Envast Gold

CIBC initates coverage of 7 gold stocks

2010-05-21T17:10:00.001-04:00

Detour Gold (DGC.TSX) - Sector Outperformer, C$36 price target

Osisko Mining (OSK.TSX) - Sector Outperformer, C$16 price target

Kirkland Lake Gold (KGI.TSX) - Sector Outperformer, C$16 price target

Lake Shore Gold (LSG.TSX) - Sector Performer, C$4.25 price target

San Gold (SGR.TSXV) - Sector Performer, C$6 price target

Rubicon Minerals (RMX.TSX) - Sector Underperformer, C$4 price target

Rainy River Resources (RR.TSXV) - Sector Underperformer, C$5.50 price target

China was not a communist country, Jim Rogers said

2010-05-19T15:20:00.002-04:00

"My suggestion is that people should move to Asia, and teach their kids how to speak Chinese," says Jim Rogers, the man who made his fortune betting against Wall Street in the 1970s. In 2007 he took his own advice, moved out of Manhattan and set up shop in Singapore. He remains bullish about China and "countries that are going to benefit from the rise of Asia, such as Australia". Marcus Reubenstein reports.

It's 29 degrees Celsius, humidity has just edged past 93 per cent and Jim Rogers is at home pedalling away on his exercise bike. ''That's the tropics,'' he says. ''It's hot and it rains.'' Within five minutes a torrential downpour arrives to underscore his point.

His Asian admirers, of which there are many, would say he even gets the weather forecast right. Rogers does not have an iPod; instead a laptop computer is mounted on the handlebars, so he can keep an eye on the market.

In 1988 Rogers became the first Westerner, possibly the first person, to ride a motorbike across China. He did it again in 1990 and then in a car, with his wife, Paige Parker, in 1999 - on a round-the-world journey that included 5½ weeks travelling, west to east, across Australia.

''These trips brought home to me,'' he says, ''that China was not a communist country. They were not horrible bloodthirsty people, they were extremely hardworking people. Despite what they called themselves, they were capitalists.''

Four decades ago - in the home of modern capitalism - Rogers partnered with George Soros to establish one of the most successful hedge funds of all time. ''A couple of us started a fund and it was successful,'' he says, sounding almost embarrassed about that success.

The Quantum Fund wasn't just successful; over the decade in which Rogers was involved, the S&P 500 advanced 47 per cent - while Rogers and Soros managed returns of 4200 per cent.

''In 1974, there was something called the Nifty Fifty,'' Rogers says. ''They were supposedly the 50 great stocks that would have rising earnings forever. They all sold at huge multiples of their earnings, they were just very, very expensive stocks and we shorted a lot of them.''

Rogers, who today mainly invests in commodities and currencies, again began shorting stocks about a month ago.

His assessment is that China and the US are heading in different directions. The big difference is the direction in which they're headed.

''China is one of the best-run countries in the world right now,'' he says, ''and that's just based on results. They call themselves communists but they're among the best capitalists in the world.''

China has many problems, he admits, including a blocked currency which has helped create an internal property bubble as increasingly wealthy investors have few options for parking their funds.

But, he argues, the problems of the US are far greater. Rogers has been a strident critic of America's massive bailout packages, its architects and its beneficiaries.

''Karl Marx is probably dancing somewhere,'' he says with a grin. ''Because, in America right now, the government owns the automobile industry, the insurance industry, the mortgage industry and the banking industry. The government suddenly owns huge parts of the American economy - that's what Karl Marx said he wanted, and he didn't have to fire a shot.''

As for Australia, he says: ''The only disappointment I've had is that your politicians are as bad as the ones in America.

If the Australian government keeps running up such gigantic debts, the lucky country is going to run out of luck.''

Rogers, who supports neither side of politics in the US, is highly critical of the Rudd government's spending policies and sees no logic behind its decision to impose a super profits tax on the resources sector. ''Further taxing resources is not going to bring out new supply, so it will hurt us all in the long run,'' he argues.

''Do you think politicians are going to find new supplies, much less develop them? If your government insists on taxing the golden goose, it should at least pay off debt so when the bad times come Australia will suffer less.''

But Rogers has praise for the Reserve Bank under its governor, Glenn Stevens. ''I wish your central bank was running the US Federal Reserve,'' he says bluntly. ''Your guys have done a much better job than most other central banks. I didn't say they're doing a great job; still, it's a much better job.

''They [the RBA] see what's going on in the world. Yes, they have the advantage of a strong economy, but at least they're doing the right thing, instead of denying reality.''

And he applauds the Reserve's tightening of monetary policy. ''If anything, I think rates should be higher because there is inflation in the world and Australia could be developing its own property bubble.''

Higher interest rates will push up the value of the Australian dollar, but Rogers says it would be foolish for policy makers to forget how the Aussie dived towards US50¢ less than a decade ago. ''If the Australian economy keeps taking on debt, the next time there's a bear market, the Australian dollar will collapse.''

And he sees a bleak future for any currency backed by massive debts. Top of his list of bad currencies is the once mighty greenback. For which, in great part, he blames the former US Federal Reserve chairman Alan Greenspan.

''In 1998, Greenspan bailed out Long Term Capital Management [the US hedge fund with over $US5 billion in debts], then he bailed Wall Street out again in 2001 because of the dotcom bubble - the bubble he caused because he kept printing money and bailing out everybody in sight.''

Rogers points to Japan, which he argues spent two decades bailing out what he calls ''zombie banks and zombie companies''. Referencing the Nikkei Index - which peaked at about 39,000 points in 1989 and today is trading below 11,000 points - he says, flatly, ''Bailouts don't work!''

Total US government debt is now about 90 per cent of GDP. ''Next time we have a slowdown, or a recession,'' Rogers asserts, ''America has shot its wad. Ben Bernanke [the US Federal Reserve chairman] can't keep printing money - the world is going to run out of trees at the rate he's printing money.''

His negativity towards the British pound is based on similar concerns. He calls the euro a political currency, which the architects of the Treaty of Maastricht got right but the nations of the euro zone got wrong by ignoring their own rules.

''Greece is bankrupt,'' he says, ''whether they acknowledge it or not. Greece should have been made to take its pain, otherwise it will never change. In five months, years or decades later we're going to be having the same conversation, only worse.''

And of the euro zone's latest bailout package? ''The idea that you can solve the problem of debt and consumption with more debt and consumption defies belief.''

B

ut Australia, in the short- to mid-term, should remain a land of opportunity, with plenty of opportunities on the land.

''I would urge anyone to buy a farm,'' he says. ''Farming has been a horrible business for 30 years, so there's fewer farmers and supply is under duress. At the same time all of Asia is becoming more prosperous, so you have demand going up when supply is under pressure.''

Rogers may not have too much time for our politicians, but he likes Australians and would like to see more Australians. ''If I was Australia, I'd be doing everything I could to bring in people and capital to develop the lucky country.''

As for foreign investors? ''I would give them tickets to enter, because you want capital and expertise. Australia was developed mainly by immigrants. How many fifth generation Australians do you know?''

His recipe for Australia is that it should leverage off Asian growth and stick to what it's good at. However, he reiterates his belief Australia will not be prepared for the next economic shock and for a commodities bear market if it keeps taking on debt.

H

e may be one of the investment world's best-known Sinophiles, but he's not an apologist. ''Don't think I have starry eyes about China. It will have a lot of setbacks along the way, as did America. Since the 19th century America's had a horrible civil war, we had 15 depressions, we had periodic massacres in the street and, at times, very few human rights.

''Plato said in The Republic that the way societies revolve is they go from dictatorship to oligarchy, to democracy, to chaos and back to dictatorship.'' China, according to Rogers, is in the early stages of oligarchy. And, America, if it's not careful, is heading for chaos.

Last year the Chinese journalist Yang Qing spent many hours following Rogers around, interviewing him for her book The Crystal Ball, about the Rogers investment philosophy. Chinese media reports say it flew off the shelves once it hit the bookstores. Often people would buy a dozen at a time so they could distribute copies to friends and colleagues.

The book has been published only in Mandarin, so Rogers is happy to wait until his daughters, aged six and two, who are learning Chinese, are old enough to read it to him. In the meantime he sticks to his maxim. ''Most people are wrong most of the time. That's not great insight; it's been proved millions of times.'' And on that point Rogers is certain he's got it right.

Changes made on John Paulson's 13F

2010-05-18T09:27:00.001-04:00

John Paulson's Paulson & Co hedge fund released its 13F for the quarter ended March 31, 2010.

Notable Changes:
* Added 16.67 million shares of Bank of America (NYSE: BAC) to 167.8 million shares
* Added 900K shares of AngloGold Ashanti Ltd. (NYSE: AU) to 43.7 million shares
* Added 1.64 million shares of Kinross Gold Corporation (NYSE: KGC) to 33.14 million
* Added 3 million shares of XTO Energy Inc. (NYSE: XTO) to 13 million shares
* New 40 million share stake in MGM Mirage (NYSE: MGM)
* Added 10 million Hartford Financial Services Group Inc. (NYSE: HIG) stake 12.75 million shares
* New 3.4 million share stake in Apache Corp. (NYSE: APA)
* New 6 million share stake in Family Dollar Stores Inc. (NYSE: FDO)
* New 11.37 million share stake in Mylan, Inc. (NYSE: MYL)
* New 20.18 million share stake in NovaGold Resources Inc. (NYSE: NG)
* New 25 million share stake in Novell Inc. (Nasdaq: NOVL)
* New 5 million share stake in Beazer Homes USA Inc. (NYSE: BZH)
* New 400K share stake in Barrick Gold Corporation (NYSE: ABX)
* New 2.61 million share stake in Dex One Corporation (Nasdaq: DEXO)
* New 4 million share stake in Boyd Gaming Corp. (NYSE: BYD)
* New 2.7 million share stake in IAMGOLD Corp. (NYSE: IAG)
* Lowers stake in Mead Johnson Nutrition Company (NYSE: MJN) from 4 million to 2 million shares
* Liquidates Dr Pepper Snapple Group, Inc. (NYSE: DPS), Kraft Foods Inc. (NYSE: KFT), Fifth Third Bancorp (Nasdaq: FITB), Liberty Entertainment Group (Nasdaq: LMDIA), New York Community Bancorp Inc. (NYSE: NYB), Philip Morris International, Inc. (NYSE: PM)

Don't blame China

2010-04-05T20:31:00.000-04:00

Las Vegas Sands (LVS) Stock Continues Uptrend

2010-03-26T09:33:00.002-04:00

LVS seems ready to finish off a decent week, which saw a confirmed uptrend. Investors who entered LVS in the last month are enjoying a very nice rise that have seen prices go from around $16 a month ago to over almost $21 today.

Sanford C. Bernstein boosted LVS price target to $24 from $22. The analysts also said they would maintain their “outperform” rating on the stock.

Las Vegas Sands will outperform the market because everyone expects a sharp rise in net earnings per share. If there’s one thing investor love, it’s fast-rising profits, because that’s what tends to push share prices higher.

LVS invested billions in building world class hotels in Singapore, Macau, and Las Vegas that are adding more to the company’s revenue and earnings pictures daily.

One group of investors who are loving LVS these days are mutual fund managers. In the past year alone, the number of mutual funds that own LVS has doubled. Why do those savvy investors want in on this stock? It seems they’re counting on the new revenue streams of the Singapore and Macau projects to add enormous profits for the company.

Marina Bay Sands development is set to open on April 27, 2010. LVS has huge ambitions for the development, which is one of the world’s most impressive gaming facilities in a fast-growing market. Company executives have stated that they will break even on $400 million a year in revenue, with some saying that they figure could achieve $1 billion if conditions are right.

If LVS does hit a number like that, investors are likely to be well rewarded.

Shares of LVS are currently trading for $20.93 a share and the technicals look great for the stock. LVS stock has appreciated an enormous amount in the last twelve months, but if the Singapore and Macau operations do extremely well, it’s possible that investors ‘ain’t seen nothing yet.’

What do you know about St. Patrick’s Day

2010-03-17T16:30:00.000-04:00

1) You will never play professional basketball.

2) You swear very well.

3) At least one of your cousins is a fireman, cop, bar owner, funeral home owner or holds political office. And you have at least one aunt who is a nun or uncle who's a priest.

4) You think you sing very well.

5) You have no idea how to make a long story short!

6) There isn't a big difference between you losing your temper or killing someone.

7) Many of your childhood meals were boiled. Instant potatoes were a mortal sin.

8) You have never hit your head on a ceiling.

9) You spent a good portion of your childhood kneeling in prayer.

10) You're strangely poetic after a few beers.

11) Some punches directed at you are from legacies of past generations.

12) Many of your sisters and/or cousins are named Mary, Catherine or Eileen .... and there is at least one member of your family with the full name of Mary Catherine Eileen

13) Someone in your family is very generous. It is more than likely you.

14) You may not know the words, but that doesn't stop you from singing.

15) You can't wait for the other guy to stop talking before you start talking.

16) You're not nearly as funny as you think you are... but what you lack in talent, you make up for in frequency.

17) There wasn't a huge difference between your last wake and your last keg party.

18) You are, or know someone, named Murph.

19) If you don't know Murph then you know Mac. If you don't know Murph or Mac, then you know Sully. Then you probably know McMurphy.

20) You are genetically incapable of keeping a secret.

21) You have Irish Alzheimer's... you forget everything but the grudges!

22) “Irish Stew” is a euphemism for “boiled leftovers.”

23) Your skin's ability to tan.... not so much. (Only in spots!)

24) Childhood remedies for the common cold often included some form of whiskey.

25) There's no leaving a family party without saying goodbye for at least 45 minutes.

26) At this very moment, you have at least two relatives who are not speaking to each other. Not fighting, mind you, just not speaking to each other.

Have a great day.

China To Purchase Half of IMF's Gold

2010-02-26T12:10:00.000-05:00

China has confirmed the intention to purchase 191.3 tons of gold from the International Monetary Fund at an open auction.

World central banks started to increase their gold reserves after prices on gold began to climb in 2001. The IMF sells gold within the scope of a program to diversify sources of income and achieve an increase in lending.

The IMF announced an intention to sell 403.3 tons of gold in accordance with the adequate decision made by the board of directors of the fund in September of 2009. India, Mauritius and Sri Lanka purchased about 212 tons of the amount at the end of 2009. India purchased most – 200 tons.

China’s interest in international trade is connected with the development of the nation’s economy, as well as with the growing consumer demand in the country.

“Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market. China is interested in the development of the domestic consumer market,” the agency reports.

Most of Chinese citizens believe that investing in gold jewelry is a good way to avoid inflation, Rough & Polished agency said.

The IMF has received the profit of $7.2 billion from gold sales. A part of the funds is to be used for crediting poor countries.

Eric Sprott says the yellow metal could hit $1500 in 2010 and $2000 in 2011.

2010-02-08T09:38:00.002-05:00

Sprott told Bloomberg, “I have no trouble imaging we get to $1,500 this year and $2,000 in two years.” During the Q3, Sprott Asset Management was adding to stakes in precious metals plays
- Barrick Gold (ABX),
- Yamana Gold (AUY),
- Eldorado Gold (EGO),
- Jaguar Mining (JAG),
- Silver Wheaton (SLW).

Meanwhile, MAG Silver (MVG), Seabridge Gold (SA), and Kinross Gold (KGC) were also among the fund’s top-15 U.S.-listed equity positions.

LVS break out today

2010-01-05T13:25:00.002-05:00

Las Vengas Sands (LVS) has one of the best line-ups of future casinos in China’s Macau and in Singapore, writes Barclay’s Capital analyst Felicia Hendrix today in a note to clients.

She initiated coverage of the stock with an “Overweight” rating and a $24 price target.

Hendrix’s note follows yesterday’s bullish comments by Robin Farley of UBS on both LVS and Wynn Resorts (WYNN).

Noting that Macau is the largest and the fastest growing gaming market in the world, and Singapore has favorably low taxes, Hendrix believes the Marina Bay Sands in Singapore, which opens in Q2, and two parcels in Macau opening the latter half of next year, could become the company’s most profitable ventures yet, she argues.

Hendrix values LVS stock as a multiple of 12.6 times her 2012 estimate for Ebitda, becuase there won’t be a full year’s worth of data on the Singapore and Macau properties until that time.

LVS shares today are up $1.61, or 10%, at $18.23, while Wynn shares are up $4, or 6%, at $67.95.

Jim Rogers: Become Farmer

2009-12-28T17:19:00.000-05:00

Portfolio Rebalancing

2009-12-28T09:20:00.001-05:00

Year-end is always a time of reflection, a rare opportunity where the usual psychological boundaries of time crumble. For a couple weeks, the tyranny of the present yields to a heightened consideration of the past and the future. This rift in our everyday thought patterns leads many investors to ponder the composition of their portfolios, making this time of year the primary season for portfolio rebalancing.

While the concept of portfolio rebalancing is simple, many investors struggle with the practical execution. The whole idea of investment is deploying the surplus fruits of our labors in productive assets that can earn returns for us. We all work and use the resulting earnings to finance our lifestyles. And if we prudently live within our means, we are blessed with leftover capital after all expenses. Rather than let it sit idle, we invest it.

But it is foolish to invest all this hard-earned surplus capital in one place. Diversification is absolutely critical for investment, it radically lowers the risk of catastrophic losses. This principle is nothing new, some thirty centuries ago the ancient Israeli King Solomon wrote, “Cast your bread upon the waters, for you will find it after many days. Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.” (Ecclesiastes 11:1-2)

LVS

2009-12-03T13:33:00.002-05:00

SPX and Gold Correlation

2009-11-19T16:11:00.001-05:00

In the old days, with the Standard & Poor’s 500-stock index down 1.75% through midday, chances were pretty good that gold prices would find a “safe haven” buying bid. That was then. This is now. Instead, gold prices were also down, off about 0.6%.

The link these days is the dollar, and the correlations between the dollar and other assets is creating strange bedfellows such as stocks and gold prices moving in the same direction.

Those correlations have continued to tighten in recent weeks. In the first eight months of the year, gold prices, as measured by the SPDR Gold Shares exchange traded fund, had a negative 30% correlation to the dollar, according to Macro Risk Advisors. In October and November, that correlation was up to negative 56%. The correlation between the S&P 500 and the dollar jumped to an astonishing -87% from -41%.

Macro Risk Advisors’ Dean Curnutt says there have also been some subtle differences in the options market that bear watching.

Traditionally, options prices for gold have been biased toward a greater risk of a sharp rise in prices than would be the case on other investments, Curnutt says. The idea being that investors would use those positions as a hedge against a significant spike in inflation. Now, they’re not only factoring in much slower increases but also, there has been more demand for puts that provide downside protection.

Of course, that could reflect the fact that gold has had a big rally, and some many be now protecting themselves against a reversal. However, Curnutt thinks it could reflect a more fundamental change. Gold is being priced “more akin to something like a traditional risk asset like the S&P 500,” he says. “That doesn’t mean the market isn’t pricing for the risk that gold can move up quickly, but less so.”

To take that one step further, if stocks go into a big decline gold might decline as well. “These risk assets – gold, commodities and S&P could move down … in a very correlated fashion,” Curnutt says.

Manulife nicely valued

2009-11-10T11:12:00.000-05:00

Manulife Financial Corp. has been upgraded to Outperform from Sector Perform by RBC Capital Markets.

"While we believe that Manulife will not earn the same kind of ROEs as it has in the past and that the volatility of its earnings shoud be greater than in the past, we believe that the stock's valuation more than reflects that reality and that the worst is behind in terms of earnings surprises, based on current equity market levels and interest rates," Andre-Phillipe Hardy, RBC Capital Markets analyst said in a note to clients.

Mr. Hardy said Manulife was trading at 9.9x estimated 2010 earnings, compared to a range of 10.1x to 11.1x for its three lifeco peers. On a normalized earnings basis, Manulife is also nicely valued, trading at 9.8x versus 9.2x to 10.8x for its peers.

"Those are attractive valuation levels compared to history as the company used to trade at a premium P/E valuation," the analyst wrote.

Over the past eight months, Manulife shares have risen almost 130% from a low around $9 in March. Now trading at roughly $20, they still remain half their value at the peak in April 2008.

Mr. Hardy reduced his price target on Manulife shares from $27 to $26.

Following Hunter-Dickinson's holding

2009-09-22T08:50:00.002-04:00

Since June 2007, I have been following the holdings of Hunter-Dickinson. Not impressive at all.

IAMGOLD ceo sees $1,200 by year end

2009-09-15T13:35:00.000-04:00

The price of gold, which just hit the $1,000 per ounce barrier, could keep rising and reach $1,200 by the end of the year, the chief executive officer of Canadian producer IAMGOLD Corp (IMG.TO) (IAG.N) said on Tuesday in Denver.

"You could very easily see $1,200 by year end. It's a possibility," he said in an interview on the sidelines of the Denver Gold Forum industry gathering.

"I can't predict. But do I feel very strongly that the gold price is going to rise significantly over the short to medium term? I am very clear on that."

Asked if that could mean as much as a 50-percent increase, Conway said, "That's a possibility."

Eldorado Gold: Cost below $300.

2009-09-15T13:32:00.002-04:00

Eldorado Gold (ELD.TO) CEO Paul Wright, in a presentation via webcast from the Denver Gold Forum, expects costs during the third quarter to come in below estimates and plans to be selective in future asset acquisitions.

"In terms of what you see us buying or developing, the simple guideline will be: Does it allow us to remain in the lower quartile of production costs," he said. "If it doesn't, frankly, you won't see us acquiring it and you won't see us developing it."

The company has forecast production of 330,000 ounces this year at cash costs per ounce of $300, and Wright said the company is on pace to beat that in the third quarter.

"We would expect to see operating costs perhaps improved (on) $300 an ounce," he said.

Peter Schiff on Gold: 2000, 3000, 4000...

2009-09-09T19:42:00.000-04:00

Eldorado Gold Break Out?

2009-08-13T16:28:00.004-04:00

After Eldorado Gold hit 52-week high in Amex, today it breaks out today in Toronto Stock Exchange and also hit all time high. It outperforms its peer gold mining companies.

This is the cheapest producer of gold at extraction costs of just $300 an ounce and going lower, maybe much lower. And also interesting was the possible sale or restart of its gigantic iron mine in South America. China needs lots of iron, who has the problem with Rio Tinto right now. It could sell this mine to China at a nifty profit and have a war chest and accelerate its properties that produce the cheapest gold in China.

According to its press release, Eldorado Gold identifies new gold zone in China and announces the discovery of a new zone of mineralization at our Tanjianshan Mine in China. The mineralization has been intersected approx 2 km south of the Qinglongtan open pit within an evolving broad zone of geochemically anomalous bedrock up to 500m wide and 2.5km long. The discovery represents the first new gold zone identified by Eldorado since acquiring the property, and the company said it believes there is the potential for additional discoveries. That may add to its price jump 8.44% today.

Congradulation to Eldorado's management team.

Disclosure: Long Eldorado Gold.

Envast Gold is not a registered investment adviser or a broker/dealer. Envast Gold makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person, or that an investment in such securities will be profitable.

Analysts downgrade and upgrade Eldorado Gold

2009-08-04T15:57:00.002-04:00

Today we saw analysts gave different rating on Eldorado gold:
Tgt Cut To C$12 From C$12.35 By Salman
Tgt Raised To C$14 From C$12 By BMO
Tgt Cut To Hold From Buy By GMP
Tgt Raised To $13 From $10.50 By CIBC
Tgt Raised To $11 From $10.25 By Canaccord
Confusing ? That explained the price of EGO up and down quite a lot. Eldorado gold is a mid-tier gold producer, and recently reported a great 2Q. Technically it is very bullish and hit a new high in AMEX today while the rest gold producer are struggling way from their high. I feel very comfortable with Eldorado management team who deliver what they promised.

Disclosure: Long EGO.

Powerful Head & Shoulders Pattern

2009-07-31T14:47:00.002-04:00

This powerful and inverted "head & shoulders" pattern has been forming since beginning of 2008. This pattern is telling us that last year decline after the Lehman collapse was a classic selling climax. Gold was dumped in the rush by hedge funds and others to de-leverage. That selling led to a bottom that was marked by emotion, not logic. Gold will climb above $1,000 this year and stay there to validate "head & shoulders" pattern. The moment is rapidly approaching.

Eldorado Gold Corp reported a second-quarter profit that beat market estimates, helped by higher production, and reiterated its production outlook for the full year. I think EGO is at good position to benefit from the imminent rising price of Gold.

Disclosure: Long EGO

Northern Dynasty is pushed up after rebound from support

2009-07-23T12:19:00.004-04:00

The world needs copper and gold especially from Chinese economy. The pebble project must be developed. Recently NDM is picking up again with this favorable environment. Technically it broke the downward trend recently and MACD is positive again. It also could be potential takeover target.

I am Long on NDM.

Endeavour Silver Looks interesting

2009-07-15T15:06:00.002-04:00

Today, Endeavour Silver Reports Production for Second Quarter, 2009; Produces 578,641 oz Silver (Up 12%) and 2,750 oz Gold (Up 61%) or 762,891 oz Silver-Equivalents (Up 21%) Compared to Q2, 2008. It looks like that EXK has moved higher from support. MACD turns positive and 5 days moving average is about to cross over 10 days moving average. At least in short term it is moving higher. In the longer term, Gold and Silver can not have much better fundamental, which definately adds to the upside of EXK.

Disclosure: Long EXK.

God Bless America

2009-07-03T12:13:00.001-04:00

Top 10 holdings for gold stock fund

2009-07-03T11:46:00.003-04:00

This is the list of top 10 holdings in the precious metal funds by end of first quarter of 2009. We can see the popularity of the gold stocks among the funds:
Senior: K.TO, G.TO, AEM.TO, YRI.TO, Eld.TO, ABX.TO, IMG.TO
Junior: SGR.V, RBI.TO, OSK.TO

JP Morgan Upgrades Evergreen Solar (ESLR) Two-Notches to Overweight

2009-07-02T09:44:00.001-04:00

July 2, 2009 7:06 AM EDT

JP Morgan upgrades Evergreen Solar Inc. (Nasdaq: ESLR) from Underweight to Overweight and raises their price target to $5.

The firm's price target represents over 100% upside from yesterday's $2.15 close.

Evergreen Solar, Inc. engages in the development, manufacture, and marketing of solar power products primarily in the United States and Europe.

A Bright Future for Evergreen Solar

2009-06-25T11:58:00.002-04:00

According to the post in Business West Online BY EDWARD J. MARKEY, the Race for Clean-energy Innovation has begun.

Here is the post:

On a recent congressional delegation to Hong Kong, I toured a factory that is developing a thin solar cell that can be put on windows to generate electricity from the sun with zero carbon emissions. I thought of 1366 Technologies, a company in Lexington that is also racing to get advanced solar technologies to market.

It may seem like your typical competition between two companies, but this race is about much more than the solar market. It is about the race for trillions of dollars in clean-energy investments. As President Obama says, “the nation that leads in 21st-century clean energy is the nation that will lead the 21st-century global economy.”

And if we win the race, it could bring 150,000 new jobs and billions of dollars to Massachusetts.

American companies would get an edge with passage of the Waxman-Markey bill, the most sweeping energy legislation Congress has considered in a generation. The plan would end America’s dangerous dependence on foreign oil; increase the amount of clean energy we produce; make our buildings, homes, cars, and trucks more efficient; and cut the harmful carbon pollution causing global warming.

The bill requires that 20% of our electricity in 2020 come from clean-energy sources like solar or wind, or from energy efficiency. It establishes ‘clean-energy innovation hubs’ around the country to help researchers and inventors move their ideas from the lab to the market.

It also aims to reduce carbon emissions from major U.S. sources 83% by 2050 compared with 2005 levels, and saves consumers money at the pump by investing $20 billion to retool America’s auto manufacturers to produce electric cars that don’t use any gasoline.

The Waxman-Markey bill would invest more than $190 billion in clean-energy technologies that will go to the companies, research institutions, and entrepreneurs smart enough, agile enough, and innovative enough to devise the next great clean-energy technology.

Many of these cutting-edge companies will be in Massachusetts.

The state has always led the way in innovation, but, like the rest of America, our technological dominance is threatened. Germany has emerged as the global photovoltaic market, even though Massachusetts has 30% better solar resources. Korea and Japan are leapfrogging America in battery and electric-vehicle technology, even though we pioneered invention of these technologies.

Today, only one-fourth of the world’s top renewable-energy companies are American-owned, because we have failed to put in place a set of policies to promote alternative energy sources. China is spending $12.6 million per hour on clean-energy development and is preparing to invest $440 billion to $660 billion this year in clean-energy development.

As I traveled around China, I saw countless examples of how Chinese investments in clean energy are bearing fruit, from the solar company in Hong Kong to electric-car factories in Tianjin. And I came back thinking that these jobs belong in Massachusetts.

There are signs of a clean-energy economic recovery sprouting over our region. There is American Superconductor in Devens, a company pioneering wind-turbine designs and working on new power-cable systems to connect sources of renewable energy to the rest of the country. Marlborough’s Evergreen Solar is on track to be manufacturing 160 megawatts of solar panels annually, and recently opened a larger factory. These are only two local examples of the next generation of American entrepreneurs who stand poised to capitalize on the clean-energy revolution.

The American economy and the American dream have succeeded because we refuse to be shackled to old technologies and business as usual, but instead always look for the newest idea or opportunity.

In Massachusetts, we have the brain power. We have the potential. What we need are the right policies to unleash this revolution. And with the Waxman-Markey bill, the next great revolution will come to New England, as we shape a new-energy destiny for the nation.

U.S. Rep. Edward J. Markey (D-Malden) is chairman of twin climate and energy panels in the House.

SSEC is on uptrend for quite some time

2009-06-24T12:09:00.002-04:00

This is not true capitalism.

2009-05-16T17:21:00.001-04:00

Don't Tick Off Jon Stewart

2009-03-05T17:59:00.001-05:00

Jon Stewart shows us that it might just be a really bad idea to stand him up for an appearance on his show.

Warren E. Buffett 's Letter

2009-02-28T18:31:00.003-05:00

Mr. Buffett released his annual letter on Feb 27,1009 to Berkshire Hathaway Inc and said the economic turmoil that contributed to a 62 per cent profit drop last year at the holding company he controls is certain to continue in 2009, but the revered investor remains optimistic.

"Though the path has not been smooth, our economic system has worked extraordinarily well over time," Mr. Buffett wrote. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

Mr. Buffett said he made at least one major investing mistake last year by buying a large amount of ConocoPhillips (COP) stock when oil and gas prices were near their peak. Berkshire increased its stake in ConocoPhillips from 17.5 million shares in 2007 to 84.9 million shares at the end of 2008. Mr. Buffett said he did not anticipate last year's dramatic fall in energy prices, so his decision cost Berkshire shareholders several billion dollars.

Mr. Buffett says he also spent $244-million on stock in two Irish banks that appeared cheap. But since then, he's had to write down the value of those purchases to $27-million.

Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewellery, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

Canadian Prime Minister, Stephen Harper on CNBC

2009-02-26T15:17:00.000-05:00

How the Mighty Banks Have Fallen

2009-02-20T15:47:00.002-05:00

Barclay bullish on Suncor

2009-02-19T12:10:00.000-05:00

Paul Chen, an analyst at Barclays, said in a note to clients that Suncor has the clearest growth prospects of the Canadian oil sands producers. He raised his recommendation on the stock to “overweight” from “equal weight” - the first time since 1999 that the analyst has been bullish on the stock.

“We expect both capital and operating costs for oil sands projects to come down, which should help add further upside,” Mr. Cheng said in his report, according to Bloomberg News. “Management's new focus on improving reliability and getting the most from the assets in the ground should help restore its reputation as a good operator.”

He believes that the stock is worth $42 – representing a potential gain of 76 per cent from its current level of $23.87 – if the price of crude oil gets to a long-term average of $80 (U.S.) a barrel.

Goldcorp Founder McEwen Bets Gold to $5,000

2009-02-11T15:02:00.003-05:00

Goldcorp Inc. founder Rob McEwen said he expects the metal to top $5,000 an ounce as governments increase the money supply to combat recession.

Bullion will more than double to $2,000 an ounce by the end of next year before rising to McEwen’s target by the end of the cycle, which could take an additional four years, the investor said.

McEwen said he has a “big, big” holding in bullion since August 2007, at the beginning of the subprime mortgage crisis. “I realized we had reached an inflection point regarding money,” McEwen said. “It was all about protecting money, and gold served that purpose.”

Gold Price Higher than Dow Index?

2009-02-07T16:36:00.001-05:00

Interview with Dr. Marc Faber (aka Dr. Doom) February 06, 2009 on Bloomberg.

Bullish chart for XGD

2009-02-06T15:42:00.004-05:00

The fundamental of Gold can not be more bullish nowadays. The ETF XGD which traded in Toronto Exchange obviously tell the story. The 50 days average has crossed over 200 days average.

Q & A from Mr.Jim Sinclair today

2009-02-06T14:45:00.001-05:00

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers..

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. No, they are borrowing it from China. Your children are expected to repay the Chinese.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn’t that stimulating the economy of China?
A. Shut up."

Are we going to rely on wife's payroll

2009-02-06T11:52:00.001-05:00

With the recession on the brink of becoming the longest in the postwar era, a milestone may be at hand: Women are poised to surpass men on the nation’s payrolls, taking the majority for the first time in American history.

The reason has less to do with gender equality than with where the ax is falling.

The proportion of women who are working has changed very little since the recession started. But a full 82 percent of the job losses have befallen men, who are heavily represented in distressed industries like manufacturing and construction. Women tend to be employed in areas like education and health care, which are less sensitive to economic ups and downs, and in jobs that allow more time for child care and other domestic work.

“Given how stark and concentrated the job losses are among men, and that women represented a high proportion of the labor force in the beginning of this recession, women are now bearing the burden — or the opportunity, one could say — of being breadwinners,” says Heather Boushey, a senior economist at the Center for American Progress.

Economists have predicted before that women would one day dominate the labor force as more ventured outside the home. The number of women entering the work force slowed and even dipped during the boom years earlier this decade, though, prompting a debate about whether women truly wanted to be both breadwinners and caregivers.

Should the male-dominated layoffs of the current recession continue — and Friday’s jobs report for January may offer more insight — the debate will be moot. A deep and prolonged recession, therefore, may change not only household budgets and habits; it may also challenge longstanding gender roles.

In recessions, the percentage of families supported by women tends to rise slightly, and it is expected to do so when this year’s numbers are tallied. As of November, women held 49.1 percent of the nation’s jobs, according to nonfarm payroll data collected by the Bureau of Labor Statistics. By another measure, including farm workers and the self-employed, women constituted 47.1 percent of the work force.

Women may be safer in their jobs, but tend to find it harder to support a family. For one thing, they work fewer overall hours than men. Women are much more likely to be in part-time jobs without health insurance or unemployment insurance. Even in full-time jobs, women earn 80 cents for each dollar of their male counterparts’ income, according to the government data.

“A lot of jobs that men have lost in fields like manufacturing were good union jobs with great health care plans,” says Christine Owens, executive director of the National Employment Law Project. “The jobs women have — and are supporting their families with — are not necessarily as good.”

Nasreen Mohammed, for example, works five days a week, 51 weeks a year, without sick days or health benefits.

She runs a small day care business out of her home in Milpitas, Calif., and recently expanded her services to include after-school care. The business brings in about $30,000 annually, she says, far less than the $150,000 her husband earned in the marketing and sales job he lost over a year ago. “It’s peanuts,” she says.

She switched from being a full-time homemaker to a full-time businesswoman when her husband was laid off previously. She says she unexpectedly discovered that she loves her job, even if it is demanding.

Still, her husband, Javed, says he and their three children — who are in third grade, junior college and law school — worry about her health, and hope things can “return to the old days.”

“In terms of the financial benefit from her work, we all benefit,” he says. “But in terms of getting my wife’s attention, from the youngest daughter to our oldest, we can’t wait for the day that my job is secure and she doesn’t have to do day care anymore.”

Women like Ms. Mohammed find themselves at the head of once-separate spheres: work and household. While women appear to be sole breadwinners in greater numbers, they are likely to remain responsible for most domestic responsibilities at home.

On average, employed women devote much more time to child care and housework than employed men do, according to recent data from the government’s American Time Use Survey analyzed by two economists, Alan B. Krueger and Andreas Mueller.

When women are unemployed and looking for a job, the time they spend daily taking care of children nearly doubles. Unemployed men’s child care duties, by contrast, are virtually identical to those of their working counterparts, and they instead spend more time sleeping, watching TV and looking for a job, along with other domestic activities.

Many of the unemployed men interviewed say they have tried to help out with cooking, veterinarian appointments and other chores, but they have not had time to do more because job-hunting consumes their days.

“The main priority is finding a job and putting in the time to do that,” says John Baruch, in Arlington Heights, Ill., who estimates he spends 35 to 45 hours a week looking for work since being laid off in January 2008.

While he has helped care for his wife’s aging parents, the couple still sometimes butt heads over who does things like walking the dog, now that he is out of work. He puts it this way: “As one of the people who runs one of the career centers I’ve been to told me: ‘You’re out of a job, but it’s not your time to paint the house and fix the car. Your job is about finding the next job.’ ”

Many women say they expect their family roles to remain the same, even if economic circumstances have changed for now.

“I don’t know if I’d really call myself a ‘breadwinner,’ since I earn practically nothing,” says Linda Saxby, who assists the librarian at the Cypress, Tex., high school her two daughters attend. Her husband, whose executive-level position was eliminated last May, had been earning $225,000, and the family is now primarily living off savings.

Historically, the way couples divide household jobs has been fairly resistant to change, says Heidi Hartmann, president and chief economist at the Institute for Women’s Policy Research.

“Over a long, 20-year period, married men have stepped up to the plate a little bit, but not as much as married women have dropped off in the time they spend on household chores,” Ms. Hartmann says. This suggests some domestic duties have been outsourced, as when takeout substitutes for cooking, for example. And as declining incomes force families to cut back on these outlays, she says, “women will most likely pick up the slack.”

A severe recession could put pressure on these roles.

“It has definitely put a strain” on my marriage, says Debbie Harlan, an executive assistant at a hospital system in Sarasota, Fla. Four months ago, her husband closed his 10-year-old independent car sales business, and the couple have been asking their children to help with bills. “So far we’ve worked through it, but there have been times when I wasn’t sure we could.”

The Mohammeds say things are not as stressful as they were the last time Mr. Mohammed lost his job. He has been helping out with the cooking and with paperwork for his wife’s business, and she says she works to prop up family morale.

“Things are not happy in the house if I blame him all the time, so I don’t do any of that anymore,” Ms. Mohammed says. “I know he is doing his best.”

Goldman Sachs forecast $1,000 gold in 3 months

2009-02-05T09:54:00.001-05:00

According to Reuters today Goldman Sachs lifted its three-month gold forecast to $1,000 an ounce from $700 an ounce, citing safe-haven demand for gold.

"The gold price rally has been driven by surging demand for gold in all forms: physical gold, exchange traded funds and futures contracts and investors seek a 'safe store of value'," the bank said in a note.

"It is also important to emphasise that the recent strong demand for gold has not been irrational, but rather pretty much in line with the probabilities of financial and sovereign default."

Merrill Lynch CIO predicted gold prices could hit $1,500

2009-02-04T16:40:00.002-05:00

Wednesday, February 04, 2009
Business 24|7

Gold prices may hit $1,500 an ounce in the next 12 to 15 months, Gary Dugan, the Chief Investment Officer (CIO) of Merrill Lynch, said yesterday.

Dugan termed his apprehensions of gold striking such a high as a "fear" that may come true. He reasoned that such a price would mean the other commodities and streams of investments have been shunned by investors.

With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of "the most trusted currency", Dugan said. "We have never seen such a rush to buy gold. It's bringing in security and it's still affordable."

Merrill Lynch commodity price forecast authored by Dugan showed that gold prices can rise from the currently prevailing $913/oz to $1,100/oz in the first quarter of 2009 and to $1,150/oz in the second quarter. "While demand for gold has been rising production has been declining. South Africa, which accounts for the major share of global gold production, is facing political issues and has energy problems," Dugan said.

With reports of declining returns from other investment options, "cash" – keeping money safe in banks and investing in government bonds – is the option in front of investors, Dugan said.

"Fear" and eventual decline of the greenback are the two factors that will drive gold prices, he said. While commodity markets could also bounce back in the first half of the year, a rebound is likely to be short-lived in the absence of strong US consumer demand.

Precious metals, led by gold, could enjoy a more sustained rally with gold benefiting from a weakening of the dollar in the second half of the year, Dugan said.

Dugan said the greenback, which has been strengthening for the past few months, will decline in value by the middle of this year. "That's when people will begin to realise that President Obama's policies are not having the desired impact," he said.

Investors could also look to private equity, which produced strong returns during the downturns in 1991 and 2001, on an opportunistic basis. Some hedge fund strategies may be worth following but hedge funds should be treated with caution, Dugan said.

Returns from private equity should remain in single digits in 2009 and a return of beyond 10 per cent should be treated as "fair value", he said. "Investors should remain cautious. They need to be prepared to take profits. We think any such rally would run out of steam by the second half of the year."

Low risk assets could offer private investors the best prospects of attractive returns in 2009 as the world's leading industrialised nations face recession, Dugan said. With governments around the world striving to tackle the economic crisis, private investors could find value in a cautious approach towards asset allocation. Options include high-grade corporate bonds and high-quality, high-yielding equities in defensive industries.

"Investors will look to long-term US government bonds as an important barometer of the progress of global recovery," said Dugan. "Sharply rising bond yields will show that the governments have overspent."

While earnings downgrades are likely to dominate the first quarter of 2009, a rally in global equity markets could be on the cards for the first half of the year with consumer and cyclical stocks among the potential beneficiaries, Dugan said.

Broad equities indices could also offer trading opportunities to private investors. "Equities could outperform as an asset class in 2009 unless there is a serious deflation risk. Our view is that deflation will be avoided," he added.

Selective investment in high-grade corporate bonds could also provide attractive returns, Dugan said.

John Paulson: Bearish for Now

2009-02-04T12:21:00.000-05:00

Hedge fund head John Paulson — who continues to make huge profits for his investors while other managers continue to drown in red — ink remains bearish going into 2009.

“The sharp contraction in the global economy, the instability of the global financial system and the ongoing credit contraction are unlikely to be resolved in the first half of 2009,” Paulson wrote in his year-end letter to investors.

Paulson's two credit funds were up 19 percent and 16 percent respectively last year, avoiding buying distressed debt such as mortgages and leveraged loans even though both were trading at what appeared to be attractive prices.

Instead, the fund essentially bet against the debt of several financial institutions by purchasing credit-default swaps.

Now, Paulson remains short financial stocks and slightly short of the equity markets in general but sees a big opportunity in buying distressed debt.

“The biggest driver for 2009 and 2010 will be in long distressed opportunities,” he says.

“We estimate the potential size of the distressed market to approach $10 trillion.”

Two-thirds of the several hundred asset managers who responded to a recent survey said they plan to raise more money and increase their investments in distressed debt this year, The Wall Street Journal reports.

One-third believe the first quarter is the right time to buy, and more than half are expecting it to pay off smartly, projecting 20 percent returns or more for the year.

Oil bottomed?

2009-02-04T11:54:00.004-05:00

UBS grows more bullish on gold and silver

2009-02-04T09:38:00.001-05:00

One of the best performing assets of 2008 is expected to have another good year in 2009. Despite adverse moves in three of gold’s most powerful drivers – a stronger U.S. dollar particularly against European currencies, the sharp decline for crude oil and rapidly falling inflation – UBS has increased its forecasts for gold and silver as it sees both investor and speculative interest boosting prices, even as jewellery demand falls and the U.S. dollar strengthens.

Its gold price targets for 2009 and 2010 move from US$700 per ounce for both years to US$1000 and US$900, respectively. UBS’s silver forecasts climb from US$8.40 and US$8.95 per ounce to US$14.75 and US$12.80, respectively.

“Purchases of physical gold have jumped over the past six months as investors’ fears about the current financial crisis and the possible outcomes from government efforts to support banks and economies have intensified,” UBS strategist John Reade told clients.

The European bank estimates that investment demand will double in 2009 compared to 2007, which will drive gold to an average of US$1000. It expects this safe haven buying to decline in 2010.

Based on the implied returns from these changes, UBS upgraded Agnico-Eagle Mines Ltd., Barrick Gold Corp., Eldorado Gold Corp., Newmont Mining Corp. and Goldcorp Inc. from “neutral” to “buy,” while maintaining “buy” ratings on Centerra Gold Inc. and Franco-Nevada Corp.

The firm also noted that precious metals remain its preferred investments in a commodity context and it anticipates that gold and platinum equities could continue to outperform. It favours names like Impala Platinum Holdings Ltd., Barrick and Goldcorp.

Eric Sprott said bullion may top $2,000 an ounce in coming years

2009-02-03T14:00:00.001-05:00

Feb. 3 (Bloomberg) -- Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is at the beginning of an economic depression that will help gold prices more than double.

Bullion may top $2,000 an ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.

“The trend is down, and there’s not one signpost that says it’s changing yet,” Sprott said yesterday from Toronto. “We’ll stand by to wait to see those, and until it does, you have to assume it gets worse.”

Sprott, who manages $4.5 billion, said in March that the world was in a “systemic financial meltdown,” a call that presaged the collapse of financial institutions including Bear Stearns & Co. and Lehman Brothers Holdings Inc. Since then, the U.S. has entered the worst economic slowdown since the Great Depression, credit markets have tightened and asset prices have dropped as companies and funds sell portfolios to raise cash.

The 81-company Standard & Poor’s 500 Financials Index has dropped 62 percent since Sprott said on March 6 he was buying bullion and gold-producers’ shares, while shorting financial- sector stocks. Gold slipped 6.3 percent during the same period.

So-called short-selling allows speculators to profit from a stock’s decline by borrowing shares, selling them to raise cash and buying them later when the price drops to repay the debt.

Sprott Funds

Sprott Hedge Fund LP posted a one-year return of 9.9 percent, while Sprott Hedge Fund LP II rose 18 percent in the period, according to data posted on the company’s Web site. The Sprott Canadian Equity Fund dropped 37 percent.

Sprott now favors buying more gold stocks and bullion while selling the entire equity market short. Most at risk in the current climate are banks, discretionary consumer stocks and any companies needing to refinance debt, he said.

Sprott believes there is a chance that a U.S. Treasury auction will fail as countries use their resources to quell financial turmoil in their home markets, leaving less to help finance the world’s largest economy. That outcome will have a “catastrophic” impact, he said.

“When do people stop buying the credit of the country? That’s a tough question to answer, but it’s on a lot of people’s lips right now,” he said. “Each country has their own financial problem, so there’s no funding for anything external.”

Gold Investors

Such concerns have driven investors to the gold market, propelling the metal higher as other commodities have slumped and helping gold-producers’ stocks almost double in the past three months.

Greenlight Capital Inc., a $5.1 billion New York-based hedge fund, has invested in gold for the first time, while Federated Investors Inc.’s $1.3 billion Federated Market Opportunity Fund, which outperformed 99 percent of rivals last year, now counts Yamana Gold Inc. and Goldcorp Inc. among its largest investments.

Gold companies such as Newmont Mining Corp. and Kinross Gold Corp. have taken the opportunity to issue stock to bolster their own balance sheets.

Barrick Gold Corp. Chairman Peter Munk said last week he has been inundated with calls from wealthy investors seeking to buy gold to protect their capital.

“The window to raise money for gold stocks has blown open,” Sprott said. “The investing public has started to go to that one thing that they think it’s safe to invest in.”

Fair oil price would be twice as high, Opec says

2009-01-30T10:19:00.001-05:00

By Sean O'Grady, Economics Editor, in Davos
Friday, 30 January 2009

A "fair price" for oil is between $60 and $80 a barrel, the secretary general of Opec, Abdullah al-Badri, told participants at the World Economic Forum yesterday, up to twice as high as the current price in the market.
Mr Badri warned he believed that the current price of oil, around the $40 mark, was insufficient to provide an acceptable income for Opec member states, or high enough to fund the investment needed to raise capacity in time for the next economic upswing.

The price of a barrel of oil has fallen from a peak of almost $150 last summer to below $40 in recent weeks as demand for oil has fallen sharply in line with the global economic downturn. The oil producers' group, said Mr Badri, was prepared to act to reduce supply further if necessary; having decided to cut output in September and October, Opec oil production will be 4.2 million barrels a day lower by the end of this month, and further cuts in supply would act as an inflationary pressure on the market price.

The cartel, which accounts for roughly 35 per cent of world oil production and two-thirds of proven reserves, is next due to meet formally in March in Vienna, Austria. Mr Badri said that if Opec was still suffering from what he described as a "destruction of demand" in March, then members of the group "will not hesitate to take oil out of the market".

He said he was "not very happy" with oil at $40 "or even $50" per barrel. "Even with $50 we cannot have a decent income for our members," Mr Badri added.

However, while Opec member states have been warning for some months that the current market conditions cannot continue indefinitely, higher oil prices would be a blow to much of the world. As the global economy enters what the International Monetary Fund said on Wednesday would be the worst recession since the Second World War, cheaper oil is one of the few bright spots. Any push by Opec for higher prices through restricting supply will suck even more spending power out of the advanced and emerging economies, and may hit developing nations especially hard.

Nevertheless, the Opec secretary general's declaration of a "reasonable price range" was endorsed yesterday by BP's chief executive, Tony Hayward, who estimated that a price of between $60 to $80 a barrel was needed to ensure adequate investment to meet growing oil demand by Opec countries. Mr Hayward also said that only this level of price would meet the cost of producing the marginal 3 million to 5 million barrels a day of world supply from sources such as ultra-deep water wells, Angola, Brazil and Canada's oil sands.

The BP boss said, however, that price levels higher than $100 tended to adversely affect consumer behaviour.

Pierre Gadonneix, chairman and chief executive of Electricité de France (EDF), also agreed that $60 to $80 would be compatible with a competitive nuclear power sector, which he favoured.

Indeed the "spirit of Davos" seemed to overwhelm all the energy session panel members in their rush to agree with the $60 to $80 proposal: other panel members, including Mukesh Ambani, chairman of the Indian giant Reliance Industries, which has interests in natural gas, and the President of oil-producing Azerbaijan, Ilham Aliyev, were also happy to back the Opec line.

Mr Badri repeated the Opec claim that the spike in the price of oil to an all-time high of $147 last year was artificially created by speculative traders rather than genuinely reflecting demand and supply. He also hinted at the idea that the world's major oil producers and consumers should agree the oil price and make oil a much less traded commodity.

Dr. Doom: Roubini Predicts More Global Gloom

2009-01-29T21:15:00.002-05:00

Jan. 30 (Bloomberg) -- At the World Economic Forum two years ago, Nouriel Roubini warned that record profits and bonuses were obscuring a “hard landing” to come. “I really disagree,” countered Jacob Frenkel, the American International Group Inc. vice chairman and former Israeli central banker.

No more. “Roubini was intellectually courageous, and he called the shots correctly,” says Frenkel, whose AIG survives only on the basis of more than $100 billion of government loans. “He gained credibility, and he deserves it.”

This week, New York University’s Roubini returned to the WEF and the Swiss ski resort of Davos as the prophet of the worst economic and financial crisis since the Great Depression - - joining the ranks of previous “Dr. Dooms” who made their names through contrarian calls that proved correct.

Even as he wins plaudits for his prescience, Roubini, 50, says worse lies ahead. Banks face bigger credit losses than they realize, more financial companies will require state takeovers and the world economy will keep shrinking throughout 2009, he says.

“The consensus is catching up with me, but it’s still behind,” Roubini said in an interview in Davos. “I don’t know what some people are smoking.”

‘Catastrophic’

As long ago as February 2007, Roubini was writing on his blog that “the party will soon be over,” and warning of “painful consequences for the U.S. and the global economy.” By last February, his tone had become apocalyptic, raising the specter of a “catastrophic” meltdown that central banks would fail to prevent, triggering the bankruptcy of large banks with mortgage holdings and a “sharp drop” in equities.

The next month, Bear Stearns Cos. failed, to be taken over by JPMorgan Chase & Co. in a government-backed deal. Then, in September, Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital. The U.S. took over AIG, Fannie Mae and Freddie Mac, and the Standard & Poor’s 500 Index suffered its worst year since 1937.

“I was intellectually vindicated,” Roubini says. “But I was vindicated by having an economic disaster which has political and social consequences.”

Predecessors

Roubini’s predecessors in the role of economic nay-sayer include some well-known names: Joseph Granville, publisher of the Granville Market Letter, who forecast the stock-market declines of 1976 and 2000; Henry Kaufman, who as a managing director at Salomon Brothers projected rising interest rates that led to a U.S. recession in the early 1980s; Marc Faber, publisher of the Gloom, Boom & Doom Report, who predicted the 1987 stock crash; and Yale University’s Robert Shiller, a former colleague of Roubini’s, who forecast the end of the dot-com bubble in his 2000 book “Irrational Exuberance.”

Granville, 85, says the key to being an outlier is not to doubt your analysis.

“I don’t have anything to do with emotion,” says Granville, who’s based in Kansas City. “Keep your head, follow the numbers and ignore the rest.”

Roubini was born in Istanbul, the son of an importer- exporter of carpets, and spent his childhood in Israel, Iran and Italy. It was while living in Milan from 1962 to 1982, he says, that he became attracted to economics: “Economics had the tools to understand the world, and not just understand it but also change it for the better.”

International Economics

After a year at the Hebrew University of Jerusalem, he earned an economics degree at Milan’s Universita’ L. Bocconi and then his Ph.D. at Harvard University in 1988, where he specialized in international economics.

Jeffrey Sachs, he says, became his “role model” at Harvard by demonstrating that economists could shape public policy -- as Sachs did by lobbying for poor countries to have their debts relieved by richer governments. Sachs is now a professor at Columbia University.

“You sensed there was something beyond academia, that you have to figure out the big issues of the global economy,” says Roubini. “You have to be engaged, and can’t just be in an ivory tower.”

For much of the 1990s, Roubini combined academic research and policy-making by teaching at Yale and then in New York, while also spending time at the International Monetary Fund, the Federal Reserve, World Bank and Bank of Israel.

Joining Clinton

By 1998 he had attracted the attention of President Bill Clinton’s administration, joining it first as a senior economist in the White House Council of Economic Advisers and then moving to the Treasury department as a senior adviser to Timothy Geithner, then the undersecretary for international affairs and now Treasury secretary in the Obama administration.

Roubini returned to the IMF in 2001 as a visiting scholar while it battled a financial meltdown in Argentina. He co-wrote a book on saving bankrupt economies entitled “Bailouts or Bail- ins?” and opened his own global consulting firm, which now employs two dozen economists and publishes a popular Web site and blog.

“Nouriel has a rare combination of economics and the real world, and so has great insight because of that,” says Shiller. “He looks into the details and rolls up his sleeves.”

Roubini says working on emerging-market blowouts in Asia and Latin America allowed him to spot the looming disaster in the U.S. “I’ve been studying emerging markets for 20 years, and saw the same signs in the U.S. that I saw in them, which was that we were in a massive credit bubble,” he says.

Still a Pessimist

With that bubble now popped, Roubini remains more pessimistic than economists elsewhere. The IMF forecasts global growth of 0.5 percent this year and bank losses from toxic U.S.- originated assets of $2.2 trillion. By contrast, Roubini sees the global economy shrinking this year, and banks writing down at least $3.6 trillion -- compared to the $1.1 trillion disclosed so far.

While the U.S. government is resisting nationalizing its biggest banks, Roubini says it will have no choice because they are now “effectively insolvent.” And the outcome may be even worse than even he anticipates if governments fail to take aggressive steps to recapitalize banks and revive their economies, he says: “The risk of a near-depression shouldn’t be underestimated.”

Roubini, who’s now working on a book about the crisis, says he takes no particular pleasure in his role as Dr. Doom or the attention it brings him.

“I’m not a permanent bear,” he says. “I’ll be the first to call a recovery, but I just don’t see it yet, and it’s getting uglier.”

Barrick Chairman Mr. Munk said Gold likely to hit new highs

2009-01-29T16:10:00.001-05:00

The gold price is likely to hit record highs in dollar terms as fears grow about the stability of the US currency, the chairman of Barrick Gold said today at the World Economic Forum (WEF) in Davos.

The founder of the world’s largest goldmining company said that there was even a possibility that central banks, including China’s, might start to switch from dollar holdings to gold, which could cause the price of the metal to treble.

“Gold is at record levels in every currency except dollars," Peter Munk told Reuters at the WEF meeting.

"Even within dollar terms it is within a few percentage points of an all-time high, at a time when all the other major commodities are falling.”

Mr Munk said: “Whether it’s the currency effect or a reaction to a feeling of uncertainty, gold, in my opinion, is more likely to go up than down.”

The gold price was up today, trading at about $890 at 1500GM. At present the record high is $1,030.80 an ounce, achieved in March last year.

Mr Munk emphasised that he was merely weighing the odds.

“It would be stupid to assume commodities prices can only go one way,” he said, adding that physical demand for gold jewellery was not high during the economic downturn.

Gold has been one of the best-performing assets of recent months, rising in value by nearly 17 per cent since late October even as the price of other commodities, such as oil and copper, has dropped sharply.

Investors have bought heavily into physical bullion in the form of coins and bars, and physically backed assets, such as exchange-traded funds, as a safe store of value at a time of increased volatility in other asset prices.

Mr Munk said that downward pressure on the dollar, partly due to massive US spending and printing money to stimulate the economy, would increase gold’s attractions as an investment even further.

Gold usually moves in the opposite direction to the dollar, as it is often bought as a hedge against weakness in the US currency.

“My personal feeling is that with the rescue packages calling for trillions, not billions ... the value of the [US] currency has to go down,” Mr Munk said.

He said that there was a possibility that central banks, including that of China, a major dollar asset holder, might start buying gold.

“If they decide to diversify, we assume into gold, then we start to talk about a trebling or quadrupling of the gold price," he said. "It could be followed by Russia or Kuwait.

“I don’t think it’s likely, but it’s more likely. I would not have said it two years ago — I’m not a gold bug — but it’s more likely than it was two years ago.”

He added that his company did not now hedge its output — meaning use derivatives to insure against a fall in price — and relied on the price climbing.

In the past its successful hedging allowed it to make key acquisitions.

“It would be dumb to hedge,” Mr Munk said

Robert Rubin Says Mark-to-Market has Done ‘Damage’

2009-01-29T14:30:00.001-05:00

Jan. 28 (Bloomberg) -- Robert Rubin, who quit his post as senior counselor at Citigroup Inc. this month, said an accounting rule forcing companies to mark down assets every quarter to reflect market value has “done a great deal of damage.”

“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,” Rubin, the former U.S. Treasury secretary, said during a discussion at the 92nd Street Y late yesterday.

Companies including Citigroup and American International Group Inc. say mark-to-market, also known as fair-value accounting, doesn’t work when few buyers are willing to trade assets like subprime mortgages. Proponents such as the U.S. Financial Accounting Standards Board say the rule adds to transparency and gives investors information about companies.

Rubin joined Citigroup in 1999. Earlier this month, he announced he won’t stand for re-election to the board. Rubin, 70, proposed that a “reserve” accounting standard be adopted, which drew applause from the audience.

Citigroup received a $45 billion bailout from the U.S. government after reporting more than $85 billion of credit losses and writedowns from investments tainted by the subprime-mortgage crisis.

‘Controversial’

“Mark-to-market accounting has done a great deal of damage,” Rubin said. “For a lot of financial institutions we should move to something that is more similar to reserve accounting. That will be a very controversial matter.”

Under reserve accounting, assets like loans are carried at cost, offset by reserves for potential losses. Rubin was criticized by investors for collecting more than $150 million in pay in a decade while failing to steer Citigroup away from subprime mortgages.

Goldman Sachs Group Inc., where Rubin was co-chairman in the early 1990s and where he spent 26 years, is an advocate of fair- value accounting. Rubin left Goldman Sachs to become a top economic adviser to President Bill Clinton in 1993. In 1994, he succeeded Lloyd Bentsen as Treasury secretary, presiding over five years of economic growth.

“For us, fair value is the oxygen of the firm,” Matthew Schroeder, managing director for accounting policy at Goldman Sachs, said at a U.S. Securities and Exchange Commission public meeting in July. “It’s part of our fabric. We follow a daily discipline of marking to market at our firm. It can be done.”

The SEC said the rule should be improved rather than suspended in a study released Dec. 30.

Chinese Ministry Denies Geithner's Currency Claims

2009-01-26T10:22:00.001-05:00

The Wall Street Journal
JANUARY 25, 2009, 10:37 P.M. ET

BEIJING -- A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.

On Thursday, President Obama's nominee for Treasury secretary, Timothy Geithner, told U.S. lawmakers that President Barack Obama, "backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency." No Chinese official of Mr. Geithner's standing has fired back -- a move analysts say shows that China doesn't want to overreact to the statement -- but Saturday morning an official from China's Ministry of Commerce said "we never have used currency manipulation or exchange-rate manipulation as a mains to gain an advantage in international trade." The statement, provided by an official from the ministry's news department, also said China would not "rely on devaluations" of its currency, the yuan, to promote exports.

Meanwhile, a top official in China's central bank said the charge that Beijing manipulates its currency was inaccurate and implied there were bigger issues to address in the global financial crisis.

"In recent days persons in a Western country have said 'China is manipulating the yuan exchange rate,' " said People's Bank of China Vice Governor Su Ning, according to a report Saturday by the state-controlled Xinhua news agency. "These remarks are not only inconsistent with the facts, but they are misleading about the reasons for the financial crisis."

Some Chinese commentators say the verbal sparring is a sign of greater trade friction to come with Washington. They noted that both sides' comments were written, not spoken -- and therefore should be taken as a serious view of intent.

"This is the first communication by the new president's team to China and it is provocative," said Shen Dingli, professor of international relations at Fudan University in Shanghai. China's official Xinhua news agency also weighed in Friday evening, saying that Mr. Geithner's claim "fans Sino-U.S. trade fears," alluding to concern in Beijing over protectionism in the new administration.

Chinese officials are deeply concerned that the global economic downturn could spur protectionist moves in the U.S. and elsewhere that could further damage China's trade-dependent economy. Mr. Geithner's comments marked a significant escalation in U.S. criticism of China's exchange-rate system.

U.S. officials have long argued that China should let its currency, the yuan, strengthen, which could make Chinese exports relatively more expensive and reduce China's massive trade surplus with the U.S. But the just-ended Bush administration stopped short of calling Beijing a currency manipulator.

In recent years, China did let the yuan strengthen, but stopped last year as its economy weakened. Some analysts have expressed concern that Beijing might let the yuan weaken, although Chinese officials have ruled that out. Almost no one in Beijing, however, believes the government would let the currency strengthen in the current environment, or abandon its controls over the currency -- especially given the disastrous results of liberal financial rules on other economies.
[Chart]

Ba Shusong, expert from Financial Research Institute of Development Research Center of the State Council, China's cabinet, said "it is U.S. dollar that is the main currency being manipulated," in part because the U.S. is printing money to pay for its soaring budget deficit. He noted that China and other developing countries hold U.S. dollars as their foreign reserve on the premise that the dollar is being managed responsibly. But in recent years, the U.S. "didn't assume its responsibilities."

Some traders and economists argue that, given Mr. Obama's reputation for pragmatism, the accusation over currency manipulation could have been made to give the U.S. an advantage in the early stage of fresh dialogue with Beijing on foreign exchange and trade.

"I expect Beijing will keep the yuan largely stable this year," said Isaac Meng, an economist at BNP Paribas. "Traders needn't worry about Geithner's remark unduly."

Chinese financial market participants were sanguine about the statement. The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.7% at 1990.66. The Shanghai Stock Exchange government bond index ended flat at 120.71.

"Geithner's comment wasn't that unexpected because people had anticipated the new Obama administration would take a relatively protectionist and populist stance toward China," said a Guangzhou-based trader at a foreign bank.

While there is concern about protectionist rhetoric coming from Washington, China wasn't a major factor in last year's presidential election and both parties agree that China is a key partner in U.S. foreign policy.

In fact, Washington and Beijing could become partners in solving other world-wide problems like global warming, says Scott Kennedy, a professor at Indiana University. In doing so, Washington is likely to call on China to take a more active role. "With a changing of the guard in Washington, China has the opportunity -- and challenge -- of doing much more."

Geithner's answer to a question about the valuation of China's yuan:

2009-01-26T10:20:00.000-05:00

"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices. More broadly, we look forward to a productive economic dialogue with the Chinese government on a number of short- and long-tem issues. The Yuan is certainly an important piece of that discussion, but given the crisis the immediate focus needs to be on the broader issue of stabilizing domestic demand in China and the US. The latest figures show that China's growth in 2008 was 9%, a full 4 percentage points lower than in the previous year. Because China accounts for such a large fraction of the world economy, a further slowdown in China would lead to a substantial fall in world growth (and demand for US exports) and delay recovery from the crisis. Therefore, the immediate goal should be for us to convince China to adopt a more aggressive stimulus package as we do our part to try to pass a stimulus package here at home."

Citigroup, Bank of America May Look ‘Nationalized’

2009-01-23T16:18:00.001-05:00

Jan. 23 (Bloomberg) -- The U.S. government’s decision to pledge billions of additional dollars with strings attached to Citigroup Inc. and Bank of America Corp. may be nationalization by another name, according to former bankers and regulators.

Faced with pressure from lawmakers, banks have shaken up management, eliminated executive bonuses and staff and canceled conventions. They’ll be forced to do monthly reports on how they’ve boosted lending while slashing quarterly dividends to one cent a share for three years.

“When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who’s calling the shots,” said Jon Bruss, a 40-year industry veteran and founder of Hartland, Wisconsin-based Fortress Partners Capital Management Ltd., which invests in banks. “It may not be de jure nationalization but I think it’s de facto nationalization.”

While avoiding steps taken by the U.K., which this week acquired a 70 percent stake in Royal Bank of Scotland Plc, U.S. regulators are no longer passively injecting capital into the nation’s biggest banks. Investors have fled, sending Citigroup and Bank of America down by more than 50 percent this year, on concern that tougher U.S. oversight is coming after the government takeover last year of mortgage financers Fannie Mae and Freddie Mac, and insurer American International Group Inc.

Citigroup, based in New York, tumbled 56 cents, or 15 percent, to $3.11 yesterday on the New York Stock Exchange. Bank of America plunged 97 cents, or 15 percent, to $5.71. The 24- company KBW Bank Index has dropped 38 percent in 2009, following last year’s 50 percent decline.

Government Decides

“Some of these traditional management decisions are being made by the government,” said Donald Powell, 67, who was chairman of the Federal Deposit Insurance Corp. from 2001 to 2005, and now lives in Amarillo, Texas. “Shareholders don’t have a voice in some of these things that are occurring.”

After the Treasury’s initial investments in October failed to adequately shield Citigroup and Bank of America from mortgage- related losses, the companies returned for more capital along with protection from hundreds of billions of dollars in potential defaults.

Citigroup needed $20 billion in November on top of an earlier $25 billion injection, which still wasn’t enough to keep the company from splitting apart after posting a record deficit on Jan. 15. The same day, Bank of America received $20 billion to cover losses tied to Merrill Lynch & Co. after the two companies received a combined $25 billion in October.

Executives Depart

Citigroup replaced Win Bischoff as chairman yesterday, naming former Time Warner Inc. Chief Executive Officer Richard Parsons to the post. Two weeks ago, former Treasury Secretary Robert Rubin, who had been a top Citigroup executive and board member, announced plans to step down. Merrill Lynch head John Thain was ousted yesterday, less than a month after he negotiated the sale of his company to Bank of America.

William K. Black, former lawyer at the Federal Home Loan Bank of San Francisco and Office of Thrift Supervision, says the Treasury could do better by assuming control of the companies and removing existing management altogether. By trying to avoid nationalizing the institutions, the government is wasting money, he said.

“It’s insane to leave it in the control of the people who have every incentive to cover up the scale of the losses,” said Black, professor at the University of Missouri-Kansas City School of Law. “You’re deliberately negotiating a bad deal for the American people by not getting an appropriate return for the risk you’re taking.”

Dividends, Conferences

Investors are getting smaller returns because the banks have to cut their dividends as part of the bailout agreements. And the companies are being told how to spend their money --especially when it comes to conferences and other business trips.

SunTrust Banks Inc., an Atlanta-based lender that sold $4.9 billion in preferred shares to the U.S., eliminated a sales conference to hold down travel expenses and reduced compensation for 4,000 managers. AIG, which received a $150 billion bailout package and is now majority-owned by the government, drew fire from lawmakers last year for conferences, bonuses and perks.

Bank of America dropped 12 cents, or 2.1 percent, to $5.59 at 11:03 a.m. in New York Stock Exchange composite trading today. Citigroup added 19 cents, or 6.1 percent, to $3.30.

In the U.K., Barclays Plc is trading at a price that indicates investors give it a 70 percent chance of nationalization, according to a note today from Sanford C. Bernstein analyst Bruno Paulson in London. The stock, down as much as 20 percent today, has lost about two-thirds of its value since Jan. 12.

‘Partial Nationalization’

Citigroup and Bank of America aren’t necessarily headed toward nationalization, according to Powell, who said President Barack Obama’s administration is tasked with developing an “exit strategy” to avoid ending up with financial control. That may mean converting preferred shares into common equity and then selling them, he said.

As Obama’s economic advisers plan for how the government will dole out the remaining $350 billion in the Troubled Asset Relief Fund, they’ll make sure the money doesn’t go to “bonuses or remodeling” offices, White House press secretary Robert Gibbs said today. Merrill Lynch’s Thain spent $1.2 million redecorating his downtown Manhattan office last year as the company was firing employees, a person familiar with the project said yesterday.

‘Weird’ Policy

Another former bank regulator, Kevin Jacques, says a nationalization policy may be preferable to the current strategy of handling every case differently.

In 2008, Bear Stearns Cos. was bought by JPMorgan Chase & Co. in a deal arranged by the government, Lehman Brothers Holdings Inc. went bankrupt, Washington Mutual Inc. was seized and AIG was taken over. That hurts confidence in the financial system and keeps investors guessing, Jacques said.

“If you took a nationalization policy, you would at least create some degree of certainty because now you know the government is going to stand behind these institutions,” said Jacques, 49, who was an economist with the Treasury Department for 14 years before becoming a finance professor at Baldwin- Wallace College in Berea, Ohio.

Now, “it’s almost like some kind of weird partial nationalization,” he said.

Jim Rogers warns against Obama's economic team

2009-01-23T14:07:00.001-05:00

BBC News
Thursday, January 22, 2009

A well-known investor has attacked the record of President Obama's nominee for Treasury Secretary, Timothy Geithner.

Jim Rogers, a former partner of George Soros, told the BBC that the new administration was "run by people who caused the latest financial problems".

He said Mr Geithner and Larry Summers, due to head the National Economic Council, have been wrong for 15 years.

"These people don't know what they're doing," he said. Mr Rogers is seen as influential in financial markets.

Investors haven't always made money from his forecasts. He advised them to back Zimbabwe in the mid-1990s. Since then the country's economy has virtually collapsed.

But his prediction that commodity prices would soar over the past ten years did prove to be correct.

He made comments on Monday advising investors to sell the pound and sterling has since weakened sharply.

Mr Rogers assured the BBC that he has no position in sterling, so did not benefit from talking the pound down.

Mr Rogers also attacked the British prime minister for selling a large portion of Britain's gold reserves when gold was at a very low price.

"Gordon Brown sold UK gold at $250 an ounce," he said. "And this is a man who knows what he's doing? " he mused.

He said Britain no longer has anything to sell without North Sea oil and with the City of London "a pale shadow of its former self."

Eastern promise

Mr Rogers believes that Asia represents the future for investors.

"China is going to have horrible setbacks, but the 21st century will be the century of Asia," he said.

He revealed that his children have bank accounts in Swiss Francs as he does not want their assets in dollars.

"There will probably be exchange controls in the US in their lifetime. I have given up on the US dollar and sterling," he said.

He added that the current actions of governments to restart economies are likely to lead eventually to inflation, and that the only way to protect wealth under those conditions is to hold real assets.

He recommended Chinese shares, the Japanese yen, gold and other real assets.

"The era of paper shufflers is over - farmers are going to inherit the earth again," he said.

"Bankers should learn how to drive tractors".

Microsoft CEO Ballmer's e-mail

2009-01-22T12:39:00.000-05:00

From: Steve Ballmer
Sent: Thursday, January 22, 2009 6:07 AM
To: Microsoft - All Employees (QBDG)
Subject: Realigning Resources and Reducing Costs

In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why.

Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.

The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.

But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.

Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.

During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.

Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.

As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.

Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.

To increase efficiency, we're taking a series of aggressive steps. We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we'll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don't, we will also offer severance pay and other benefits.

The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow's Town Hall at 9am PST in Café 34 or watch the webcast.

While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.

With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.

With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.

Thank you for your continued commitment and hard work.

Steve

Bank of Canada sees return to economic growth later in 2009

2009-01-22T12:30:00.001-05:00

The Bank of Canada is projecting a sharp recession that will see three quarters of economic contraction before growth returns in the second half of 2009.

In its update to its Monetary Policy Report, the central bank said it anticipates quarter-over-quarter contractions of 2.3 per cent in the fourth quarter of 2008, followed by a deeper drop of 4.8 per cent for the first three months of 2009 and a drop of one per cent in second quarter of this year.

However, the bank sees a rebound to positive activity by the third quarter of the year, when it forecasts two per cent growth and 3.5 per cent expansion in the last three months of the year.

The bank said the return of normal financial conditions, coupled with the stimulus coming from monetary and fiscal policies, should boost the growth of consumer spending in 2010, leading to growth for the year of 3.8 per cent. The recent depreciation in the Canadian dollar will also lend support to a recovery, it added.

"Excess supply will be gradually reduced, with the economy projected to return to balance by mid-2011," the bank said. "The projected return to balance of the Canadian economy is faster than either of the recoveries following the 1981-82 and 1990-92 recessions."

Bank of Canada governor Mark Carney said the recovery projected by the bank is milder than from an average recession due to "muted" recoveries expected in other economies around the world.

"We are comfortable with our forecast," he told reporters at a news conference in Ottawa.

The latest outlook offered by the central bank marked a significant downgrade from the forecast it presented in October, when the bank projected growth of 0.6 per cent in 2009, and 3.4 per cent in 2010.

Two days earlier, the bank cut a key lending rate by half a percentage point to one per cent as it sought to boost the economy. Since it began its latest round of monetary policy easing in December 2007, the Bank of Canada has cut 3.5 percentage points from the key lending rate.

Fertilizer stocks in for rough 2009??

2009-01-22T11:32:00.002-05:00

Consensus is building on the Street in Canada and the U.S., calling for a rough 2009 in the fertilizer sector, followed by a 2010 turnaround.

Citigroup Global Markets analyst P.J Juvekar assumed coverage on Potash Corp. of Saskatchewan Inc., Agrium Inc, and Mosaic Co. with short term caution, based on a forecast of a 10 to 20% year-over-year decline in phosphate and potash volumes in 2009.

"We expect many farmers in North America to go on a 'fertilizer holiday' as they 'mine' their soil for fertilizer," he said. "But the nutrient depletion may set the stage for a robust recovery in 2010 that could cause us to revisit our stance."

The analyst has "hold" ratings for Potash Corp. and Mosaic with price targets of US$81 and US$39, respectively. As for Agrium, he rates the stock a "sell" with a US$27 price target.

"We have a sell on Agrium given its potential for retail margin compression and write-downs, amid falling fertilizer prices, and large Nitrogen exposure.

At CIBC World Markets, analyst Jacob Bout also told clients that fertilizer demand and pricing will remain weak at least through the first half of this year, with recovery expected next year. However, he remains more bullish on both Agrium and PotashCorp's long term prospects than his Citigroup peer.

"While [nitrogen] and [phosphate] prices have collapsed, [potash] prices are still buoyed by producer discipline," he said. "We expect reduced plantings in South America and Russia to have an impact on pricing, supporting stronger plantings (and fertilizer demand) in '10."

On a relative basis, he likes Agrium Inc. because of its exposure to the retail fertilizer market, saying retail demand should "hold in well on a year-over-year basis." That should offset weak wholesale results in H1 for phosphate and potash, the analyst said, continuiing to rate these shares "sector outperformer" with a US$60 price target.

Mr. Bout also rates Potash Corp. of Saskatchewan Inc. "sector outperformer" with a US$125 price target. He said potash demand will be on hold until there is a 2009 Chinese potash contract, but once a contract is settled, Mr. Bout believes potash demand will reach 2 to 3% per annum, creating tight market conditions.

From National Post

Jim Rogers sees Renminbi replacing US Dollar as world reserve currency

2009-01-21T10:10:00.000-05:00

BusinessIntelligence
Tuesday, January 20, 2009

Legendary global investor Jim Rogers said the Renminbi may possibly replace the US dollar as the international reserve currency 15 years from now.

Addressing the Asian Financial Forum in Hong Kong, an event that brought together about a thousand participants from around the globe, Rogers said he found Asia to be the place where "the world is changing" as he toured the world in 1990 through 1992.

"This is going to be the new centre of the world, not just the financial but the political world," he said.

The only currency that could replace the US dollar "this year" would be the euro, while the only conceivable currency that can replace the dollar as the reserve currency "15 years from now" is renminbi.

Rogers said he believed China will rise despite possible setbacks.

The United States also experienced setbacks and had various problems back in the 19th century, which, nevertheless, did not stop it from becoming the greatest success of the 20th century, he said.

The US dollar, on the other hand, is falling, he said, citing the fact that China is now the largest creditor nation while the United States is largest debtor nation.

"The Renminbi is big enough. It's liquid enough," he said, adding that the question was only academic in the sense that the renminbi is still a blocked currency.

He accused US authorities of consciously trying to devalue the US dollar by flooding the market with liquidity -- or in his words, "turning on the printing presses" -- and said anyone chasing the rally in government bonds is making a "terrible mistake."

"The idea that you can fix a period of excess borrowing and excess consumption by more borrowing and more consumption to me is just ludicrous," he said.

The projected plan to bail out the US economy by printing more money and boosting consumption could lead to even bigger problem. "The idea that you can solve a period of excessive borrowing and consumption with more borrowing and more consumption and destroying more balance sheets, to me, is ludicrous on its face," Rogers said.

Rogers said protectionism, one of the key pillars of U.S. President-elect Barrack Obama's presidential campaign platform, could push the U.S. economy into big trouble, citing the historical anecdote that the US congress passed a protectionist bill after the 1929 stock market crash to send the US economy into a long depression.

Underscoring his convictions, Rogers began his speech by showing pictures of his two young children, both of whom he said have Swiss bank accounts and speak Mandarin.

Rogers said his elder daughter, who is five years old, is in school in Asia and speaks fluent mandarin thanks to a governess who can speak fluent Chinese.

The other younger daughter was also learning mandarin.

"The single most important advice I can give you is teaching your child mandarin," he said, urging investors to sell US dollars when it peaks in the near term.

Rogers has spent a career being one step ahead of mainstream investment thinking. Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%. The Quantum Fund shot to fame after making more than US$1 billion betting against the British pound in early 1990s.

The Asian Financial Forum was hosted by the Hong Kong Special Administrative Region government and Hong Kong Trade Development Council. Prominent speakers discussed the challenges and opportunities facing Asian economies.

Rick Warren's Inaugural Invocation

2009-01-20T22:38:00.000-05:00

Let us pray.

Almighty God, our Father, everything we see and everything we can’t see exists because of you alone. It all comes from you. It all belongs to you. It all exists for your glory.

History is your story. The Scripture tells us, “Hear O Israel, the Lord is our God. The Lord is One.” And you are the compassionate and merciful one. And you are loving to everyone you have made.

Now, today, we rejoice not only in America’s peaceful transfer of power for the 44th time. We celebrate a hingepoint of history with the inauguration of our first African American president of the United States. We are so grateful to live in this land, a land of unequaled possibility, where the son of an African immigrant can rise to the highest level of our leadership. And we know today that Dr. King and a great cloud of witnesses are shouting in heaven.

Give to our new President, Barack Obama, the wisdom to lead us with humility, the courage to lead us with integrity, the compassion to lead us with generosity. Bless and protect him, his family, Vice President Biden, the cabinet, and every one of our freely elected leaders.

Help us, O God, to remember that we are Americans, united not by race, or religion, or blood, but to our commitment to freedom and justice for all. When we focus on ourselves, when we fight each other, when we forget you, forgive us. When we presume that our greatness and our prosperity is ours alone, forgive us. When we fail to treat our fellow human beings and all the earth with the respect that they deserve, forgive us. And as we face these difficult days ahead, may we have a new birth of clarity in our aims, responsibility in our actions, humility in our approaches, and civility in our attitudes, even when we differ.

Help us to share, to serve and to seek the common good of all. May all people of goodwill today join together to work for a more just, a more healthy and a more prosperous nation and a peaceful planet. And may we never forget that one day all nations and all people will stand accountable before you. We now commit our new president and his wife, Michelle and his daughters, Malia and Sasha, into your loving care.

I humbly ask this in the name of the one who changed my life, Yeshua, Isa, Jesus [Spanish pronunciation], Jesus, who taught us to pray:

“Our Father, who art in heaven, hallowed be thy name. Thy kingdom come. Thy will be done on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. For thine is the kingdom and the power and the glory forever. Amen."

President Barack Obama 2009 Inauguration and Address

2009-01-20T18:09:00.000-05:00

SPEAKER: PRESIDENT BARACK OBAMA

[*] OBAMA: Thank you. Thank you.

CROWD: Obama! Obama! Obama! Obama!

My fellow citizens: I stand here today humbled by the task before us, grateful for the trust you have bestowed, mindful of the sacrifices borne by our ancestors.

I thank President Bush for his service to our nation...

(APPLAUSE)

... as well as the generosity and cooperation he has shown throughout this transition.

Forty-four Americans have now taken the presidential oath.

OBAMA: The words have been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms. At these moments, America has carried on not simply because of the skill or vision of those in high office, but because We the People have remained faithful to the ideals of our forbearers, and true to our founding documents.

OBAMA: So it has been. So it must be with this generation of Americans.

That we are in the midst of crisis is now well understood. Our nation is at war against a far-reaching network of violence and hatred. Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age.

Homes have been lost, jobs shed, businesses shuttered. Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.

OBAMA: These are the indicators of crisis, subject to data and statistics. Less measurable, but no less profound, is a sapping of confidence across our land; a nagging fear that America's decline is inevitable, that the next generation must lower its sights.

Today I say to you that the challenges we face are real, they are serious and they are many. They will not be met easily or in a short span of time. But know this America: They will be met.

(APPLAUSE)

On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.

OBAMA: On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics.

We remain a young nation, but in the words of Scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free, and all deserve a chance to pursue their full measure of happiness.

(APPLAUSE)

In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of shortcuts or settling for less.

OBAMA: It has not been the path for the faint-hearted, for those who prefer leisure over work, or seek only the pleasures of riches and fame.

Rather, it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path towards prosperity and freedom.

For us, they packed up their few worldly possessions and traveled across oceans in search of a new life. For us, they toiled in sweatshops and settled the West, endured the lash of the whip and plowed the hard earth.

OBAMA: For us, they fought and died in places Concord and Gettysburg; Normandy and Khe Sahn.

Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we might live a better life. They saw America as bigger than the sum of our individual ambitions; greater than all the differences of birth or wealth or faction.

This is the journey we continue today. We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions -- that time has surely passed.

OBAMA: Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.

(APPLAUSE)

For everywhere we look, there is work to be done.

The state of our economy calls for action: bold and swift. And we will act not only to create new jobs but to lay a new foundation for growth.

We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.

We will restore science to its rightful place and wield technology's wonders to raise health care's quality...

(APPLAUSE)

... and lower its costs.

OBAMA: We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age.

All this we can do. All this we will do.

Now, there are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans. Their memories are short, for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose and necessity to courage.

What the cynics fail to understand is that the ground has shifted beneath them, that the stale political arguments that have consumed us for so long, no longer apply.

OBAMA: The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.

Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.

And those of us who manage the public's knowledge will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.

Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched.

OBAMA: But this crisis has reminded us that without a watchful eye, the market can spin out of control. The nation cannot prosper long when it favors only the prosperous.

The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on the ability to extend opportunity to every willing heart -- not out of charity, but because it is the surest route to our common good.

(APPLAUSE)

As for our common defense, we reject as false the choice between our safety and our ideals.

Our founding fathers faced with perils that we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations.

OBAMA: Those ideals still light the world, and we will not give them up for expedience's sake.

And so, to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman and child who seeks a future of peace and dignity, and we are ready to lead once more.

(APPLAUSE)

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with the sturdy alliances and enduring convictions.

OBAMA: They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use. Our security emanates from the justness of our cause; the force of our example; the tempering qualities of humility and restraint.

We are the keepers of this legacy, guided by these principles once more, we can meet those new threats that demand even greater effort, even greater cooperation and understanding between nations. We'll begin to responsibly leave Iraq to its people and forge a hard- earned peace in Afghanistan.

OBAMA: With old friends and former foes, we'll work tirelessly to lessen the nuclear threat and roll back the specter of a warming planet.

We will not apologize for our way of life nor will we waver in its defense.

And for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that, "Our spirit is stronger and cannot be broken. You cannot outlast us, and we will defeat you."

(APPLAUSE)

For we know that our patchwork heritage is a strength, not a weakness.

We are a nation of Christians and Muslims, Jews and Hindus, and nonbelievers. We are shaped by every language and culture, drawn from every end of this Earth.

And because we have tasted the bitter swill of civil war and segregation and emerged from that dark chapter stronger and more united, we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve; that as the world grows smaller, our common humanity shall reveal itself; and that America must play its role in ushering in a new era of peace.

OBAMA: To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect.

To those leaders around the globe who seek to sow conflict or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy.

To those...

(APPLAUSE)

To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist.

(APPLAUSE)

OBAMA: To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds.

And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders, nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it.

As we consider the road that unfolds before us, we remember with humble gratitude those brave Americans who, at this very hour, patrol far-off deserts and distant mountains. They have something to tell us, just as the fallen heroes who lie in Arlington whisper through the ages.

We honor them not only because they are guardians of our liberty, but because they embody the spirit of service: a willingness to find meaning in something greater than themselves.

OBAMA: And yet, at this moment, a moment that will define a generation, it is precisely this spirit that must inhabit us all.

For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies.

It is the kindness to take in a stranger when the levees break; the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours.

It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate.

Our challenges may be new, the instruments with which we meet them may be new, but those values upon which our success depends, honesty and hard work, courage and fair play, tolerance and curiosity, loyalty and patriotism -- these things are old.

OBAMA: These things are true. They have been the quiet force of progress throughout our history.

What is demanded then is a return to these truths. What is required of us now is a new era of responsibility -- a recognition, on the part of every American, that we have duties to ourselves, our nation and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character than giving our all to a difficult task.

This is the price and the promise of citizenship.

OBAMA: This is the source of our confidence: the knowledge that God calls on us to shape an uncertain destiny.

This is the meaning of our liberty and our creed, why men and women and children of every race and every faith can join in celebration across this magnificent mall. And why a man whose father less than 60 years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.

(APPLAUSE)

So let us mark this day in remembrance of who we are and how far we have traveled.

In the year of America's birth, in the coldest of months, a small band of patriots huddled by nine campfires on the shores of an icy river.

OBAMA: The capital was abandoned. The enemy was advancing. The snow was stained with blood.

At a moment when the outcome of our revolution was most in doubt, the father of our nation ordered these words be read to the people:

"Let it be told to the future world that in the depth of winter, when nothing but hope and virtue could survive, that the city and the country, alarmed at one common danger, came forth to meet it."

America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words; with hope and virtue, let us brave once more the icy currents, and endure what storms may come; let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.

Thank you. God bless you.

(APPLAUSE)

And God bless the United States of America.

(APPLAUSE)

ELD is one of the recommendation by Eric Sprott

2009-01-20T10:01:00.002-05:00

During the interview with The Gold Report on January 9, 2009, Eric Sprott metioned a few names of larger gold producers amongst his fund holdings:
Kinross Gold Corporation (KGC),
Alamos Gold Inc. (AGIGF.PK),
Dynasty Metals & Mining (DMMIF.PK),
Kirkland Lake Gold Inc. (KGLIF.PK) ,
El Dorado Gold Corporation (EGO) and
Ramelius Resources [ASX:RMS] in Australia.

David Walker - U.S. Heading For Financial Trouble?

2009-01-19T20:04:00.001-05:00

(CBS) This segment was originally broadcast on March 4, 2007. It was updated on July 8, 2007.

When the stock market soars or plunges, everyone pays attention. But short term results aren't that important to the man you're about to meet. David Walker thinks the biggest economic peril facing the nation is being ignored, and for nearly two years now he has been traveling the country like an Old Testament prophet, urging people to wake up before its too late. Who is David Walker and why should we care?

As correspondent Steve Kroft first reported earlier this year, he is the nation's top accountant, the comptroller general of the United States. He's totaled up our government's income, liabilities, and future obligations and concluded that our current standard of living is unsustainable unless some drastic action is taken. And he's not alone. It's been called the "dirty little secret everyone in Washington knows" – a set of financial truths so inconvenient that most elected officials don't even want to talk about them, which is exactly why David Walker does.

--------------------------------------------------------------------------------

"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility," Walker tells Kroft.

David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.

"I'm going to show you some numbers…they’re all big and they’re all bad," he says.

So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.

"You know the American people, I tell you, they are absolutely starved for two things: the truth, and leadership," Walker says.

He calls it a fiscal wake up tour, and he is telling civic groups, university forums and newspaper editorial boards that the U.S. has spent, promised, and borrowed itself into such a deep hole it will be unable to climb out if it doesn’t act now. As Walker sees it, the survival of the republic is at stake.

"What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous," he told the editorial board of the Seattle Post Intelligencer.

You have heard this before, from Ross Perot 15 years ago. You might have even thought the problem had been solved, when President Clinton announced, "Tonight, I come before you to announce that the federal deficit … will be simply zero."

"Well, those days are gone. We've gone from surpluses to huge deficits and our long range situation is much worse," Walker says.

"President Bush would argue that the economy is in pretty good shape, unemployment is down, the deficit is actually less than expected," Kroft remarks.

"The fact is, is that we don't face an immediate crisis. And, so people say, 'What's the problem?' The answer is, we suffer from a fiscal cancer. It is growing within us. And if we do not treat it, it could have catastrophic consequences for our country," Walker replies.

The cancer, Walker says, are massive entitlement programs we can no longer afford, exacerbated by a demographic glitch that began more than 60 years ago, a dramatic spike in the fertility rate called the "baby boom."

Beginning next year, and for 20 years thereafter, 78 million Americans will become pensioners and medical dependents of the U.S. taxpayer.

"The first baby boomer will reach 62 and be eligible for early retirement of Social Security January 1, 2008. They'll be eligible for Medicare just three years later. And when those boomers start retiring in mass, then that will be a tsunami of spending that could swamp our ship of state if we don't get serious," Walker explains.

To illustrate their impact, he uses a power point presentation to show what would happen in 30 years if the U.S. maintains its current course and fulfills all of the promises politicians have made to the public on things like Social Security and Medicare.

What would happen in 2040 if nothing changes?

"If nothing changes, the federal government's not gonna be able to do much more than pay interest on the mounting debt and some entitlement benefits. It won't have money left for anything else – national defense, homeland security, education, you name it," Walker warns.

Walker says you could eliminate all waste and fraud and the entire Pentagon budget and the long-range financial problem still wouldn't go away, in what's shaping up as an actuarial nightmare.

Part of the problem, Walker acknowledges, is that there won't be enough wage earners to support the benefits of the baby boomers. "But the real problem, Steve, is health care costs. Our health care problem is much more significant than Social Security," he says.

Asked what he means by that, Walker tells Kroft, "By that I mean that the Medicare problem is five times greater than the Social Security problem."

The problem with Medicare, Walker says, is people keep living longer, and medical costs keep rising at twice the rate of inflation. But instead of dealing with the problem, he says, the president and the Congress made things much worse in Dec. 2003, when they expanded the Medicare program to include prescription drug coverage.

"The prescription drug bill was probably the most fiscally irresponsible piece of legislation since the 1960s," Walker argues.

Asked why, Walker says, "Well, because we promise way more than we can afford to keep. Eight trillion dollars added to what was already a 15 to $20 trillion under-funding. We're not being realistic. We can't afford the promises we've already made, much less to be able, piling on top of 'em."

With one stroke of the pen, Walker says, the federal government increased existing Medicare obligations nearly 40 percent over the next 75 years.

"We’d have to have eight trillion dollars today, invested in treasury rates, to deliver on that promise," Walker explains.

Asked how much we actually have, Walker says, "Zip."

So where's that money going to come from?

"Well it's gonna come from additional taxes, or it's gonna come from restructuring these promises, or it's gonna come from cutting other spending," Walker says.

He is not suggesting that the nation do away with Medicare or prescription drug benefits. He does believe the current health care system is way too expensive, and overrated.

"On cost we're number one in the world. We spend 50 percent more of our economy on health care than any nation on earth," he says.

"We have the largest uninsured population of any major industrialized nation. We have above average infant mortality, below average life expectancy, and much higher than average medical error rates for an industrialized nation," Walker points out.

Walker says we have promised almost unlimited healthcare to senior citizens who never see the bills, and the government already is borrowing money to pay them. He says the system is unsustainable.

"It's the number one fiscal challenge for the federal government, it's the number one fiscal challenge for state governments and it's the number one competitive challenge for American business. We're gonna have to dramatically and fundamentally reform our health care system in installments over the next 20 years," Walker tells Kroft.

And if we don't?

"And if we don't, it could bankrupt America," Walker argues.

You’re probably expecting to hear from someone who disagrees with the comptroller general’s numbers, projections, and analysis. But hardly anyone does. He is accompanied on the wake-up tour by economists from the conservative Heritage Foundation, the left-leaning Brookings Institution, and the non-partisan Concord Coalition. The only dissenters seem to be a small minority of economists who believe either that the U.S. can grow its way out of the problem, or that Walker is over-stating it.

"The Wall Street Journal for example calls you 'Chicken Little,' running around saying that the 'sky is falling, the sky is falling,'" Kroft remarks.

"Unfortunately they don't get it. I don't know anybody who has done their homework, has researched history, and who's good at math who would tell you that we can grow our way out of this problem," Walker replies.

Federal Reserve Chairman Ben Bernanke validated much of Walker's take on the situation at congressional hearings this year, and so did ranking Republicans and Democrats on the Senate Budget Committee. Senator Kent Conrad of North Dakota is the chairman.

Sen. Conrad thinks David Walker is "providing an enormous public service."

Asked if he agrees with Walker’s figures and his projections, Sen. Conrad says, "I do. You know, I mean we could always question the precise nature of this projection or that projection. But, that misses the point. The larger story that he is telling is exactly correct."

Conrad acknowledges that most people in Washington are aware how bad the situation is. "They know in large measure here, Republicans and Democrats, that we are on a course that doesn't add up," the senator tells Kroft.

"Why doesn't somebody do something about it?" Kroft asks.

"Because it's always easier not to. 'Cause it's always easier to defer, to kick the can down the road to avoid making choices. You know, you get in trouble in politics when you make choices," Sen. Conrad says.

Asked if he thinks taxes should be raised, the senator says, "I believe first of all, we need more revenue. We need to be tough on spending. And we need to reform the entitlement programs … we need to do all of it."

But he admits he doesn't think there's a consensus for raising taxes.

"Any politician who tells you that we can solve our problem without reforming Social Security, Medicare, and Medicaid is not telling you the truth," Walker told an audience at the University of Denver.

Over the next year, the nation’s top accountant will be traveling to the early primary states, telling voters that we need to begin raising taxes or government revenues and put a cap on federal spending if we want to maintain our economic security and standard of living.

"If you tell them the truth, if you give them the facts, if you explain this in terms of not just numbers but values and people, they will get it and empower their elected officials to make tough choices," Walker argues.

Asked if he knows any politicians willing to raise taxes or cut back benefits, Walker says, "I don't know politicians that like to raise taxes. I don't know politicians that like to cut spending, but I think what we have to recognize is this is not just about numbers. We are mortgaging the future of our children and grandchildren at record rates, and that is not only an issue of fiscal irresponsibility, it's an issue of immorality."

Oil expected to rise to US$65 this year

2009-01-19T16:19:00.001-05:00

Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects a "swift and violent rebound" in energy prices in the second half of the year.

Oil prices may have reached their lowest point already, after falling to US$32.40 in mid-December, and are expected to rise to US$65 by the end of this year, the analyst said. There is scope for a "new bull market" in oil, Mr. Currie said.

World oil demand is likely to fall by about 1.6 million barrels a day this year, the Goldman analyst said Monday at a conference in London. That's bigger than the reduction expected by the International Energy Agency, which last week forecast a decrease of about 500,000 barrels a day, or 0.6 %, this year.

A recent tactic of using supertankers to store crude oil to take advantage of higher prices later this year is "difficult" to profit from and is "near the end of this process" anyway, the Goldman analyst said.

New York crude futures for delivery in December, trading near US$56 a barrel, currently cost some US$15 a barrel more than March futures, a market situation known as contango, where prices are higher for later delivery.

The contango is likely to flatten as supply cuts by OPEC and other producers take effect, reducing the availability of oil for immediate delivery, Currie said.

The Organization of Petroleum Exporting Countries started another round of supply cutbacks at the start of this month. The group's compliance with its overall efforts to cut production will probably peak at 75%, or a reduction of about 3 million barrels a day out of an announced aim of 4.2 million barrels a day, Goldman Sachs said.

In several steps, 10 OPEC members have pledged to reduce production to 24.845 million barrels a day, a cut of 4.2 million barrels a day from September's level.

Morgan Stanley hired an oil tanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell PLC in trying to profit from the contango, two shipbrokers said in reports earlier Monday.

Simple But Difficult Discipleship

2009-01-18T10:25:00.002-05:00

1 Thessalonians 5:16-18

One of the most perplexing questions for a Christian is this one: What is God’s will for my life? When we ask that question we generally want to know,
· What job should I take?
· What school should I attend?
· What person should I marry?
· What ministries should I be involved in?

Often we ask the question at crisis points in our life (as we should). Today’s text is going to challenge the way we normally think about God’s will. I think our text suggests that when we ask “What is God’s will for my life?” we should put less emphasis on “What does God want me to do?” and more emphasis on the question “What does God want me to be?”

In 1 Thessalonians 5:16-18 we find what some call the “standing orders of the church”. If you want to know what God’s will is for your life here’s where you can start. Whereas in verses 12-15 Paul instructed us on our interpersonal relationships, in these verses he talks to us about our attitudes.

16 Be joyful always; 17 pray continually; 18 give thanks in all circumstances, for this is God’s will for you in Christ Jesus.

Each of these commands is in the Imperative, which means these are commands. Paul is not really talking about our feelings; for the most part, we can’t control our feelings. Paul is addressing our mindset; our focus.

I’ve titled this message: “Simple but Difficult Discipleship” because these three commands are not difficult to understand. We know God wants us to be joyful, praying, and filled with thanksgiving. However, the modifiers of each directive is what makes these commands difficult: we are to be ALWAYS joyful; CONTINUALLY praying; and thankful in ALL circumstances.

Be Joyful Always
In Philippians 4:4 Paul told us to “rejoice in the Lord always, again I say, rejoice!” Before we can begin to understand what this means we have to be clear about what it DOESN’T mean. Paul is not telling us that we should be happy all the time. That would be foolish.

There are many things in life that bring unhappiness. Circumstances can bring sadness, grief, and a sense of bewilderment. I don’t believe Paul is telling us to simply “put on a happy face”. God doesn’t want us to be phony; He wants us to be real. Sometimes we don’t feel happy.

Joy is deeper than happiness. It is unrelated to the circumstances of life and it is anchored to our relationship with God. It is that exhilaration of spirit that derives from our deep-seated confidence in God’s love, power, and His work in our lives. The deeper our roots extend in our relationship with God, the more joy we will know.

So, let’s state the obvious. If you don’t have a true and vital relationship with God, you cannot know this kind of joy. The prerequisite to joy is a true and vital relationship with God through Jesus Christ. In other words, If you are still putting your confidence in your own abilities, if you think you can “do it on your own”, if your faith is more of an academic issue than a vital relationship in your life, you will never find this kind of joy.

I was reading this week and excellent book by Erwin Lutzer on what happens after we die. In the book Lutzer told of a time he was bobbing on a boat on Lake Michigan. When he began getting seasick his friend told him to choose a building on the shore and keep his eyes fixed on it. Lutzer writes,

I chose the Sears Tower and discovered in a few moments that I felt better. He [his friend] explained that the motion of a boat confuses our balance system if we look at the very object that is causing our movement. But we can handle the ups and downs if our eyes have a fixed object that is unmoved by our own vacillation. (Your Eternal Reward, p. 122)

This is how we experience joy. We cannot focus on the circumstances of life or life will make us sick. We will be joyful sometimes but often we will find joy lacking. We must instead put our focus on something that is constant. That constant is the nature, character, and promise of God. John MacArthur [Commentary on 1 Thessalonians] gives a number of “constants” we should to take away the seasickness of life’s circumstances, We should focus on,

1. God’s Righteous Character (Nehemiah. 8:10, Psalm 71:23)
2. Christ’s redemptive work (Luke 10:20, Romans 5:1-2; 1 Peter 1:8-9)
3. The Holy Spirit’s ministry on our behalf (Romans 8:14-27)
4. The Spiritual blessings we possess (Philippians 4:13, 19; 2 Peter 1:3)
5. God’s providence as He orchestrates everything for our benefit (Rom. 8:28–30; James 1:2–4)
6. The promise of future glory (Jude 24)
7. Answered Prayer (John 16:24)
8. The gift of God’s Word (Psalm 19:7-11)
9. Deep and sincere relationships in the body of Christ (1 Thessalonians 3:9)
10. The privilege of being able to share the life-changing message of the gospel

Do you notice something about this list? These are generally not the things that we think of as the key to our joy. We would list things like: good health, family, job satisfaction, great experiences, and personal achievements. Our focus is on the storm tossed circumstances rather than the stable character of God.

Let me repeat something I said in a sermon on Philippians.

We often miss out on joy because we try to create it ourselves. When we try to "produce" joy we are working against joy. You see, when we look to our activities and our devices to bring us joy we are NOT looking at the Lord. When we are relying on external things we are distracted from the internal work of God's Spirit. The harder we work to find joy the further we drift from the Lord and that joy we are looking for.

It's like a person who is drowning. They need to trust the lifeguard who comes to save them. The more they struggle to "save themselves" the more difficult it is for them to be saved. Or maybe it is like the patient in the hospital. They wake up from surgery and find tubes in them. The more they fight the tubes and pull at them, the longer it will be before they get better. Instinct says to fight, but in this case instinct is wrong.

So it is with joy. Our instinct is to try to DO things to produce joy. We can't produce joy by our choruses, music, methods, campfires, meditation or anything else. The harder we try to create joy the more elusive it becomes. Joy comes from resting not running. It comes from trusting not working.

Pray Continually

The second command is to pray continually or as the King James puts it, “pray without ceasing.” Many dismiss this command quickly as ridiculous hyperbole or exaggeration. They reason if anyone prayed all the time, they would actually be quite useless in the world. They would not function.

However, Paul does not mean that we should constantly spend our lives in a prayer meeting or in formal prayer. He isn’t saying we should always be on our knees or have our eyes closed. That is only one kind of prayer. Paul is encouraging us to be in constant communication with God. Most of us would actually have a better time with prayer if we kept up a running conversation with the Lord throughout the day.

When we talk about communication in marriage we are not simply talking about those times when we sit down to have formal conversations with our spouse. Communication in marriage takes place constantly. We communicate through our words, our actions, and through our silence. Have you noticed that people who have been married a while start often finish each others’ sentences? Many times something will be said and they have exactly the same response. At times it is maddening. A conversation is progressing and all of a sudden a husband and wife start talking about something totally unrelated. Why? Because they have shared their lives with each other to such a degree that they have begun to think alike. Wouldn’t it be great to have that kind of relationship with God? Wouldn’t it be wonderful to have such a continuing conversation with the Lord that you regularly “knew” what God wanted you to without even having to ask? Wouldn’t it be great if you could hear His voice of love in your head in every crisis?

People wonder, “What in the world would I talk to God about all day long?” Again, we have to adjust our thinking. We think of prayer as “asking God for stuff”. Prayer is much more than merely making requests. Prayer is meant to be a conversation with the Lord. It is a time for us to align our hearts and minds with His.

There are times when we need to confess our sin; times when we can express appreciation for God’s creative wonders; times we should express our love; times when we should admit our fears or seek His guidance; and times we should be giving thanks. There are times when we simply need to seek to align our hearts with the heart of God. If you will, there are times we need to discuss things with the Lord. To pray without ceasing means we are living and thinking in the presence of God.

Give Thanks in All Circumstances
Paul tells to give thanks in all circumstances. Once again we need to qualify. Paul is not saying we should give thanks FOR all circumstances. Obviously we should not be thankful for injustice, for tragedy, for disease, or for war. None of these things are good. However, we are to be grateful IN every circumstance. This is an important distinction. Like joy, our thankfulness is anchored to our relationship in Christ rather than to the circumstances of life.

No matter what happens in life we can be grateful that

1. We are forgiven and loved in Christ

2. Nothing can separate us from God’s love (Romans 8:38)

3. God is working in every circumstance (even in the circumstances that aren’t good in and of themselves) for our good. (Romans 8:28)

4. God will supply our needs (Philippians 4:19)

5. God will give us the strength we need. (Philippians 4:13)

6. We will live even though we die (John 11:25); and if this earthly tent we live in is destroyed, we have an eternal house in Heaven not made by human hands. (2 Corinthians 5:1)

7. No one can snatch us from His hand (John 6:39)

8. God will finish the work He started in our lives (Philippians 1:6)

9. We have been extended mercy rather than justice.

If we get this; if we understand the implications of these truths; then we will be able to be grateful in every circumstance. No matter what happens, we can still be grateful that we have not been treated as we have deserved but have been treated with the mercy and love of God.

Periodically on the news someone is interviewed who recently lost their home to fire. In the midst of the devastation these people often say things like: “we lost everything, but thankfully no one was hurt.” These people understand that they can be grateful even in the midst of such terrible loss. They have the right perspective.

We ought to not only thank God in the hard times . . . we should also be grateful in the good times. In the hard times we recognize our lack of strength; so we turn to the Lord. In the good times we have a tendency to feel that we have somehow earned what we have. We tend to pat each other or ourselves on the back. We forget to give thanks. Every day of life is a gift. Every blessing is an expression of the mercy and love of God.

Let me apply this even further.

· In the case of a death of someone we love, we will be grateful that there is life beyond the grave

· In the case of a devastating illness we can be grateful that God knows our weakness and has promised to give us strength. If the illness leads to death we again can be thankful (and draw strength from the fact) that this life is not all there is.

· In the case of injustice, we can be grateful that God will vindicate us.

· In the case of a promotion, we thank God for the new responsibility He has entrusted to us.

· In the case of a job loss, we can be grateful that God will work in the situation for our good or that God is giving us some kind of new opportunity.

· In the case of a financial windfall, we should give thanks that God has equipped us to steward His resources.

· In the case of divorce, we can be grateful that God will forgive our failures and heal our heartache.

The point is this: if we focus on the circumstances of life we will be grumblers. If we focus on the Lord we will be thank-ers. No one promised that life will be easy. In fact, Jesus told the disciples, “In the world you will have tribulation.” However, Jesus then adds, “but I have overcome the world.” (John 16:33) That’s the perspective that leads to a continuously grateful heart.

Conclusions
I struggle with these commands. Too often I find myself swallowed up by complaints rather than gratitude; a sour mood rather than an attitude of deep-seated joy. I admit that at times I have to remind myself to talk with God.

However, what Paul commands of us; what God desires from us; is not unreasonable and certainly not impossible. We must stop looking at these verses as if they were grand exaggerations. We CAN be joyful always; praying without ceasing; and we can always be grateful. It all depends on our relationship with God.

So it is time for us to get serious. Let’s be honest with ourselves.

· We lack joy because we lose sight of God

· We become lax in prayerfulness because we think to highly of ourselves

· We find gratitude illusive because we have put our focus in the wrong place

We must remember that doing the will of God starts by being the person God has called us to be. If you want to do His will the place to start is to develop an intimate relationship with Him.

The thing about these three commands is: if you really start working on one, the others will tend to follow. If we find our joy in the Lord in all circumstances we will want to talk with him and we will be grateful. If we adopt an attitude of gratitude we will find ourselves giving thanks at all times and our attitude and outlook will be one of joy. If we learn to pray without ceasing we will find the joy of our relationship with God will overshadow the trials of our lives and it will lead us to a constant sense of gratefulness.

So, start somewhere. Here are some simple suggestions,

· Put up some little signs around your house that ask, “have you talked to God lately?” We often tell our children that they need to “check in” with us periodically. As God’s children we need to check in with Him.

· Memorize the words to the hymn “Count your Blessings”

· Draw a picture of a heart that has a big smile to remind yourself that joy is a heart issue

· Memorize 1 Thessalonians 5:16-18

· When you feel yourself getting anxious or uptight about the events of life, learn to say to yourself, “look to the Lord”. When you face a daunting task, ask, “Do I trust Him or don’t I?”

These commands are not unrealistic. Each one of us can do these things. And if we would work on these areas of our life, we will find that our Lord will become more precious, the trials of life would be less devastating, and we would be a lot more fun to be around. So, if you want to know what the will of God is for your life, start here.

Peter Schiff on Russia Today on January 7,2008

2009-01-09T09:27:00.001-05:00

The top performer on the S&P/TSX

2009-01-02T16:16:00.003-05:00

Interview with ELD CEO Paul Wright
Eldorado Gold Corp. shares soared 65.5 per cent to $9.65 in 2008 making it the top performer on the S&P/TSX composite index, while in a year most commodity prices get slaughtered.

Gold managed to hold its own closing at $884.30 (U.S.) an ounce, up from $838 a year ago. Yet bullion is still well below its peak of $1,032 an ounce it reached in mid-March as the credit crisis took hold.

Gold producers accounted for five of the top 10 companies on the S&P/TSX. The other five were Alamos Gold Inc. (up 58 per cent), Kinross Gold Corp. (23 per cent), Red Back Mining Inc. (21 per cent) and Agnico-Eagle Mines Ltd. (15 per cent).

Eldorado Gold Hit 52 Week High Today

2008-12-29T17:48:00.002-05:00

This is very bullish for Eldorado Gold (ELD.TO) when it hit 52-week high today in Canadian dollar.

O Holy Night

2008-12-21T08:57:00.002-05:00

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.

Our One and Only Savior

2008-12-12T10:51:00.001-05:00

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!

Jim Rogers: $200 oil By 2013.

2008-12-11T18:06:00.003-05:00

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.

Look at those interesting gold & silver miners, NDM, ELD, EDR and XGD

2008-12-10T15:57:00.005-05:00

An unnecessary quarrel

2008-12-10T12:45:00.002-05:00

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.

Raymond James picks its best bets for 2009

2008-12-09T13:27:00.003-05:00

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.

Marc Faber Says Time to Buy Gold Exploration Stocks

2008-12-01T16:31:00.001-05:00

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!

Fluor (FLR) in good shape

2008-11-28T18:37:00.002-05:00

Bounced off double bottom and being above 50 days AVG. MACD is also indicating momentum. It looks good.

Thanksgiving

2008-11-26T16:14:00.001-05:00

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!

Honda Civic 2009 - A Christmas Gift to Mollie

2008-11-23T10:22:00.000-05:00

Peter Schiff Was Right 2006 - 2007

2008-11-20T18:53:00.002-05:00

Mr. Peter Schiff was so right.

Where are the other people today who laughed and mocked Mr. Schiff?

US plan opens Alaska salmon run to development

2008-11-15T14:02:00.002-05:00

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.

Bush: Intervention not "cure-all" for crisis

2008-11-13T16:42:00.001-05:00

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

Henry Paulson backing away from buying troubled mortgage assets

2008-11-12T16:09:00.002-05:00

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.

Goldcorp CEO expects $1,000 gold in near future

2008-11-06T16:34:00.002-05:00

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."

Cash or Gold?

2008-11-06T11:06:00.001-05:00

This is from Sprott website:
http://www.sprott.com/pdf/marketsataglance/10_2008.pdf

MARKETS AT A GLANCE October 2008
Eric Sprott & Sasha Solunac

Jim Rogers: America is bankrupt

2008-11-04T18:26:00.002-05:00

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!"

Eric Sprott talks about gold on November 1, 2008

2008-11-04T17:59:00.000-05:00

Takeover talk circles handful of Canadian juniors

2008-10-31T12:23:00.002-04:00

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.

Barrick CEO Said Gold's Outlook Is "a hell of a lot more positive than anything else"

2008-10-31T11:55:00.003-04:00

"...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.

Sprott says redemptions loom

2008-10-31T11:43:00.002-04:00

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.

Cramer Interviewed Sean Boyd, CEO of Agnico-Eagle Mines

2008-10-31T09:41:00.001-04:00

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.

Gold Fields CEO said Gold to reach $1,000 next year and stay there

2008-10-30T11:18:00.001-04:00

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.

John Embry: Gold’s Game-Changing Moment Could be Fast Approaching

2008-10-28T14:14:00.001-04:00

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.”

Buy American. I Am.

2008-10-27T15:12:00.001-04:00

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.

Even gold can't hedge a nuclear implosion

2008-10-26T20:04:00.001-04:00

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.

Heed the advice of The Smartest Man

2008-10-26T15:50:00.001-04:00

DEREK DeCLOET
Globe and Mail Update
October 25, 2008 at 6:00 AM EDT

Crackpot. Crank. Scaremonger. Alarmist.

The Smartest Man We Know has heard the slurs. When you make your living on Wall Street, yet hold the opinion that Wall Street is populated by incompetent fools, you're not going to win a lot of friends at dinner parties, are you?

And when you bet millions that the American financial system is going to fall apart, that its economy will be seized with fear – and when you were doing this and saying this before there was any hint of real trouble – well, you couldn't really expect other people to welcome the message, could you?

The Smartest Man, when delivering his prophesies, did not sugar-coat them. “This could potentially make Long-Term Capital [the financial crisis of 1998] look like some kind of walk in the park,” he predicted. “The reckoning has started.” No soft landing this time: It could even be “like the Great Depression of this century.” He said these things not last week, not last month, but on July 26, 2007. That day, the Dow Jones industrial average closed at 13,473.

But The Smartest Man was just getting warmed up. Checking in with him again this January, he was every bit as gloomy. By that point, credit fires were burning all over the place; the Dow was at 12,500; the world's biggest banks had been forced to turn, cap in hand, to Singapore, China, the Middle East and elsewhere for billions of dollars. It won't be enough, he said. “There's a whole bunch of companies that just have to hit the wall. They can't survive.”

What kind of companies? U.S. financial institutions, mostly. Wachovia looks bad. The major investment banks are shaky. It's about to get a lot uglier, warned The Smartest Man. “The implications of what's going on for the U.S. economy, credit, for lending over all, are not that pleasant to think of.” Two months and two days later, Bear Stearns was gone.

So you can imagine our surprise when the Smartest Man – his real name is Krishnamurthy Narayanan, and he goes by Nandu – showed up in town this week and was bullish.

“I think we're ending the financial crisis now,” he said. “There will be countries, like the U.S., that will go into recession. But this need not be a global recession. And there are some encouraging signs on that front.”

In a different era, The Smartest Man might have been a rocket scientist, or an engineer, or a medical researcher, or maybe a university professor. The academic résumé says: MBA, PhD in finance and economics from the Massachusetts Institute of Technology, studied under Paul Krugman, who just won the Nobel prize for economics. But this is – or at least was – the age of finance, and The Smartest Man became a hedge-fund manager, placing money on his views rather than just writing them.

Lately, that has worked out rather well. His CI Global Opportunities Fund has returned 57 per cent in the past year, 19 per cent (compounded) over the past five. Nice numbers, but once you've made your money calling the credit crisis and short selling Washington Mutual, what do you do then?

You buy Canada, says Mr. Narayanan, who can't believe the way the loonie has been savaged. “The currency is ridiculously undervalued. I can't think of any country in the world that has no fiscal deficit, no trade deficit and no inflation – except Canada. I think the Canadian dollar should go through parity.

“I like the whole Canadian market. I don't particularly dig the banks because I just don't know what's in there [on the balance sheet]. But I'd say virtually everything else is fine.”

You buy some emerging markets, even though they, too, have collapsed in the meltdown. “You can't play the emerging markets by listening to the market action. If the Indian market's down 50 or 60 per cent from its peak, I can assure you nothing's really changed in India. Nothing's changed. The vast majority of people in India don't believe in the stock market,” said Mr. Narayanan, who was born in Chennai, India.

You look to the currencies of Asian countries that are growing and still financially healthy. Singapore, Malaysia and Thailand all have trade surpluses and single-digit inflation. “Most of the Asian emerging markets and emerging currencies are ridiculously priced right now.”

You buy uranium stocks: “Ridiculously cheap.” Gold miners: “Ridiculously cheap.” Pipelines, too: “How bad a business is that? It's a fantastic business. You're just shipping gas. Why are people selling those?” Energy: “Unless there's an absolute collapse in oil demand, you really can't see oil plunge all that much [more].”

There are, however, some things The Smartest Man wouldn't touch. They happen to be the assets the investing masses have flocked to in this crisis: U.S. Treasuries and the greenback. “I don't think it can hold for that much longer.” Once the world has to absorb trillions of dollars in new U.S. debt – watch out. In fact, he thinks the odds of the U.S. having its own currency crisis are “at least 30 per cent.”

Would you want to bet against him?

Paulson says China's role critical

2008-10-24T14:54:00.002-04:00

As the credit crunch has struck markets worldwide, one lingering question has been how the turmoil will affect China's burgeoning economy. Tuesday evening in New York, Treasury Secretary Henry Paulson spoke about China's economic health and addressed its relationship with the United States in a speech to the National Committee on U.S.-China Relations.

It's clear that from Paulson's perspective, the strength of the Chinese economy can serve as a buffer against the chaos in the American and European markets.

"While some see China as a threat that must be countered or contained, I believe that the only path to success with China is through engagement," Paulson said. "We must recognize that China's growth is an opportunity for U.S. companies and consumers, for our producers, exporters and investors. A stable, prosperous and peaceful China is in the best interest of the Chinese people, the American people and the rest of the world."

The full transcript of Paulson's remarks can be found after the jump.

Here is a transcript of Paulson's remarks:

The world's financial markets are undergoing the most serious stresses in recent memory and this financial crisis has begun to negatively impact real economies here and around the world. China is feeling this stress as well, but fortunately its economy is expected to continue to be an important engine for global growth during this period. In the United States, recent collaborative actions by the Federal Reserve, the FDIC and the Treasury clearly demonstrate that our government will do what is necessary to significantly strengthen our banks and financial institutions, enabling them to increase financing for the consumption and business investments that drive U.S. economic growth. Through a multitude of powerful actions we have and will demonstrate our commitment to unlocking our credit markets and minimizing the impact of the current instability on the rest of the U.S. economy.

Addressing the effects of financial market turmoil around the world requires the dramatic steps we are taking here in the United States, and it requires close international corroboration and cooperation. We have been in close contact with Chinese leaders, as well as with leaders of many other nations. And we welcome Premier Wen's statement that China will play a constructive and cooperative role in global efforts to deal with the current financial market turmoil. Throughout this turbulent time, I have stayed in close touch with Vice Premier Wang Qishan, who has now been appointed to lead China's newly established international financial crisis committee. Our conversations have been useful and constructive. It is clear that China accepts its responsibility as a major world economy that will work with the United States and other partners to ensure global economic stability.

Governments must continue to take individual and collective actions to provide much-needed liquidity, strengthen financial institutions through the provision of capital and the disposition of troubled assets, prevent markets abuse, and protect the savings of their citizens. We must also take care to ensure that our actions are closely coordinated and communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole.

Ten days ago leaders from the world's 20 largest economies met in Washington and found ways to further enhance our collective efforts to lessen the effects of global market turmoil. Those meetings brought concrete actions that have supported world markets. I am heartened that the international community is working together for stability and to regain a footing of confidence. As confidence returns to the system, normal financial activities will resume. And we are all grateful for President Bush's leadership during this time. As the President said on Friday, "The American people...can have confidence that this economy will recover. We're a country where all people have the freedom to realize their potential and chase their dreams." As the President knows, Americans are a strong and optimistic people. Although we expect current challenges to continue for a number of months, we will overcome them as we have overcome every challenge our Nation has ever faced.

We will elect a new president two weeks from today, and our new President should start from the perspective that China will continue to play a key role in the world economy. As a matter of fact, today more than ever the world is looking to China to be a big contributor to global economic growth. While some see China as a threat that must be countered or contained, I believe that the only path to success with China is through engagement. We must recognize that China's growth is an opportunity for U.S. companies and consumers, for our producers, exporters and investors. A stable, prosperous and peaceful China is in the best interest of the Chinese people, the American people and the rest of the world.

U.S.-China relations are more productive today than ever before, largely because we have engaged China as it is, not as we might wish or imagine it to be. We have acted to lessen misperceptions and miscommunication between our countries.

An important part of the engagement has been through the Strategic Economic Dialogue established in 2006 by President Bush and President Hu. We have worked from the understanding that robust and sustained economic growth is a social imperative for China and that Beijing views its international interactions primarily through an economic lens. We have worked with Beijing on economic issues that are of mutual interest, and we have found that we can produce tangible results in both economic and noneconomic areas. Our recent close and frequent communication and cooperation as we address the challenges in the financial markets is a tangible example of the power and utility of a Strategic Economic Dialogue based on mutual trust

Over the past two years we have built a strong foundation for this dialogue by focusing on policy areas in which China's reform agenda and U.S. interests intersect. The SED has found new and constructive ways to address some of the most important matters in our economic relationship --- including growth imbalances, energy security and environmental sustainability, trade and investment issues, product safety, and China's position in the world economy. Addressing these questions serves China's interests, and is also vital to the U.S. and global economic future.

One of the SED's major achievements is the Ten Year Energy and Environment Cooperation Framework. This framework is a bilateral mechanism to create a new energy-efficient model for sustainable economic development and to address the factors that cause climate change. Greater breakthroughs can be expected in the years ahead, and this framework provides the next administration a critically important platform for U.S. economic engagement with China.

Trade and investment, once the glue of U.S. -Chinese relations now also represent a source of increased tension. Any dynamic economy that is constantly creating new, higher-value jobs faces factory closings and job losses that are real and painful. The benefits of free trade are often spread across an entire country, while the lost jobs are more immediately visible. But succumbing to the temptation to make trade and foreign investment a scapegoat only breeds support for isolationist policies that will make us worse off, sacrificing future job opportunities and higher standards of living.

American investors in China, and Chinese investors in America, question whether the other country is truly open to investment and provides adequate legal protections. To answer this question, we sent a powerful and clear signal at the June SED meeting by launching negotiations of a U.S. - China bilateral investment treaty. Through these negotiations, we seek to assure our people and the world that our two nations welcome investment and will treat each other's investors in a fair and transparent manner. And we will work even harder to resolve a critical issue for American companies working in China --- better enforcement of intellectual property laws, to help China on its path to become an innovation society, while accelerating the development and competitiveness of its economy.

In the area of product safety, we have made real progress but need to intensify our work together to enhance China's regulatory and legal infrastructure, to help them build quality into each stage of the manufacturing and distribution process.

In the financial sector, we have worked steadily to help China develop and open up its institutions. Some in China look at the recent failures in our financial markets and conclude that they should slow down their reforms. But there is a great opportunity for China to learn from our significant mistakes and move forward with reforms that have the potential to produce important gains for China and its people.

For example, a capital markets reform agenda will advance China's economic goals in four important ways. It will rebalance the sources of China's growth to ensure that it is more harmonious, more energy and environmentally efficient, and provides greater welfare for Chinese households. It will create effective macroeconomic policy tools to ensure stable, non-inflationary growth. It will support China's transition to a market-driven and innovation-based economy; and, finally, it will assist China in dealing with its demographic challenges.

The SED has also provided an excellent forum for discussing the value of the RMB; I am pleased that China has appreciated the RMB by over 20 percent since July of 2005.

The SED has shown that active economic engagement between the highest levels of U.S. and Chinese leadership can keep our relationship on an even keel even as we tackle our most challenging issues and manage short-term tensions.

Chinese leaders understand that if the SED is to be sustained, it must be more than talk; it must continue to yield specific, tangible results, what I call signposts along the path toward transformational reform. We look forward to further progress in the on-going discussions with Chinese officials and at our next SED meeting in Beijing in December.

The successes of the SED in the past two years have created a foundation of mutual understanding and trust and a platform for further progress. And perhaps most importantly the SED has established a new model for communication, enabling us to address urgent issues such as turmoil in our financial markets, energy security and climate change. I hope that the next U.S. president will expand on the SED to take U.S.-Chinese relations to the next level. Thank you.

The Shipping Blues for China’s Small Builders

2008-10-24T14:48:00.001-04:00

Today’s WSJ reports on the impact of the economic slowdown across the shipping industry, from railroads and cargo ships to trucks and package delivery firms. In the first nine months of this year, the number of containers entering the U.S. via its top 10 container ports was 7.2% lower than in the same period last year, the report notes.

The impact is being felt as far afield as China, where a building boom among small, privately owned ship makers seems set to come to an end. The global financial crisis and fears of recession were topics of conversation at a recent forum on ship financing in Shanghai, the China Securities Journal reports.

Large shipbuilders such as China State Shipbuilding Corp. stand to benefit from industry consolidation (Photo by Imaginechina via AP Images)

In recent years, small shipbuilders have proliferated in China, buoyed by a revival in river transport from inland China. Despite the limited technology available to these builders, their eagerness to secure customers led some firms to build unordered boats first and then market the finished product to potential buyers.

Now these firms are seeing cancellations and falling orders, leading to speculation that a major industry consolidation will come next. Larger private shipbuilders and state-owned enterprises are better positioned to weather an economic downturn, since they have more advance orders lined up and generally receive up front payments of 70% to 80% of a ship’s cost, which can run $30 to $50 million for smaller boats and up to $200 million for a large ship.

“What buyer would risk losing the advance payment by canceling an order?” Tan Zoujun, the general manager of China State Shipbuilding Corp., a large state owned firm, asked reporters. “Right now, the industry is certainly looking at a pretty major economic adjustment, but we are definitely not the worst off,” Tan said, according to the China Securities Journal. “At the most difficult time for everyone, we can still eat some big hairy crab,” he said, referring to the Chinese seasonal delicacy.

Tan said his firm would consider acquiring smaller shipbuilders.

The real tragedy of this financial crisis is that people will die

2008-10-24T09:54:00.000-04:00

By Thomas Kostigen, MarketWatch
Last Update: 8:25 PM ET Oct 23, 2008

SANTA MONICA, Calif. (MarketWatch) -- The harsh reality of the economic fallout isn't that Joe the plumber can't buy his business or that people's retirement funds are being lost or that unemployment is rising; the harsh reality is that people will die.

Already, since food prices began to rise 100 million more people have been pushed into poverty, according to the World Bank, with as many as two billion on the verge of disaster. Almost half the world's population, let's remember, live on less than $2.50 per day. Millions die annually of hunger and starvation, and more than a billion do not have access to fresh water.

These numbers are poised to rise dramatically with population growth, dwindling natural resources and higher consumer prices across all goods and services. So as the stock market tumbles and the world economy falters, it's important to remember that it's more than financial losses we are talking about, it's the loss of life.

And increasingly it isn't just people in far-off places around the world who are succumbing to such extreme hardships. Note this: Job losses in the state of Indiana have caused the child poverty rate there to spike 29% since 2000. The wealth gap in the United States and around the world is at record levels -- and it has serious consequences.

The Organization for Economic Cooperation and Development reported this week that the gap between the rich and the poor is getting bigger around the world, and that the U.S. is experiencing the biggest dichotomy.

We are experiencing the largest wealth gap in history. Further erosion of the economic floor will only send more people plunging into destitution.

This is why it's so important to fix the economic crisis -- now.
We're all linked

Wealthy nations are trying mightily to correct the daily economic woes plaguing the world. An emergency economic summit has been called. Brash measures have been taken. Interventions of all sorts have been enacted.

Developed nations realize that they are intricately tied to one another's economies because of sophisticated financial instruments. When one nation loses so do the others, as we are finding out these days from as far away as China and Korea.

But there's another link that hasn't been much talked about: the emerging markets. The emerging markets rely on the strength of the bigger economic powers to grow, more so even than bigger economic powers rely on each other. The capital-markets erosion has yet to be fully felt in these countries as the trickles they rely on may stop coming down.

And here is the sad end game of the ripple effect: it takes food out of the mouths of children, it shuts the water taps and it sends hordes of people into lives of despair.

We need to solve the world's economic crisis not only for ourselves so we can continue to live at the standard to which we are accustomed, but also so people can continue to live -- period.

The economic crisis we are facing today and likely tomorrow is about more than numbers. There are faces to go along with every digit of value lost. And that is something we will never be able to quantify.

However, we should recognize the losses we are incurring daily before our eyes -- every five seconds a child dies because of a lack of food or water -- are a matter of life and death.

Thomas M. Kostigen is the author of "You Are Here: Exposing the Vital Link Between What We Do and What That Does to Our Planet" (HarperOne). www.readyouarehere.com

The golden mystery

2008-10-23T17:34:00.001-04:00

Posted: October 23, 2008, 2:01 PM by Jonathan_Chevreau at national post

These must be frustrating times for gold bugs. For years they’ve been waiting for financial armageddon and now that it appears finally to have arrived, the price of gold bullion and gold stocks is plummeting with most stocks and commodities, even though most suppliers of gold coins don't have enough on hand to meet demand. Something strange is happening.

All of which doesn’t stop John Embry, chief investment strategist at Sprott Asset Management from declaring in the Oct. 17th issue of Investors Digest that the U.S. government’s “Rescue will send gold to surreal price level.”

Embry should know about surreal prices. As an owner of Sprott Precious Metals myself, I can confirm the fund is trading at surreal levels – surreally low. There's a big difference between physical gold and the stocks of gold miners and exploration firms. I never thought we'd see gold in the low 700s in this kind of global crisis but if you're in the "5% gold as insurance camp" as are some investment advisors (for example at Rogers Group Financial), then the better play might be the SPDR Gold Trust [GLD/NYSE].

Go to the Gold-Eagle site and you can see various explanations for why gold hasn’t soared as it should have – most revolve around the fact there is a “conspiracy” to suppress the gold price by the central banks, governments and other members of the “fiat” or paper money cartel that rules the world.

Maybe there is, in which case gold could go even lower. You have to hand it to the “fiat” crowd – keeping a lid on gold during the Great Credit Crisis of 2007-2008 is some kind of accomplishment. I borrow that phrase from David Smick, whose The World is Curved published last month should be a must read for investors concerned about the many hidden dangers to the global economy.

I don't count myself in the "gold bug" crowd but am familiar with the arguments. Once upon a time a dollar was backed by gold and in theory you could trade paper dollars for the gold the paper promised. That era was ended in the early 1970s by Richard Nixon and with the exception of the Islamic Dinar, most developed nations run the printing presses with little concern for the fact their paper money is backed only by faith. The U.S. and other developed economies are essentially adding zeros to their computers somewhere in order to create liquidity -- in theory, what they're doing is no different than what Zimbabwe is up to. The difference is Robert Mugabe can't get away with it and so that nation is afflicted with runaway inflation. The U.S. is more subtle about it and the U.S. dollar has actually been moving up in recent months even as gold languishes.

As commodities expert Bob Tebbutt commented today in his daily market update, “Lead should be a buy along with Gold but the general market panic selling is not helping any fundamentally strong market situation. Gold may be the best bet on the board but not when it is declining as fast as it is now.”

Consider too what Larry Swedroe says in his just-published The Only Guide to Alternative Investments You'll Ever Need. Swedroe classifies precious metals equities in his "flawed category" -- behind "The Good" but ahead of "The Bad" and "The Ugly." He concedes PMEs do provide a good hedge against inflation and "there could be a large rebalancing (diversification) bonus" but says for the latter PIMCO's Commodity Real Return Strategy Fund (or an ETF or equivalent) is a better alternative than bullion funds or precious metals equity funds.

Consider too what columnist Jane Bryant Quinn wrote this week: Gold only good for maximum despair. She notes that buying physical gold as insurance against a currency collapse is a rich man's game and warns that "gold isn't even a reliable hedge against inflation." Note too her comment on the GLD ETF: that "you don't own the gold directly."

BMG Bullion Fund [aka Millennium Bullion Fund] does hold precious metals for you, but you have to take equal parts platinum and silver with your gold.

Where do I sit currently? I've always been in the "5% insurance camp" and if the gold price keeps dragging down the value of precious metals funds below the 5%, at some point it may be necessary to "rebalance" back up to 5% by taking profits from some other asset class. But there's the rub: find me an asset class that's in the plus column right now.

Cost of living was being replaced by the cost of survival

2008-10-22T14:30:00.001-04:00

Up until the Boskin/Greenspan agendum surfaced, the CPI was measured using the costs of a fixed basket of goods, a fairly simple and straightforward concept. The identical basket of goods would be priced at prevailing market costs for each period, and the period-to-period change in the cost of that market basket represented the rate of inflation in terms of maintaining a constant standard of living.

The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that.

Some weekend comedy relief

2008-10-19T14:06:00.001-04:00

Click here

I hope no one ends up offended.

Agnico Expects Share Declines, Bankruptcy for Mineral Explorers

2008-10-19T08:21:00.001-04:00

Oct. 17 (Bloomberg) -- Agnico-Eagle Mines Ltd., the Canadian gold producer planning to increase output fivefold, said smaller mining and exploration companies may go bankrupt as their cash dwindles and the credit freeze makes borrowing more difficult.

There is another ``leg down'' for shares of so-called junior miners, which rely on external financing to develop their first projects or to fund the search for new metal deposits, Agnico Chief Financial Officer David Garofalo said yesterday in a telephone interview. Agnico will wait for those stocks to drop before making any acquisitions, he said.

``We haven't seen the bankruptcies in the junior market, but those are inevitable,'' Garofalo said from the company's headquarters in Toronto. ``There's no need to rush after opportunities, because the valuations will come down again.''

Mineral-exploration and development stocks have dropped this year as credit markets seized up and metal prices cratered on expectations that a global recession would hurt demand. The shares also have been hurt by the forced sale of investments by hedge and mutual funds required to return clients' cash amid a wave of redemptions.

Agnico fell C$5.24, or 11 percent, to C$41.92 yesterday in Toronto Stock Exchange trading, taking its decline this year to 23 percent and paring its market value to C$6.03 billion ($5.1 billion).

Others have fared worse. Osisko Mining Corp., planning to develop its first gold mine in Canada, declined 63 percent, Detour Gold Corp. is 59 percent lower and Orezone Resources Inc. has plunged 85 percent.

`Roadkill' Companies

Tom Winmill, president of New York-based Midas Management, which invests in gold and natural-resource stocks, said in an interview last week that mining companies with no cash flow are ``roadkill.''

The current conditions for obtaining credit are worse than Garofalo has seen in more than two decades in the mining industry, and there is no indication of when things will ease, he said. Credit has become ``virtually impossible'' for miners and companies in other industries to access, he said.

Agnico doubled its credit line to $600 million last month before the credit squeeze intensified and had $110 million in cash at the end of last month, he said. The company will continue developing new mines in Canada, Mexico and Finland, he said. The projects together will cost about $1.4 billion and will increase output to 1.2 million ounces by 2010.

Additional projects to expand production beyond what already was planned at the Pinos Altos, Kitilla and Meadowbank mines will have to be studied closely before capital is committed, Garofalo said.