle of reform is that our nations must make our financial markets more transparent. For example, we should consider improving accounting rules for securities, so that investors around the world can understand the true value of the assets they purchase.
Secondly, we must ensure that markets, firms, and financial products are properly regulated. For example, credit default swaps -- financial products that insure against potential losses -- should be processed through centralized clearinghouses instead of through unregulated, "over the counter" markets. By bringing greater stability to this large and important financial sector, we reduce the risk to our overall financial systems.
Third, we must enhance the integrity of our financial markets. For example, authorities in every nation should take a fresh look at the rules governing market manipulation and fraud -- and ensure that investors are properly protected.
Fourth, we must strengthen cooperation among the world's financial authorities. For example, leading nations should better coordinate national laws and regulations. We should also reform international financial institutions such as the IMF and the World Bank, which are based largely on the economic order of 1944. To better reflect the realities of today's global economy, both the IMF and World Bank should modernize their governance structures. They should consider extending greater voter -- voting power to dynamic developing nations, especially as they increase their contributions to these institutions. They should consider ways to streamline their executive boards, and make them more representative.
In addition to these important -- to these management changes, we should move forward with other reforms to make the IMF and World Bank more transparent, accountable, and effective. For example, the IMF should agree to work more closely with member countries to ensure that their exchange rate policies are market-oriented and fair. And the World Bank should ensure its development programs reflect the priorities of the people they are designed to serve -- and focus on measurable results.
All these steps require decisive actions from governments around the world. At the same time, we must recognize that government intervention is not a cure-all. For example, some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations, and still experienced problems almost identical to our own.
History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market. (Applause.) We saw this in the case of Fannie Mae and Freddie Mac. Because these firms were chartered by the United States Congress, many believed they were backed by the full faith and credit of the United States government. Investors put huge amounts of money into Fannie and Freddie, which they used to build up irresponsibly large portfolios of mortgage-backed securities. And when the housing market declined, these securities, of course, plummeted in value. It took a taxpayer-funded rescue to keep Fannie and Freddie from collapsing in a way that would have devastated the global financial system. And there is a clear lesson: Our aim should not be more government -- it should be smarter government.
All this leads to the most important principle that should guide our work: While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people. (Applause.)
This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure. It's true this crisis included failures -- by lenders and borrowers and by financial firms and by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe.
Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity -- the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.
Free market capitalism is far more than economic theory. It is the engine of social mobility -- the highway to the American Dream. It's what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. It's what transformed America from a rugged frontier to the greatest economic power in history -- a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod.
Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan, an island with few natural resources, to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself into one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore and Hong Kong and Taiwan into global economic players. Today, the success of the world's largest economies comes from their embrace of free markets.
Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in its -- in their cars.
The record is unmistakable: If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go. (Applause.) And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success.
Just as important as maintaining free markets within countries is maintaining the free movement of goods and services between countries. When nations open their markets to trade and investment, their businesses and farmers and workers find new buyers for their products. Consumers benefit from more choices and better prices. Entrepreneurs can get their ideas off the ground with funding from anywhere in the world. Thanks in large part to open markets, the volume of global trade today is nearly 30 times greater than it was six decades ago -- and some of the most dramatic gains have come in the developing world.
As President, I have seen the transformative power of trade up close. I've been to a Caterpillar factory in East Peoria, Illinois, where thousands of good-paying American jobs are supported by exports. I've walked the grounds of a trade fair in Ghana, where I met women who support their families by exporting handmade dresses and jewelry. I've spoken with a farmer in Guatemala who decided to grow high-value crops he could sell overseas -- and helped create more than 1,000 jobs.
Stories like these show why it is so important to keep markets open to trade and investment. This openness is especially urgent during times of economic strain. Shortly after the stock market crash in 1929, Congress passed the Smoot-Hawley tariff -- a protectionist measure designed to wall off America's economy from global competition. The result was not economic security. It was economic ruin. And leaders around the world must keep this example in mind, and reject the temptation of protectionism. (Applause.)
There are clear-cut ways for nations to demonstrate the commitment to open markets. The United States Congress has an immediate opportunity by approving free trade agreements with Colombia, Peru*, and South Korea. America and other wealthy nations must also ensure this crisis does not become an excuse to reverse our engagement with the developing world. And developing nations should continue policies that foster enterprise and investment. As well, all nations should pledge to conclude a framework this year that leads to a successful Doha agreement.
We're facing this challenge together and we're going to get through it together. The United States is determined to show the way back to economic growth and prosperity. I know some may question whether America's leadership in the global economy will continue. The world can be confident that it will, because our markets are flexible and we can rebound from setbacks. We saw that resilience in the 1940s, when America pulled itself out of Depression, marshaled a powerful army, and helped save the world from tyranny. We saw that resilience in the 1980s, when Americans overcame gas lines, turned stagflation into strong economic growth, and won the Cold War. We saw that resilience after September the 11th, 2001, when our nation recovered from a brutal attack, revitalized our shaken economy, and rallied the forces of freedom in the great ideological struggle of the 21st century.
The world will see the resilience of America once again. We will work with our partners to correct the problems in the global financial system. We will rebuild our economic strength. And we will continue to lead the world toward prosperity and peace.
Thanks for coming and God bless. (Applause.)
END 2:22 P.M. EST
Wednesday, November 12, 2008
Henry Paulson backing away from buying troubled mortgage assets
Washington - Good morning. I will provide an update on the state of the financial system, our economy, and our strategy for continued implementation of the financial rescue package.
Current State of Global Financial System
The actions taken by Treasury, the Federal Reserve and the FDIC in October have clearly helped stabilize our financial system. Before we acted, we were at a tipping point. Credit markets were largely frozen, denying financial institutions, businesses and consumers access to vital funding and credit. U.S. and European financial institutions were under extreme pressure, and investor confidence in our system was dangerously low.
We also acted quickly and in coordination with colleagues around the world to stabilize the global financial system. Going into the Annual IMF/World Bank meetings in early October, I made clear that we would use the financial rescue package granted by Congress to purchase equity directly from financial institutions – the fastest and most productive means of using our new authorities to stabilize our financial system. We launched our capital purchase program the following week when we announced that nine of the largest U.S. financial institutions, holding approximately 55 percent of U.S. banking assets would sell $125 billion in preferred stock to the Treasury. At the same time, the FDIC announced it would temporarily guarantee all newly issued senior unsecured debt of participating organizations for up to three years. In addition, the FDIC provided an unlimited guarantee on non-interest bearing transaction accounts that expires at the end of next year.
As I assess where we are today, I believe we have taken the necessary steps to prevent a broad systemic event. Both at home and around the world we have already seen signs of improvement. Our system is stronger and more stable than just a few weeks ago. Although this is a major accomplishment, we have many challenges ahead of us. Our financial system remains fragile in the face of an economic downturn here and abroad, and financial institutions' balance sheets still hold significant illiquid assets. Market turmoil will not abate until the biggest part of the housing correction is behind us. Our primary focus must be recovery and repair.
Housing and Mortgage Finance
Overall, we are in a better position than we were, but we must address the continued challenges of a weak economy, especially the housing correction and lending contraction.
On housing, we have worked aggressively to avoid preventable foreclosures and keep mortgage financing available. In October 2007, we helped establish the HOPE NOW Alliance, a coalition of mortgage servicers, investors and counselors, to help struggling homeowners avoid preventable foreclosures. HOPE NOW created a streamlined protocol to assist struggling borrowers who could afford their homes with a loan modification. The industry is now helping 200,000 homeowners a month avoid foreclosure. In addition, HUD has created new programs to complement existing FHA options, and to refinance a larger number of struggling borrowers into affordable FHA mortgages.
Most significantly, we acted earlier this year to prevent the failure of Fannie Mae and Freddie Mac, the housing GSEs that now touch over 70 percent of mortgage originations. I clearly stated at that time three critical objectives: providing stability to financial markets, supporting the availability of mortgage finance, and protecting taxpayers – both by minimizing the near term costs to the taxpayer and by setting policymakers on a course to resolve the systemic risk created by the inherent conflict in the GSE structure.
Fortunately we acted, citing concerns about both the quality and quantity of GSE capital. Unfortunately, our actions proved all too necessary. The GSEs were failing, and if they did fail, it would have materially exacerbated the recent market turmoil and more profoundly impacted household wealth: from family budgets, to home values, to savings for college and retirement.
Earlier this week, Fannie Mae reported a record loss, including write-downs of its deferred tax assets that make up a significant portion of its capital. We monitor closely the performance of both Fannie Mae and Freddie Mac, and both are performing within the range of our expectations. The magnitude of the losses at Fannie Mae were within the range of what we expected, and further confirms the need for our strong actions.
Eight weeks ago, Treasury took responsibility for supporting the agency debt securities and the agency MBS through a preferred stock purchase agreement that guarantees a positive net worth in each enterprise – effectively, a guarantee on GSE debt and agency MBS. We also established a credit facility to provide the GSEs the strongest possible liquidity backstop. As the enterprises go through this difficult housing correction we will, as needed and promised, purchase preferred shares under the terms of that agreement. The U.S. government honors its commitments, and investors can bank on it.
When we took action in September, I said that we would be entering a "time out" – a period where the new President and Congress must decide what role government in general, and the GSEs in particular, should play in the housing market. In my view, government support needs to be either explicit or non-existent, and structured to resolve the conflict between public and private purposes. And policymakers must address the issue of systemic risk. In the weeks ahead, I will share some thoughts outlining my views on long term reform.
In the meantime, the GSEs now operate on stable footing. They have strong government support backing both future capital and liquidity needs. We have stabilized the GSEs and limited systemic risk, and our authorities provide us with additional flexibility to use as necessary to accomplish our objectives.
Implementing the Financial Rescue Package
More recently, we have also taken extraordinary steps to support our financial markets and financial institutions. As credit markets froze in mid-September, the Administration asked Congress for broad tools and flexibility to rescue the financial system. We asked for $700 billion to purchase troubled assets from financial institutions. At the time, we believed that would be the most effective means of getting credit flowing again.
During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets – our initial focus – would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.
Of course, before that time, the only instances in which Treasury had taken equity positions was in rescuing a failing institution. Both the preferred stock purchase agreement for Fannie Mae and Freddie Mac, and the Federal Reserve's secured lending facility for AIG came with significant taxpayer protections and conditions. As we planned a capital purchase plan to support the overall financial system by strengthening balance sheets of a broad array of healthy banks, the terms had to be designed to encourage broad participation, balanced to ensure appropriate taxpayer protection and not impede the flow of private capital.
Capital Purchase Plan
We announced a plan on October 14th to purchase up to $250 billion in preferred stock in federally regulated banks and thrifts. By October 26th we had $115 billion out the door to eight large institutions. In Washington that is a land-speed record from announcing a program to getting funds out the door. We now have approved dozens of additional applications, and investments are being made in approved institutions. Although we are moving very quickly it will take time to complete legal contracts and execute investments in the significant number of institutions who meet the eligibility requirements and are approved, but we are on the path to getting this done.
Although this program's primary purpose is stabilizing our financial system, banks must also continue lending. During times like these with a slowing economy and some deterioration in credit conditions, even the healthiest banks tend to become more risk-averse and restrain lending, and regulators' actions have reinforced this lending restraint in the past. With a stronger capital base, our banks will be more confident and better positioned to play their necessary role to support economic activity. Today banking regulators issued a statement emphasizing that the extraordinary government actions taken by the Fed, Treasury and FDIC to stabilize and strengthen the banking system are not merely one-sided; all banks – not just those participating in the Capital Purchase Program – have benefited, so they all also have responsibilities in the areas of lending, dividend and compensation policies, and foreclosure mitigation. I commend this action and I am particularly focused on the importance of prudent bank lending to restore our economic growth.
Since announcing the Capital Purchase Program, we have been examining a wide range of ideas that can further strengthen the financial system and get lending going again to support the broader economy. First and foremost, because the system remains fragile, we must continue to stand ready to prevent systemic failures. That is the basis for Monday's action to purchase preferred shares in AIG. The stability of our system remains the highest priority.
We must also allow markets and institutions to absorb the extensive array of new policies put in place in a very short period of time. The injection of up to $250 billion of capital into individual banks, the FDIC's temporary guarantee of bank debt and the Federal Reserve's multiple liquidity facilities for banks, money funds and commercial paper issuers have all significantly enhanced liquidity and helped improve market conditions.
Priorities for Remaining TARP Funds
We have evaluated options for most effectively deploying the remaining TARP funds, and have identified three critical priorities. First, we must continue to reinforce the stability of the financial system, so that banks and other institutions critical to the provision of credit are able to support economic recovery and growth. Although the financial system has stabilized, both banks and non-banks may well need more capital given their troubled asset holdings, projections for continued high rates of foreclosures and stagnant U.S. and world economic conditions. Second, the important markets for securitizing credit outside of the banking system also need support. Approximately 40 percent of U.S. consumer credit is provided through securitization of credit card receivables, auto loans and student loans and similar products. This market, which is vital for lending and growth, has for all practical purposes ground to a halt. Addressing these two priorities will have powerful impacts on the overall financial system, the strength of our financial institutions and the availability of consumer credit. Third, we continue to explore ways to reduce the risk of foreclosure.
Over these past weeks we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets. Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role, relative to other potential uses of TARP resources, in helping to strengthen our financial system and support lending. But other strategies I will outline will help to alleviate the pressure of illiquid assets.
Further Strategies
First, we are designing further strategies for building capital in financial institutions. Stronger capital positions will enable financial institutions to better manage the illiquid assets on their books and better ensure that they remain healthy. Any future program should maintain our principle of encouraging participation of healthy institutions while protecting taxpayers. We are carefully evaluating programs which would further leverage the impact of a TARP investment by attracting private capital, potentially through matching investments. In developing a potential matching program, we will also consider capital needs of non-bank financial institutions not eligible for the current capital program; broadening access in this way would bring both benefits and challenges. Non-bank financial institutions provide credit that is essential to U.S. businesses and consumers. However, many are not directly regulated and are active in a wide range of businesses, and taxpayer protections in a program of this sort would be more difficult to achieve. Also before embarking on a second capital purchase program, the first one must be completed, and we have to assess its impact and use this information to evaluate the size and focus of an additional program in light of existing economic and market conditions.
Second, we are examining strategies to support consumer access to credit outside the banking system. To date, Fed, FDIC and Treasury programs have been targeted at our banking system, and the non-bank consumer finance sector continues to face difficult funding issues. Specifically, the asset-backed securitization market has played a critical role for many years in lowering the cost and increasing the availability of consumer finance. This market is currently in distress, costs of funding have skyrocketed and new issue activity has come to a halt. Today, the illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards. This is creating a heavy burden on the American people and reducing the number of jobs in our economy. With the Federal Reserve we are exploring the development of a potential liquidity facility for highly-rated AAA asset-backed securities. We are looking at ways to possibly use the TARP to encourage private investors to come back to this troubled market, by providing them access to federal financing while protecting the taxpayers' investment. By doing so, we can lower costs and increase credit availability for consumers. Addressing the needs of the securitization sector will help get lending going again, helping consumers and supporting the U.S. economy. While this securitization effort is targeted at consumer financing, the program we are evaluating may also be used to support new commercial and residential mortgage-backed securities lending.
Third, we are examining strategies to mitigate mortgage foreclosures. In crafting the financial rescue package, we and the Congress agreed that Treasury would use its leverage as a major purchaser of troubled mortgages to work with servicers and achieve more aggressive mortgage modification standards. Now that we are not planning to purchase illiquid mortgage assets, we must find another way to meet that commitment.
FDIC Chairman Bair has given us a model, in the mortgage modification protocol she developed with IndyMac Bank. Through the end of October, the FDIC has completed loan modifications for 3,500 borrowers, with several thousand more modifications currently being processed. These modifications have reduced payments for participating homeowners by an average of $380 month, or about 23 percent. We have worked with the FHFA, the GSEs, HUD and the Hope Now alliance who yesterday announced a streamlined industry-wide modification program that for the first time adopts an explicit affordability target similar to the model pioneered at IndyMac. With this commitment, the GSEs and large portfolio investors are setting a new industry standard for foreclosure mitigation. Potentially hundreds of thousands more struggling borrowers will be enabled to stay in their homes at an affordable monthly mortgage payment.
Beyond these efforts, there has been significant work to design and evaluate a number of proposals to induce further modifications. Each of these would, however, require substantial government subsidies. The FDIC, for example, has developed a proposal that Treasury and others in the Administration continue to discuss. I believe it is an important idea. As we evaluate the merits of any new proposal, we also will have to identify and justify the means to finance it. We must be careful to distinguish this type of assistance, which essentially involves direct spending, from the type of investments that are intended to promote financial stability, protect the taxpayer, and be recovered under the TARP legislation. Maximizing loan modifications, nonetheless, is a key part of working through the housing correction and maintaining the quality of communities across the nation, and we will continue working hard to make progress here.
We will continue to pursue the three strategies I have just outlined: how best to strengthen the capital base of our financial system; how best to support the asset-backed securitization market that is critical to consumer finance, and how to increase foreclosure mitigation efforts. All of these strategies are important, but ensuring the financial system has sufficient capital is essential to getting credit flowing to consumers and businesses and that is where the bulk of the remaining TARP funds should be deployed --- in a program to support the system and as a contingency reserve for addressing any unforeseen systemic events.
We are focused on developing and preparing programs which can be implemented for each of these strategies. We will continue to brief President-elect Obama's transition team on all of these issues.
Global Challenge
Of course managing through this market turmoil while mitigating the impact of the credit crisis is a global as well as a national issue. We in the U.S. are well aware and humbled by our own failings and recognize our special responsibility to the global economy. The U.S. housing correction exposed gaping shortcomings in the outdated U.S. regulatory system, shortcomings in other regulatory regimes and excesses in U.S. and European financial institutions. These institutions found themselves with large holdings of structured products, including complex and opaque mortgage-backed securities. Some European institutions were characterized by high leverage, exposure to their own housing markets, exposure to Central European institutions, weak business models or overly aggressive expansion, while others faced weaknesses because of inadequate depositor protection systems. It should not be surprising that after 13 months of stress in the global capital markets, banks from the U.S. to the U.K., from Germany to Iceland, from Russia to France, had difficulties that exposed some of these weaknesses for the first time. For some of these banks, this proved to be a hurdle too high and government action was necessary to support financial stability.
In that regard the G7 Finance Ministers meeting last month represented a major turning point in stabilizing the global financial system as the ministers came together to support a number of powerful strategies that were soon turned into effective actions in the United States and Europe. It is also clear that our first priority must be recovery and repair. And of course we must take strong actions to fix our system so that the world does not have to suffer something like this ever again. The Leaders summit President Bush will be hosting this weekend marks a very important step in what will be an ongoing process of recovery and reform.
And to adequately reform our system, we must make sure we fully understand the nature of the problem which will not be possible until we are confident it is behind us. Of course, it is already clear that we must address a number of significant issues, such as improving risk management practices, compensation practices, oversight of mortgage origination and the securitization process, credit rating agencies, OTC derivative market infrastructure and regulatory policies, practices and regimes in our respective countries. And we recognize that our financial institutions and our markets are global, but our regulatory regimes are national, so we will examine how best to improve cooperation and information sharing to foster global financial system stability.
But let us not forget one fundamental issue which lies at the heart of our problems. Over a period of years, persistent and growing global imbalances fueled a dramatic increase in capital flows, low interest rates, excessive risk taking and a global search for return. Those excesses cannot be attributed to any single nation. There is no doubt that low U.S. savings are a significant factor, but the lack of consumption and accumulation of reserves in Asia and oil-exporting countries and structural issues in Europe have also fed the imbalances.
If we only address particular regulatory issues – as critical as they are – without addressing the global imbalances that fueled recent excesses, we will have missed an opportunity to dramatically improve the foundation for global markets and economic vitality going forward. The pressure from global imbalances will simply build up again until it finds another outlet.
The nations attending this weekend's summit represent the 20 largest economies in the world – over 77 percent of global GDP. President Bush is convening this group of countries to discuss and address problems such as global imbalances, making regulatory regimes more effective, fostering cooperation among regulators, and reforming international institutions to better address today's global economy. We can't simply task the IMF, the FSF or other International Financial Institutions to solve the problems, unless member nations all see that they have a shared interest in a solution. There are no easy answers, because until we reach a consensus on a broad-based reform agenda, we will not reach a solution. This weekend provides an opportunity for nations to take an important step, but only one step, on the necessary path to reform.
Conclusion
The road ahead, for the U.S. economy and the global economy, is full of challenges. And it will take strong leadership to address them. I am confident the United States, under this and the next Administration, will rise to these challenges. I will do everything I can to put us on the right path, both by working diligently through the end of my term and by working closely to ensure the smoothest possible transition.
Thursday, November 6, 2008
Goldcorp CEO expects $1,000 gold in near future
Goldcorp CEO Kevin McArthur says he expects to soon see gold prices in the thousand-dollar range - a price that will allow the company to achieve its goal of 50 per cent growth over the next five years.
"We continue to believe gold's status as a safe haven in times of global uncertainty is real," McArthur said in a Friday conference call with analysts.
"This attribute has been obscured by indiscriminate selling pressure in recent weeks ... (but) our medium-and long-term view on gold price remains unchanged. I continue to believe we will be seeing a four-digit gold price in the not-too-distant future."
McArthur's prediction comes a day after Barrick Gold Corp. president and interim CEO Peter Munk said he too believes gold prices will rise in tandem with a weakening U.S. dollar.
McArthur said his company remains an industry leader. "Today, we enjoy a top-quality balance sheet, low-cost production and the flexibility to pursue growth in a quickly moving market environment,".
Continued production strength at the company's El Sauzal mine in Mexico, as well as improvements at its Canadian mining operations - which include the Porcupine, Red Lake and Musselwhite mines in northern Ontario - helped to boost the company's bottom line. The company is now focused on completing its Penasquito project, also in Mexico.
"This will be our largest mine and a key driver of shareholder value for decades," McArthur said.
"We're pleased to note steady improvement at nearly all phases of mining operations from the second quarter to the third," McArthur said.
"I look forward to continued improvements moving forward."
"We continue to believe gold's status as a safe haven in times of global uncertainty is real," McArthur said in a Friday conference call with analysts.
"This attribute has been obscured by indiscriminate selling pressure in recent weeks ... (but) our medium-and long-term view on gold price remains unchanged. I continue to believe we will be seeing a four-digit gold price in the not-too-distant future."
McArthur's prediction comes a day after Barrick Gold Corp. president and interim CEO Peter Munk said he too believes gold prices will rise in tandem with a weakening U.S. dollar.
McArthur said his company remains an industry leader. "Today, we enjoy a top-quality balance sheet, low-cost production and the flexibility to pursue growth in a quickly moving market environment,".
Continued production strength at the company's El Sauzal mine in Mexico, as well as improvements at its Canadian mining operations - which include the Porcupine, Red Lake and Musselwhite mines in northern Ontario - helped to boost the company's bottom line. The company is now focused on completing its Penasquito project, also in Mexico.
"This will be our largest mine and a key driver of shareholder value for decades," McArthur said.
"We're pleased to note steady improvement at nearly all phases of mining operations from the second quarter to the third," McArthur said.
"I look forward to continued improvements moving forward."
Cash or Gold?
This is from Sprott website:
http://www.sprott.com/pdf/marketsataglance/10_2008.pdf
MARKETS AT A GLANCE October 2008
Eric Sprott & Sasha Solunac
http://www.sprott.com/pdf/marketsataglance/10_2008.pdf
MARKETS AT A GLANCE October 2008
Eric Sprott & Sasha Solunac
Tuesday, November 4, 2008
Jim Rogers: America is bankrupt
Rogers
During the seventies Jim Rogers (66) managed a successful hedge fund with George Soros. After that, he traveled and went into commodities.
Last Friday Rogers went at it in front of a roomful of ABN private banking clients and had an exclusive 15-minute interview.
The most important points:
America is bankrupt. American government bonds are extremely overvalued. "The world’s last bubble." America is in debt for over 13.000 billion (13 trillion) dollar and adds a 1.000 billion dollar debt each year. According to Rogers this can not continue for long. Therefore, he went short in long-term US goverment bonds. “These bonds have peaked.” By the way: Rogers owns Dutch government bonds. “They are safe.”
"The fact that the dollar is gaining rapidly is only temporary", Rogers says. “All hedge funds were short on the dollar and because of the appreciation of the dollar there is a short squeeze for the dollar. Managers have to close thier positions and they have to buy dollars instead.” “This is temporary, within a year you have to get rid of the dollar. Fundamentally it is a drama.”
Commodities
Last year we spoke Rogers as well. At that time he advised us to invest blindly in commodities and agriculture. That was a bad advice, because Rogers’ commodities index (Rici) has fallen around 40 per cent last year, while ABN’s African Commodities Certificate dropped even from 11 euros to 5 euros during that time.
Oil
Rogers: "Whether oil costs 45 or 145 dollars, it doesn’t really matter. What does matter is that with oil, like with many other commodities, supply is decreasing while demand is increasing. In the long run this will result in a considerable increase in prices."
"The question is not if the price of a barrel of oil will increase again, but how expensive a barrel of oil will be eventually?"
"The oil supply will fall with 6 to 9 per cent each year, according to the IAE. The demand for oil will increase in China and developing countries. This has nothing to do with economy, the market is simple. It is simply the law of supply and demand."
High inflation
Rogers has been telling his commodity-story for a few years now. On Friday he sighed while saying: "People don’t understand that the commodity-market will be bullish, this will lead to high inflation."
Commodity prices will be a lot higher in the future than they are now.
"The world is going to change, there is no way around it. If you don’t understand that and you don’t adapt you will be suffering in five years. The Chinese see on TV how we live in the West. They want that too! That generates an enormous demand for products and materials."
"All countries in the world have been printing money, the United States in particular. That created a huge amount of money, resulting in the icing on the cake for commodity prices. But fundamentally you have to look at supply and demand."
The United States
Rogers has been negative about the United States for a long time. "You should be worried, America is out of control". The enemies of the United States are currently looking into how to profit from the weaknesses of the United States. When we asked him: Obama or McCain? he answered: "Neither of them. They are both turkeys, they take the wrong decicions."
Bernanke or Trichet?
Rogers is not a big fan of Bernanke, the president of the Federal Reserve. With a big smile Rogers tells us: "Bernanke will continue to print money until there are no trees left in America."
He is more positive about Trichet of the ECB. At least he knows what he is doing and what it’s all about.""
Banks
Rogers is fiercely against bailing out the banks. "That has never worked. Let them go bankrupt. Right now bad-managed banks are saved with money from good banks and from you and me. After that, the failing but nationalized banks are going to compete with the well-managed banks and they gain their market share. Ridiculous. The Bail-out plan is a disaster. In 1929 we had a recession but after the government interfered, it became a depression. You should not interfere."
Stocks
Rogers: "You can make good money with stock-picking, perhaps even more than with commodities, but only if you pick the right equitie at the right moment. The stockmarket in the west is still too expensive. But the market is extremely volatile. In the five years to come you can earn money with trading ranges".
China and Russia
"Do know know what the problem is? When at work, the Chinese people ask when they can work and what they can do. We ask how day's off we have. That’s a big difference."
Rogers has bought Chinese equitie in the last few weeks. "I don’t know if we have reached the bottom, but the market is low. I am a bad timer, by the way."
"My daughter is five years old and she speaks Mandarin fluently. After the dollar has collapsed as a world currency, there is only one currency that could take over that role: the renminbi. That could happen in 15 to 20 years. Other currencies cannot take over the role of the dollar, including the euro."
Russia
The former Soviet Union will be split up in even more smaller countries. And with that, there will be some wars."
"In Russia you are lucky if they kill you right away. You are unlucky if they first arrest you, then keep you in prisson for 15 years, torture you and kill you after that". He joked.
"What you see therby is that the Russians take their capital abroad, while the Chinese take it home."
City or countryside?
According to Rogers farmers have a bright future. "within a few years farmers will drive Maserati’s and all stockbrokers will be cabdrivers."
In Holland you could have a farm with a lot of land at the moment. “Agriculture has been out of vogue for 30 years, but now it will be hot because the demand for food will increase greatly."
“The stupidest thing you can do right now is to sell your farm and buy a house in the city instead. The housing market is in decline."
War
And finally: "If a war breaks out, it will begin in the Middle East. Amsterdam will be last. I would love to live here if the weather was any better... Amsterdam should have been 600 miles further to the south!"
Friday, October 31, 2008
Takeover talk circles handful of Canadian juniors
According to reports on Reuters today, merger and acquisition activity in Canada's mining patch will heat up again, but it is tough to predict when big miners will decide the time is right.
"The increasing valuation gap between the senior and intermediate producers and the junior explorers/developers suggests to us that M&A activity will likely heat up going into 2009," Dundee Securities said in a note to clients.
Analysts have fingered a handful of juniors that are likely takeover candidates. Here is a list of some potential targets:
* Aquiline Resources (AQI.TO) - The owner of Navidad silver project in Argentina needs to raise funds to finance immediate capital needs, analysts say. "If the company can continue to move toward development, potential acquirers may take an interest in its large, world-class silver project," Dundee Securities said in a note.
* Corriente Resources (CTQ.TO) - Developing the big Panantza-San Carlos copper project in Ecuador, Corriente is looking for partners. The owner of the Mirador and Mirador Norte projects, has a "good probability of being taken over," Wellington West Capital Markets said in a report.
* Candente Resource (DNT.TO) - Said in late September it was looking for a joint venture partner for its Canariaco copper, gold and silver project in Peru.
* Detour Gold (DGC.TO) - The past-producing Detour Lake project has a good chance of being acquired by a senior producer in the coming year, Wellington West said. Buyers may have to go through PDX Resources (PLG.TO: Quote, Profile, Research, Stock Buzz) which holds a 42 percent stake in Detour.
* South American Silver (SAC.TO) - "The size and scope of the Malku Khota project makes South American Silver Corp a takeover candidate by a major with cash or cash flow," said Wellington West.
Noront Resources (NOT.V) - Owns a promising nickel, copper and platinum property at its Double Eagle property in northern Ontario. Complicated by a recently settled proxy battle.
* Osisko Mining (OSK.TO) - Developing the Malartic gold project in Quebec with an estimated 8.4 million ounces.
"The increasing valuation gap between the senior and intermediate producers and the junior explorers/developers suggests to us that M&A activity will likely heat up going into 2009," Dundee Securities said in a note to clients.
Analysts have fingered a handful of juniors that are likely takeover candidates. Here is a list of some potential targets:
* Aquiline Resources (AQI.TO) - The owner of Navidad silver project in Argentina needs to raise funds to finance immediate capital needs, analysts say. "If the company can continue to move toward development, potential acquirers may take an interest in its large, world-class silver project," Dundee Securities said in a note.
* Corriente Resources (CTQ.TO) - Developing the big Panantza-San Carlos copper project in Ecuador, Corriente is looking for partners. The owner of the Mirador and Mirador Norte projects, has a "good probability of being taken over," Wellington West Capital Markets said in a report.
* Candente Resource (DNT.TO) - Said in late September it was looking for a joint venture partner for its Canariaco copper, gold and silver project in Peru.
* Detour Gold (DGC.TO) - The past-producing Detour Lake project has a good chance of being acquired by a senior producer in the coming year, Wellington West said. Buyers may have to go through PDX Resources (PLG.TO: Quote, Profile, Research, Stock Buzz) which holds a 42 percent stake in Detour.
* South American Silver (SAC.TO) - "The size and scope of the Malku Khota project makes South American Silver Corp a takeover candidate by a major with cash or cash flow," said Wellington West.
Noront Resources (NOT.V) - Owns a promising nickel, copper and platinum property at its Double Eagle property in northern Ontario. Complicated by a recently settled proxy battle.
* Osisko Mining (OSK.TO) - Developing the Malartic gold project in Quebec with an estimated 8.4 million ounces.
Barrick CEO Said Gold's Outlook Is "a hell of a lot more positive than anything else"
"...I think the outlook for gold is a hell of a lot more positive than anything else you can think of, "Barrick Chairman and interim CEO Peter Munk told analysts Thursday during a conference call Thursday to discuss financial results.
We have never seen such volatility. We have never seen such dislocations. And in fact we have never seen such turmoil," Munk said.
"If ever there was an expectation for gold to shine, we could not have imagined a more suitable, global macroeconomic climate than what we have seen over the last 90 to 120 days," he noted.
Nevertheless, Munk admitted, "You have to be disappointed-just like we are-that, despite the external factors falling in line with all the guys who predicted Doomsday and gold going to $10,000 an ounce, Doomsday has almost arrived. Certainly we are on the precipice a number of times. And gold grows slowly." As hundreds of institutional funds sold their gold holdings to cover stock losses, Munk noted that the pressure on gold "was absolutely unprecedented. And, that, I think, really explains why gold never really fulfilled its promise."
"The one thing that we have all learned from this crisis is the almost flawless correlation...the inverse correlation between the U.S. dollar and gold," he asserted.
Despite gold's current wild ride, Barrick retains an "exceptionally positive view" on gold, Munk declared.
We have never seen such volatility. We have never seen such dislocations. And in fact we have never seen such turmoil," Munk said.
"If ever there was an expectation for gold to shine, we could not have imagined a more suitable, global macroeconomic climate than what we have seen over the last 90 to 120 days," he noted.
Nevertheless, Munk admitted, "You have to be disappointed-just like we are-that, despite the external factors falling in line with all the guys who predicted Doomsday and gold going to $10,000 an ounce, Doomsday has almost arrived. Certainly we are on the precipice a number of times. And gold grows slowly." As hundreds of institutional funds sold their gold holdings to cover stock losses, Munk noted that the pressure on gold "was absolutely unprecedented. And, that, I think, really explains why gold never really fulfilled its promise."
"The one thing that we have all learned from this crisis is the almost flawless correlation...the inverse correlation between the U.S. dollar and gold," he asserted.
Despite gold's current wild ride, Barrick retains an "exceptionally positive view" on gold, Munk declared.
Sprott says redemptions loom
According to Globe and mail today, Eric Sprott expects more redemptions in his firm's hedge funds from international investors soon, which he says could "ultimately be significant."
Mr. Sprott made the comments after the Toronto-based money manager's third-quarter results missed analysts' expectations. The firm reported a profit of $3.7-million or 2 cents a share, compared with $3.5-million a year ago when it was a private company. Analysts polled by Thomson Reuters First Call expected 7 cents a share.
During the quarter ended Sept. 30, assets under management tumbled 27 per cent or $2.1-billion to $5.6-billion as the market carnage shaved off much of the market value. Net sales came in at $122-million.
"Our long-only funds have been significantly affected by the market," but the hedge funds have done better because of their short positions, he said.
Mr. Sprott's said his bearish view on financial stocks has borne fruit with the collapse of venerable U.S. financial institutions, but his bullish outlook on gold has yet to take hold.
"If certain things unfold as we expect, it's not out of the realm for us to imagine that gold could go to $1,500 (U.S.) or $2,000 an ounce," he said.
Much of Sprott's assets are concentrated in the small- to mid-capitalization resource sector that has taken a beating in the market meltdown.
But as of Wednesday, the Sprott Opportunities Hedge Fund LP, run by Jean-François Tardif, was up 0.9 per cent year to date, while the Sprott Hedge Fund LP II, run by Mr. Sprott, was only down 3.7 per cent. The S&P/TSX composite fell 31 per cent in the same period.
"The break-even line is not a bad resolution to a market that has fallen as much as it has around the world," Mr. Sprott said.
Most of the mutual funds, however, are sharply in the red. They include the flagship Sprott Canadian Equity Fund, down 47 per cent; Sprott Gold and Precious Metals, 66 per cent; Sprott Energy, 59 per cent; Sprott Growth, 70 per cent and Sprott Small Cap Equity, 50 per cent.
Mr. Sprott made the comments after the Toronto-based money manager's third-quarter results missed analysts' expectations. The firm reported a profit of $3.7-million or 2 cents a share, compared with $3.5-million a year ago when it was a private company. Analysts polled by Thomson Reuters First Call expected 7 cents a share.
During the quarter ended Sept. 30, assets under management tumbled 27 per cent or $2.1-billion to $5.6-billion as the market carnage shaved off much of the market value. Net sales came in at $122-million.
"Our long-only funds have been significantly affected by the market," but the hedge funds have done better because of their short positions, he said.
Mr. Sprott's said his bearish view on financial stocks has borne fruit with the collapse of venerable U.S. financial institutions, but his bullish outlook on gold has yet to take hold.
"If certain things unfold as we expect, it's not out of the realm for us to imagine that gold could go to $1,500 (U.S.) or $2,000 an ounce," he said.
Much of Sprott's assets are concentrated in the small- to mid-capitalization resource sector that has taken a beating in the market meltdown.
But as of Wednesday, the Sprott Opportunities Hedge Fund LP, run by Jean-François Tardif, was up 0.9 per cent year to date, while the Sprott Hedge Fund LP II, run by Mr. Sprott, was only down 3.7 per cent. The S&P/TSX composite fell 31 per cent in the same period.
"The break-even line is not a bad resolution to a market that has fallen as much as it has around the world," Mr. Sprott said.
Most of the mutual funds, however, are sharply in the red. They include the flagship Sprott Canadian Equity Fund, down 47 per cent; Sprott Gold and Precious Metals, 66 per cent; Sprott Energy, 59 per cent; Sprott Growth, 70 per cent and Sprott Small Cap Equity, 50 per cent.
Cramer Interviewed Sean Boyd, CEO of Agnico-Eagle Mines
Gold is usually considered an ideal port in a financial storm, but it hasn’t worked as a hedge in this dismal market. The reason is that gold usually is a good protection when faced with inflation, but currently the market is in a deflationary cycle, noted Cramer. As a result, he is “eating crow” over his failed Agnico-Eagle Mines call; the stock dropped $22 from $68 reflecting gold’s fall from $897 to $738 an ounce. However, Cramer thinks gold will make a comeback in a few quarters, and a good choice may be Agnico-Eagle Mines. CEO Sean Boyd discussed the company’s projection of a 23% production increase along with the creation of 5 new mines between 2008 and 2010. Boyd says AEM’s dividend is modest because the gold industry is capital-intensive. Cramer says AEM might be a good investment for the patient investor who can wait a few quarters for an upturn in gold.
Thursday, October 30, 2008
Gold Fields CEO said Gold to reach $1,000 next year and stay there
Interviewed on SAfm Radio in Johannesburg yesterday by Mineweb Editor in Chief, Alec Hogg, Gold Fields CEO, Nick Holland, gave some interesting views into his take on the gold price. "I believe gold will go through $1000 and stay there during the course of 2009", said Holland.
While to an extent this may be wishful thinking from someone whose company depends on gold for its income and on the gold price for its profitability, Holland's reasons for his views are compelling. He feels gold underperformed during the run-up in the oil price at the mid-year and that then, when oil came down in price, gold was dragged down with it without making earlier commensurate gains. Thus gold hasn't really performed in line with the overall situation - yet!
However Holland feels that with negative real interest rates around the world, contracting supplies and physical demand at almost record levels, the time is ripe for a re-evaluation of gold by the market.
When asked whether he felt the price would rise much beyond the $1,000 level, Holland wasn't prepared to fuel speculative flames in this respect: "I wouldn't say beyond $1,000" said Holland. "Some people will say it should be much higher. I'd be very grateful with $1000 because right now the industry at $800 - or at $764 today, I think - doesn't make any money after you take the all-in costs into account. So just to actually restore the margin and keep this industry going, we need something close to $1,000."
On Gold Fields itself, on a day when the stock price bounced 16 percent, Holland feels the company is significantly undervalued if one assesses the underlying valuations of all the company's assets.
As far as the future is concerned, Holland feels that a number of companies will be cutting back on projects and a number of gold mining projects which had been scheduled to go ahead will not be able to as it is proving virtually impossible to raise finance through equity or loans in the current climate. However this does not apply to most of Gold Fields' own plans with Cerro Corona and the Tarkwa expansion both virtually complete. With the completion of safety related work on its South African mines, together with the new developments overseas, Gold Fields expects output to be back to an annual rate of 4 million ounces a year b the end of the first quarter next year.
As to South Deep, Holland is extremely confident about the future of this massive gold resource seeing it as a "wonderful investment going forward". Although deep, it will be a fully mechanised mining operation and will be able to produce its gold more safely and more efficiently with a fraction of the workforce used in most current South African mining operations. Currently Gold Fields is aiming for production from South Deep in 2014. He went on to say about South Deep that it "is something different, and I think this could be the greatest deep-level mechanised gold mine in the world when we get this to full production.
Tuesday, October 28, 2008
John Embry: Gold’s Game-Changing Moment Could be Fast Approaching
In a recent Business News Network interview, Amanda Lang talks with John Embry, Chief Investment Strategist at Sprott Asset Management, about his position on precious metals (bullish) and base metals (bearish). While hesitating to make a definitive prediction in the midst of such widespread asset destruction, Embry nonetheless looks beyond the carnage to what he suggests could be the seminal event for gold—the possibility of default on physical delivery for the December futures contract. He also explains why gold has failed to rise to the occasion of the worst-case financial scenario in history. Below are some excerpts from the interview, edited for length and clarity.
Amanda Long: People say gold really should be doing better than it is now and that actually becomes a justification for not buying it. It’s not doing what it should be doing in a crisis and, therefore, I don’t want to own it.
John Embry: That is a wonderful analysis because that is exactly the mindset the guys who are driving the price down are trying to create. Gold doesn’t work so keep away from it. They’re able to control the price quite easily in the paper markets because the paper markets are so huge in comparison. “The guys” – the central banks and their bullion bank accomplices—have a lot of power and a lot of money, so they can overwhelm the other side. But what’s happening is that the physical supply is diminishing dramatically. It’s getting harder and harder to purchase gold and silver through traditional avenues. You can’t get it in coin shops to any extent. You can’t get it through your banks. The physical side is really constricted by supply. That, to me, is the reality. The paper stuff is just the illusion.
AL: Now the problem, of course, for investors is that the paper market is the one you’ve got to play and, for the most part, it affects the price. How will that be resolved?
JE: What will have to happen is the people that are on the long side of the paper market in, say, on Comex, are going to have to call for delivery. When they call for delivery and there isn’t enough gold available to meet that call, the game changes. That is probably going to be the event that changes the perception. There’s a suggestion that something may happen around the time of the maturity of the December contract.
AL: Would you expect them to do that out of fear? In other words, they’d literally want to take delivery so that they have gold in their vaults?
JE: I would think that would be the best reason to do it for the simple reason that I want physical gold today. I mean that is the one thing you can trust. Paper gold, who knows? You may have a force majeure in the sense that people in the end will settle for paper and you won’t have the gold protection you think you have. You’ll get your money’s worth, but you’ll have paper. So that to me is the reason why I think somebody’s going to say, wait a minute, I want the gold. [Ed. Note: Force Majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, act of nature (e.g., flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.]
AL: In that transaction people ask for delivery. Will that trade crush a lot of people? Are there a lot of people who are short this market?
JE: Yes, without question. For the people who are short this market, there will be a force majeure and they will have to settle in paper because they can’t meet the requirements of gold. That is going to be the seminal event that defines this whole situation.
Embry has a solidly bullish view of the precious metals. On the other hand, his short-term stance on the base metals is bearish. He clearly regards the precious metals as being in an altogether different category and explains why in the edited segment of the interview below.
JE: At this stage of the game, gold and silver are monetary metals. All the rest of the commodities are industrially driven. I’m not a long-term bear in base metals. I’m a short-term bear based on the fact that I think we’re in considerable demand destruction at the same time that there were some significant positions held by leveraged hedge funds in London and the U.S. that are being unwound. As you know, the hedge fund business, particularly the leveraged ones, are just getting slaughtered.
AL: When will that be over? When will the margin call stop being a major factor in daily trade?
JE: It’s happening so fast that I’d hoped it would be over sooner rather than later. I’m really reluctant to make hard and fast predictions because we’re dealing with a situation that we’ve never seen before. We’ve never had this much leverage in the system and it’s been amped up by derivatives. The authorities have a huge task on their hands trying to recapitalize the banking system and getting this thing moving in the other direction, but time will tell.
AL: The perception is that a lot of base and precious metals and all the commodities have been affected by the inflow of capital from ETFs and hedge funds—and that really increased the impact of the speculative element…
With copper below $2—assuming China doesn’t go to zero—at what point do say, this isn’t a bad entry point?
JE: We’re getting pretty close to breakeven in copper now because costs have gone up so much. But things can often go through breakeven in the short term. Gold and silver are already there. Consequently, I think that we could still see a spike down. Who knows how low? But I think a longer-term copper price would probably be at $4.00 or realistically somewhere in the current area.
AL: Is it too soon to start thinking about buying a base metal producer?
JE: Well, the problem is that the base metal producers have done really well because they were able to put some fat on their bones; whereas, precious metals producers have never made any money in this cycle to speak of. Now that it’s come back hard, I think they’re getting so cheap. If the company’s really well-financed and it has a low quartile cost mine, this is the time you get into these things as a long-term investment when everybody else is fleeing for other reasons.
In closing, Embry discusses the case for platinum. The chart for the metal “looks like it’s just gone off the side of a cliff.” He attributes platinum’s precipitous fall to the demand destruction that has accompanied the devastated automobile industry. “At some point you have to start looking at the cost of mining platinum and we’re getting down to that level.” He regards the economics for gold and platinum as being linked. “That’s why I always thought gold was suppressed because platinum was trading at over two times the price of gold. Now platinum’s come way back for demand reasons and it’s reaching a level where I would certainly look at it because it is a precious metal.”
Monday, October 27, 2008
Buy American. I Am.
Here is Warren Buffett's latest writing in New York Times
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Sunday, October 26, 2008
Even gold can't hedge a nuclear implosion
This is from 321Gold.com
We have had another week of carnage in the markets with gold hitting new lows and gold shares getting hammered yet again. It's enough to make a gold bug slit his throat. Wasn't gold supposed to be some magic commodity that acted as an insurance policy against financial chaos? We have the financial chaos but gold has tanked.
Actually gold has been a hedge but an imperfect hedge. If you were Canadian or Australian or English, you would wonder what all the hoopla was about from the Americans because in their currencies gold is hitting new record highs. Gold worked exactly as advertised and those investors are all standing in high cotton.
Even the hedge funds used gold to hedge. I use the term hedge funds lightly. I'm not sure who made up the name "hedge funds" because they functioned far more as out of control casinos with crooked dealers.
The hedge funds did hedge using gold. They may have had 5-10% in gold. Since gold was $660 an ounce only in August of last year, the hedge funds actually made money on gold before chaos appeared and they were forced to sell their gold. They had to sell their gold because the other 90-95% of their bets were leveraged 50 to 1 and when those went south, they sold their gold because they could.
Gold hasn't gone down in US dollar terms because it has lost its role as an insurance policy against chaos. It went down because it was being used as a hedge and it was the last thing of value the bankrupt hedge funds could sell. But if you think gold going down $40 in a day gets exciting, just wait a few days until it starts going up. Lots of hedge funds shorted gold and when they get forced out of their positions, gold is going to roar higher $100 a day. The $87 dollar move higher in a day that came 6 weeks ago was just the first of many barnburner days.
It's a confusing time for everyone. We are in a place the world has never been before; in uncharted waters. I've made the comment in the past that only 10 people in the world actually understood derivatives. That number is probably up to 100 by now, more people are catching on.
Derivatives are simple to understand. They are financial instruments that derive their value from something else. Gold calls are derivatives, stock options are derivatives, futures are derivatives, credit default swaps are derivatives. Securitized mortgages sold in large lots are derivatives.
But derivatives grew totally out of control and indeed were growing 50% a year and no one took any notice. I did. With derivatives growing 150% faster than the total underlying economy, there had to be a lot of fraud involved. There was and it's all coming to the surface. The hedge funds were similar to giant casinos where when they won a bet, they took the winnings home in real money and when they lost, they paid off in Monopoly money, secure in the knowledge that the government would bail them out.
Well, the governments of the world have been dumping piles of $100 bills on the bonfire and every day the situation becomes worse as markets realize the government action is counterproductive. So far the US administration of George Bush has nationalized Fannie Mae, Freddie Mac and the entire banking system. It nationalized insurance giant AIG about a month ago and the company has already gone through $123 billion dollars in two tries at the feeding trough and is back for another feeding. Ford, GM and Chrysler have had $25 billion thrown at them and want more. The government of California wants $7 billion. State and local governments across the country are whining to be bailed out.
Is there no price to be paid for stupidity and cupidity? Are we going to bail out every fool who made foolish bets? Under the Bush administration is failure the new "No Chump left behind?" Where are we going to get the printing presses required to make all the new money?
The solution is going back to a real Bretton Woods agreement where all currencies are tied to gold directly. Where all international currencies are denominated in units of gold. We have total financial chaos yet you can still, for the time, buy an insurance policy in the form of physical gold and silver. If you never have before, you need to quickly.
Someone sent me a copy of a list put out by Canaccord Capital on Friday showing about 100 resource companies selling for cents on the dollar. I want my readers to understand that these are good companies who have been dumped by hedge funds because of deleveraging and nothing more. When you can buy $1 bills for $.80 and get a free mine and mill with it, it's a situation that won't last long.
Evolving Gold has a market cap of $13.6 million and cash of $19.5 million. Olympus Pacific has an $11.6 million dollar market cap and $16.2 million in the bank. Full Metal Minerals has a market cap of $8.1 million and cash of $9.8 million. My favorite, ATW Gold, has a market cap of $14.6 million and $14.7 million in cash and owns two gold mines and two mills and will be in production in March of 2009 at a rate of 50,000 ounces of gold a year. It doesn't get any better than that.
To conclude, gold won't hedge totally against a nuclear implosion and we have had that. Nobody really called how bad it would get even if there were a lot of people who knew it would be bad. Bob Hoye did the best job of timing and recommendation that I have seen.
The system is breaking apart. We are not past the shoals; there are some really bad times ahead. TA and Fundamental analysis are both pretty useless because we don't have anything to compare where we are or where we are headed. It's a time to be prudent, very prudent.
And while gold and gold production stories are not a perfect hedge, they are better hedges than anything else.
We have had another week of carnage in the markets with gold hitting new lows and gold shares getting hammered yet again. It's enough to make a gold bug slit his throat. Wasn't gold supposed to be some magic commodity that acted as an insurance policy against financial chaos? We have the financial chaos but gold has tanked.
Actually gold has been a hedge but an imperfect hedge. If you were Canadian or Australian or English, you would wonder what all the hoopla was about from the Americans because in their currencies gold is hitting new record highs. Gold worked exactly as advertised and those investors are all standing in high cotton.
Even the hedge funds used gold to hedge. I use the term hedge funds lightly. I'm not sure who made up the name "hedge funds" because they functioned far more as out of control casinos with crooked dealers.
The hedge funds did hedge using gold. They may have had 5-10% in gold. Since gold was $660 an ounce only in August of last year, the hedge funds actually made money on gold before chaos appeared and they were forced to sell their gold. They had to sell their gold because the other 90-95% of their bets were leveraged 50 to 1 and when those went south, they sold their gold because they could.
Gold hasn't gone down in US dollar terms because it has lost its role as an insurance policy against chaos. It went down because it was being used as a hedge and it was the last thing of value the bankrupt hedge funds could sell. But if you think gold going down $40 in a day gets exciting, just wait a few days until it starts going up. Lots of hedge funds shorted gold and when they get forced out of their positions, gold is going to roar higher $100 a day. The $87 dollar move higher in a day that came 6 weeks ago was just the first of many barnburner days.
It's a confusing time for everyone. We are in a place the world has never been before; in uncharted waters. I've made the comment in the past that only 10 people in the world actually understood derivatives. That number is probably up to 100 by now, more people are catching on.
Derivatives are simple to understand. They are financial instruments that derive their value from something else. Gold calls are derivatives, stock options are derivatives, futures are derivatives, credit default swaps are derivatives. Securitized mortgages sold in large lots are derivatives.
But derivatives grew totally out of control and indeed were growing 50% a year and no one took any notice. I did. With derivatives growing 150% faster than the total underlying economy, there had to be a lot of fraud involved. There was and it's all coming to the surface. The hedge funds were similar to giant casinos where when they won a bet, they took the winnings home in real money and when they lost, they paid off in Monopoly money, secure in the knowledge that the government would bail them out.
Well, the governments of the world have been dumping piles of $100 bills on the bonfire and every day the situation becomes worse as markets realize the government action is counterproductive. So far the US administration of George Bush has nationalized Fannie Mae, Freddie Mac and the entire banking system. It nationalized insurance giant AIG about a month ago and the company has already gone through $123 billion dollars in two tries at the feeding trough and is back for another feeding. Ford, GM and Chrysler have had $25 billion thrown at them and want more. The government of California wants $7 billion. State and local governments across the country are whining to be bailed out.
Is there no price to be paid for stupidity and cupidity? Are we going to bail out every fool who made foolish bets? Under the Bush administration is failure the new "No Chump left behind?" Where are we going to get the printing presses required to make all the new money?
The solution is going back to a real Bretton Woods agreement where all currencies are tied to gold directly. Where all international currencies are denominated in units of gold. We have total financial chaos yet you can still, for the time, buy an insurance policy in the form of physical gold and silver. If you never have before, you need to quickly.
Someone sent me a copy of a list put out by Canaccord Capital on Friday showing about 100 resource companies selling for cents on the dollar. I want my readers to understand that these are good companies who have been dumped by hedge funds because of deleveraging and nothing more. When you can buy $1 bills for $.80 and get a free mine and mill with it, it's a situation that won't last long.
Evolving Gold has a market cap of $13.6 million and cash of $19.5 million. Olympus Pacific has an $11.6 million dollar market cap and $16.2 million in the bank. Full Metal Minerals has a market cap of $8.1 million and cash of $9.8 million. My favorite, ATW Gold, has a market cap of $14.6 million and $14.7 million in cash and owns two gold mines and two mills and will be in production in March of 2009 at a rate of 50,000 ounces of gold a year. It doesn't get any better than that.
To conclude, gold won't hedge totally against a nuclear implosion and we have had that. Nobody really called how bad it would get even if there were a lot of people who knew it would be bad. Bob Hoye did the best job of timing and recommendation that I have seen.
The system is breaking apart. We are not past the shoals; there are some really bad times ahead. TA and Fundamental analysis are both pretty useless because we don't have anything to compare where we are or where we are headed. It's a time to be prudent, very prudent.
And while gold and gold production stories are not a perfect hedge, they are better hedges than anything else.
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