Russia: Economy will solid direction--By Shan Saeed
Why I am bullish on Russia?
Russia defaulted on its domestic debt amounting to $60 Billion on 17th August 1998. Every analyst surmised that Russia was gone economically. But, Russia recovered and paid off the IMF debt in record time. Russia emerged as strong country. If I can share some statistics with you about Russia: The world biggest producer of crude oil is Russia per se and not Saudi Arabia as most people think.
[Source: Economist 24th Feb-2011 & www.eia.doe.gov/countries.]
Russia is the 6th largest economy with per capita standing at $10,521 in 2010. According to the IMF, Russia is set to grow its GDP by 4.34% in 2011. Russia and China have signed trade agreement to enhance volumes of economic corporation in Chinese Yuan and Russian Ruble. I am bullish on Russia for the next decade. In currencies, I stand bullish on Chinese Yuan, Canadian dollar and Aussie dollar and Russian Ruble. Russia is a resource rich economy and its currency ruble will appreciate against US dollar going forward. Oil and Gas are the main exports. With oil prices continue to upsurge; Russian economy will drive huge dividends in this favorable commodity price environment.
There are few experts that I follow and I have met them to get their insights about commodities and global economy. According to Marc Faber—the author of Gloom, Doom and Boom, Russian economy will continue to grow since it is rich in oil. He is bullish on oil. Oil prices upside will be high as global demand and appetite would grow further as emerging economies need energy for their sustainable growth and development. The country is moving with strong political forces that are joining hands to take the country to the next phase of economic development. Skilled and educated labor force and evolving business environment are making a strong case for foreign direct investment to be placed in Russia.
According to commodity guru, Jim Rogers, no major exploration has been done in energy sector for the past 25 years and energy economics follow a different path as we move forward to bridge the gap between demand and supply. Energy demand i.e. Oil and gas will remain high for many years. In 1998, the average oil price was $17/barrel. In 2008, the average price was $38.77 / barrel. In 2018, average prices are expected to touch $77/barrel. At present price, oil is consumed amounting to $3.2 trillion annually. In a nutshell, Russia will benefit from oil and gas price rise globally and will emerge as one of the strongest players in the international financial markets with solid infra-structure and sound economic base to navigate through the financial meltdowns and storms coming in the noisy market.
Disclaimer:
This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making investment in any commodity, stocks, currency, bonds or country. All financial transactions carry a RISK.
Friday, April 1, 2011
Monday, March 21, 2011
Oil, Gold, Silver are still the best bet against uncertainity---By Shan Saeed
Commodities are still the best bet against financial market chaos.
I am cautiously bullish on commodities. Last year, I predicted that the market would move higher on Fed liquidity and remain “cautiously bullish” on stocks. But I recommended that gold and silver will do well going forward and is especially positive on oil [ will stay over $100/barrel in 2011].
It’s not clear that the Federal Reserve can continue to keep interest rates low and QE2 and now QE3 is ready. Add to that the burden of new regulations on healthcare and labor from the White House, and the path forward for equities is less clear than a year ago.
Stocks have doubled off the March 2009 low but seem to have hit a wall on Middle East unrest and fears of a double-dip in the U.S. economy as oil shot higher. Gasoline prices now average $3.54 a gallon nationwide.
I think liquidity is slowing down a little bit. The market is having a harder time moving higher. It might even move lower here. Confidence is getting lower which is the main driver of the economy. How long can the Fed maintain these low interest rates? Are they going to another quantitative easing to stimulate the economy? While I remain cautiously bullish, I do think there are a lot of dangers there.
Nevertheless, I should advice my investors. Investors shouldn't fight the Fed by presuming that liquidity will end soon. There’s no indication that interest rates will rise, nor that the Fed’s bond-buying strategy has run its course. I think investors should take long position in oil, gold and silver. Agriculture is one aread where I feel that remained depressed for the last 27 years and would rish as weather patterns and population go up. I fully recommend my clients and investors to go into real assets and hold significant portfolio in gold and silver to get insurance of their wealth.
Regarding Oil, ExxonMobil recently announced that it would expand its production operations. Considering the continuing turmoil in the Middle East and the Obama administration’s unwillingness to expand drilling at home, investors would do well to focus on crude. Uncertainity would remain high and FEAR PREMIUM would average $30/barrel in 2011. I’m quite bullish on oil, gold is a great investment right now but oil is a better play.
As for inflation, while current inflation is around 5% and there are clear signs of inflation to keep rising as prices of precious metals go out of the roof. Inflation is still not that relevant. The fact that gold and silver are moving to new highs is a great indicator of future inflation. Current inflation is very strong which US government is ignoring. FED cannot fix the economy by printing money. US dollar will remain weak against major currencies by 9-10% in 2011.
Businesses are sitting on record amounts of cash but they are likely to continue to grow mostly by keeping costs in line with demand and taking advantage of rising productivity. There will be an eventual uptick in hiring, but expect plenty of mergers and acquisition activity this year. I do think employment is going to get better, but it’s going to be slow process. Unemployment in February fell to 8.9 percent from 9 percent, the lowest point since April 2009. In November, just three months ago, the jobless rate had been 9.8 percent. The Federal Reserve projects unemployment to stay at about its current level for the rest of 2011 and then fall to between 7.5 percent and 8 percent in 2012. But I think unemployment rate to stay over 10% as projected by Gallup.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making an strategic investment or strategy implemmentation.
I am cautiously bullish on commodities. Last year, I predicted that the market would move higher on Fed liquidity and remain “cautiously bullish” on stocks. But I recommended that gold and silver will do well going forward and is especially positive on oil [ will stay over $100/barrel in 2011].
It’s not clear that the Federal Reserve can continue to keep interest rates low and QE2 and now QE3 is ready. Add to that the burden of new regulations on healthcare and labor from the White House, and the path forward for equities is less clear than a year ago.
Stocks have doubled off the March 2009 low but seem to have hit a wall on Middle East unrest and fears of a double-dip in the U.S. economy as oil shot higher. Gasoline prices now average $3.54 a gallon nationwide.
I think liquidity is slowing down a little bit. The market is having a harder time moving higher. It might even move lower here. Confidence is getting lower which is the main driver of the economy. How long can the Fed maintain these low interest rates? Are they going to another quantitative easing to stimulate the economy? While I remain cautiously bullish, I do think there are a lot of dangers there.
Nevertheless, I should advice my investors. Investors shouldn't fight the Fed by presuming that liquidity will end soon. There’s no indication that interest rates will rise, nor that the Fed’s bond-buying strategy has run its course. I think investors should take long position in oil, gold and silver. Agriculture is one aread where I feel that remained depressed for the last 27 years and would rish as weather patterns and population go up. I fully recommend my clients and investors to go into real assets and hold significant portfolio in gold and silver to get insurance of their wealth.
Regarding Oil, ExxonMobil recently announced that it would expand its production operations. Considering the continuing turmoil in the Middle East and the Obama administration’s unwillingness to expand drilling at home, investors would do well to focus on crude. Uncertainity would remain high and FEAR PREMIUM would average $30/barrel in 2011. I’m quite bullish on oil, gold is a great investment right now but oil is a better play.
As for inflation, while current inflation is around 5% and there are clear signs of inflation to keep rising as prices of precious metals go out of the roof. Inflation is still not that relevant. The fact that gold and silver are moving to new highs is a great indicator of future inflation. Current inflation is very strong which US government is ignoring. FED cannot fix the economy by printing money. US dollar will remain weak against major currencies by 9-10% in 2011.
Businesses are sitting on record amounts of cash but they are likely to continue to grow mostly by keeping costs in line with demand and taking advantage of rising productivity. There will be an eventual uptick in hiring, but expect plenty of mergers and acquisition activity this year. I do think employment is going to get better, but it’s going to be slow process. Unemployment in February fell to 8.9 percent from 9 percent, the lowest point since April 2009. In November, just three months ago, the jobless rate had been 9.8 percent. The Federal Reserve projects unemployment to stay at about its current level for the rest of 2011 and then fall to between 7.5 percent and 8 percent in 2012. But I think unemployment rate to stay over 10% as projected by Gallup.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making an strategic investment or strategy implemmentation.
Friday, March 18, 2011
QE-3 is getting ready to enter the market--By Shan Saeed
QE2 was a disaster and so would be QE3. Its a balance sheet recession.
By Shan Saeed
The unwind of the carry trade has been in full swing for a couple of days now. It’s probably been accompanied by repatriation of capital by Japanese investment trusts and the like – time will tell. Without the aid of intervention – it’s likely that the peak of this flow has passed. Still, the withdrawal of the world’s best savers from the global capital markets can be expected to put upward pressure on interest rates from here on in. There would be lot of headwinds in the global financial markets as Decision makers try to navigate through turbulent times strategically.
Next phase of the crisis, as it will be played out in capital markets at least, will unfold over a couple of weeks as the impact on individual actors become clearer. Given the enormity of the events, it is unlikely that we will see a return to the optimism of a week ago – bounces in risk assets will be sold into. Stocks and equity market would take correction of 10-15% globally. Commodities will continue to upsurge as US dollar would stay weak.
The response from global governments, if they stick to the same script, will be to once again turn to the stimulus levers. Given that these have been overused of recent times, fiscal policy options are now somewhat constrained. As a result, it’s likely that ‘unconventional monetary policy’ will remain a feature of the landscape. In the US, the liklihood of QE3 being pre-announced ahead of the closure of QE2 has just risen dramatically. Inflation is aroung 5-7% in US and living standards have gone down by 20% courtesy Quantitative Easing. Japanese government will print money as well. QE is going global and getting global recognition.
So while we can argue cause and effect, fears of further price rises in real goods may be amplified by the crisis in Japan. It’s a balance sheet recession. Whenever you have a giant bubble collapse, and the whole economy goes under, then you enter into unusual territory. If millions of homeowners are underwater on their
mortgage notes, are they going to take out loans? No, they want to pay
down their loans if they can, and that is what is happening. Deleveraging would cost $5-6 trillion to the American consumers. This would create sub-par GDP growth going forward. BUT,since most of the money supply comes from credit money i.e. money
borrowed at the bank, then the money supply COLLAPSES when people don’t borrow.
The QE maneuvers are an asset SWAP. The FED trades out cash for bonds
held at the big banks. It is equivalent to the average person taking
money out of his savings account and transfering it to his checking
account. The bank is no longer earning interest, and cash is available
to lend. The FED also buys bonds from the Treasury, so the treasury can deficit
spend up to their authorization level.
The flaw is that banks are not revenue limited to issue loans. If you
have a good credit rating, the bank will lend to you despite what they
have in reserves. The bank can borrow money anytime to back up a new
loan. So, the quantitative easing forces some banks to speculate in
order to keep their profits up. Think of it like the banker in the
game monopoly getting to play AND be the banker. But again, people are
not taking out loans, and the banks are sitting on piles of cash. You
cannot push on a string.
What the government should do and they aren’t, is direct spending into
main street. Simply issue cash to build bridges, infrastructure, and
so on. That will put people to work, thus improving wealth. It will
also put money in peoples hands so they can pay down their upside down
loan debts to the bankers.
The bottom line is the money needs to be issued vertically when you
have a balance sheet recession. How it is spent is very important, and
there are no good laws or sensibility issuing forth from Washington. I
blame it on predatory financial capitalism that has captured
Washington. Its like a revolving door of Goldman Sachs type people at
the levers of power, and they have pulled the wool over idiot lawyers
eyes in Washington.
A sovereign people should not have to borrow their own credit. I
think the banking class as important, but they really
aren’t. All a banker should do is match up creditors with debtors.
They should intermediate between credit and debt, and earn a fee for
their services. That’s it. As soon as US politicians and public
figure out that the money power rightly belongs under legal control,
then it can move on to a bright future. A federal political system is
ideal for controlling the money power through proper poltical
representation. In case of US, the money power is held in private hands,
and has usurped political power. Big difference.
During the great depression, FDR borrowed money to build things like
the Hoover dam. This money put people to work, and left behind
tangible wealth. The country was better off for putting people to work
and creating real wealth. At first the banks wouldn’t make any loans,
until they were threatened with the Thomas ammendment, which would
have allowed debt free greenbacks thus bypassing the banking system.
When WW2 came around the bankers opened their wallets to the max. They
agreed to 3/8 of 1% (memory, but it is close). In other words, the
bankers issued plenty of credit at low interest rates, when they knew
our tanks and planes would be blown up, but the debt would remain.
Imagine how much can get done in a balance sheet recession if US government spent
money to build infrastructure, low cost housing, strucural reforms and fiscal discipline, etc. There is plenty that needs to be done. Instead, since US does not have good laws, and doesn’t understand money, the deficit spend so people can sit on their rears in unemployment. Pumped money into the banking system, usually to create / gather dust, or be speculatively spent to create bubble in the financial markets.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making any stategic investment or implementation.
By Shan Saeed
The unwind of the carry trade has been in full swing for a couple of days now. It’s probably been accompanied by repatriation of capital by Japanese investment trusts and the like – time will tell. Without the aid of intervention – it’s likely that the peak of this flow has passed. Still, the withdrawal of the world’s best savers from the global capital markets can be expected to put upward pressure on interest rates from here on in. There would be lot of headwinds in the global financial markets as Decision makers try to navigate through turbulent times strategically.
Next phase of the crisis, as it will be played out in capital markets at least, will unfold over a couple of weeks as the impact on individual actors become clearer. Given the enormity of the events, it is unlikely that we will see a return to the optimism of a week ago – bounces in risk assets will be sold into. Stocks and equity market would take correction of 10-15% globally. Commodities will continue to upsurge as US dollar would stay weak.
The response from global governments, if they stick to the same script, will be to once again turn to the stimulus levers. Given that these have been overused of recent times, fiscal policy options are now somewhat constrained. As a result, it’s likely that ‘unconventional monetary policy’ will remain a feature of the landscape. In the US, the liklihood of QE3 being pre-announced ahead of the closure of QE2 has just risen dramatically. Inflation is aroung 5-7% in US and living standards have gone down by 20% courtesy Quantitative Easing. Japanese government will print money as well. QE is going global and getting global recognition.
So while we can argue cause and effect, fears of further price rises in real goods may be amplified by the crisis in Japan. It’s a balance sheet recession. Whenever you have a giant bubble collapse, and the whole economy goes under, then you enter into unusual territory. If millions of homeowners are underwater on their
mortgage notes, are they going to take out loans? No, they want to pay
down their loans if they can, and that is what is happening. Deleveraging would cost $5-6 trillion to the American consumers. This would create sub-par GDP growth going forward. BUT,since most of the money supply comes from credit money i.e. money
borrowed at the bank, then the money supply COLLAPSES when people don’t borrow.
The QE maneuvers are an asset SWAP. The FED trades out cash for bonds
held at the big banks. It is equivalent to the average person taking
money out of his savings account and transfering it to his checking
account. The bank is no longer earning interest, and cash is available
to lend. The FED also buys bonds from the Treasury, so the treasury can deficit
spend up to their authorization level.
The flaw is that banks are not revenue limited to issue loans. If you
have a good credit rating, the bank will lend to you despite what they
have in reserves. The bank can borrow money anytime to back up a new
loan. So, the quantitative easing forces some banks to speculate in
order to keep their profits up. Think of it like the banker in the
game monopoly getting to play AND be the banker. But again, people are
not taking out loans, and the banks are sitting on piles of cash. You
cannot push on a string.
What the government should do and they aren’t, is direct spending into
main street. Simply issue cash to build bridges, infrastructure, and
so on. That will put people to work, thus improving wealth. It will
also put money in peoples hands so they can pay down their upside down
loan debts to the bankers.
The bottom line is the money needs to be issued vertically when you
have a balance sheet recession. How it is spent is very important, and
there are no good laws or sensibility issuing forth from Washington. I
blame it on predatory financial capitalism that has captured
Washington. Its like a revolving door of Goldman Sachs type people at
the levers of power, and they have pulled the wool over idiot lawyers
eyes in Washington.
A sovereign people should not have to borrow their own credit. I
think the banking class as important, but they really
aren’t. All a banker should do is match up creditors with debtors.
They should intermediate between credit and debt, and earn a fee for
their services. That’s it. As soon as US politicians and public
figure out that the money power rightly belongs under legal control,
then it can move on to a bright future. A federal political system is
ideal for controlling the money power through proper poltical
representation. In case of US, the money power is held in private hands,
and has usurped political power. Big difference.
During the great depression, FDR borrowed money to build things like
the Hoover dam. This money put people to work, and left behind
tangible wealth. The country was better off for putting people to work
and creating real wealth. At first the banks wouldn’t make any loans,
until they were threatened with the Thomas ammendment, which would
have allowed debt free greenbacks thus bypassing the banking system.
When WW2 came around the bankers opened their wallets to the max. They
agreed to 3/8 of 1% (memory, but it is close). In other words, the
bankers issued plenty of credit at low interest rates, when they knew
our tanks and planes would be blown up, but the debt would remain.
Imagine how much can get done in a balance sheet recession if US government spent
money to build infrastructure, low cost housing, strucural reforms and fiscal discipline, etc. There is plenty that needs to be done. Instead, since US does not have good laws, and doesn’t understand money, the deficit spend so people can sit on their rears in unemployment. Pumped money into the banking system, usually to create / gather dust, or be speculatively spent to create bubble in the financial markets.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making any stategic investment or implementation.
Saturday, March 5, 2011
Why dollar will stay low in 2011------by Shan Saeed
Why a Dollar Rally Will Never Last Long? By Shan Saeed
The bull market in the U.S. dollar is like an Invisible Man. Its quite funny when people talk about currencies without executing or performing their preparation on the subject.
An important aspect of any bull market is psychology. Bull markets climb a wall of worry, or so they say. This means that the market will continue to climb despite all of the worries surrounding the bull market.
Let analyze history and find some facts. For example, from 1982 to 2000, when the Dow Jones Industrial Average soared from 777 to above 11,000, there were all sorts of worries. Inflation pressures, the collapsed of the Eastern Bloc, the S&L crisis, the Mexican peso crisis, the Long Term Capital collapse in 1998.
Throughout all of these crises and collapses, equity prices kept climbing. If you read the book "The Great Super Cycle by David Skarica'....I analyzed why its true. One of the reasons is that markets take on a life of their own. These major cycles run 15 years to 20 years and they go on despite wars, recessions, drought, etc.
The same goes for downward cycles. Despite all of the reasons to buy the dollar in recent years — such as the financial crisis of 2008 which caused a flight to the dollar and the euro crisis of 2010 — the dollar has continued on its long-term downward trend.
However, I'm hearing more calls for a dollar rally. People are talking about reasons the dollar will rally, such as the Middle East crisis will cause another flight to safety in the dollar.
I hear that the U.S. economy will grow faster [ GDP 3%] in the short term due to the tax cuts of late 2010. Some say that the euro crisis will show its ugly head again. However, with so many calls for a dollar rally, I think this means the dollar will continue on its downward trend. Dollar will lose 9-10% against major basket of currencies. There are just too many people looking for a dollar rally.
In addition, we must remember three points about the dollar at the moment:
1• The U.S. is running a near-10 percent of GDP deficit, which is higher than every other Western government in fiscal 2011. Higher than Great Britain. Higher than Spain. Higher than Portugal. Yes, even higher than Greece, if its austerity measures pay off. These deficits are putting the U.S. in danger of losing its reserve-dollar status.
2• As George Soros pointed out recently, the euro crisis is all but over with the recent austerity and bailout measures being passed. The crisis this year is in local municipalities and states in the United States. It requires $127 billion to rescue the failed states in USA. They are acting like Greece....California, Illinois, Michigan, Wisconsin are all in red & in bad shape....This will put further pressure on the U.S. dollar in 2011.
3• If the Middle East crisis spreads[ Saudi Arabia is a bombshell], oil prices will continue to spike [ might touch $137/barrel this year]. My prediction of $$117/barrel already hit the market. The U.S. is much more reliant on the automobile and low oil prices than other Western nations. European nations have much better public transportation and train systems. Therefore, higher oil prices will pressure the U.S. more than Europe.
Therefore, other than small rallies upward, I expect that the dollar is going to continue its bear market [9-10% down in 2011] and continue to move lower against other major world currencies.
Disclaimer...This is just a research piece and not an investment advice. Investors are strongly encouraged to execute their own due diligence before making any investment decision or strategy execution.
The bull market in the U.S. dollar is like an Invisible Man. Its quite funny when people talk about currencies without executing or performing their preparation on the subject.
An important aspect of any bull market is psychology. Bull markets climb a wall of worry, or so they say. This means that the market will continue to climb despite all of the worries surrounding the bull market.
Let analyze history and find some facts. For example, from 1982 to 2000, when the Dow Jones Industrial Average soared from 777 to above 11,000, there were all sorts of worries. Inflation pressures, the collapsed of the Eastern Bloc, the S&L crisis, the Mexican peso crisis, the Long Term Capital collapse in 1998.
Throughout all of these crises and collapses, equity prices kept climbing. If you read the book "The Great Super Cycle by David Skarica'....I analyzed why its true. One of the reasons is that markets take on a life of their own. These major cycles run 15 years to 20 years and they go on despite wars, recessions, drought, etc.
The same goes for downward cycles. Despite all of the reasons to buy the dollar in recent years — such as the financial crisis of 2008 which caused a flight to the dollar and the euro crisis of 2010 — the dollar has continued on its long-term downward trend.
However, I'm hearing more calls for a dollar rally. People are talking about reasons the dollar will rally, such as the Middle East crisis will cause another flight to safety in the dollar.
I hear that the U.S. economy will grow faster [ GDP 3%] in the short term due to the tax cuts of late 2010. Some say that the euro crisis will show its ugly head again. However, with so many calls for a dollar rally, I think this means the dollar will continue on its downward trend. Dollar will lose 9-10% against major basket of currencies. There are just too many people looking for a dollar rally.
In addition, we must remember three points about the dollar at the moment:
1• The U.S. is running a near-10 percent of GDP deficit, which is higher than every other Western government in fiscal 2011. Higher than Great Britain. Higher than Spain. Higher than Portugal. Yes, even higher than Greece, if its austerity measures pay off. These deficits are putting the U.S. in danger of losing its reserve-dollar status.
2• As George Soros pointed out recently, the euro crisis is all but over with the recent austerity and bailout measures being passed. The crisis this year is in local municipalities and states in the United States. It requires $127 billion to rescue the failed states in USA. They are acting like Greece....California, Illinois, Michigan, Wisconsin are all in red & in bad shape....This will put further pressure on the U.S. dollar in 2011.
3• If the Middle East crisis spreads[ Saudi Arabia is a bombshell], oil prices will continue to spike [ might touch $137/barrel this year]. My prediction of $$117/barrel already hit the market. The U.S. is much more reliant on the automobile and low oil prices than other Western nations. European nations have much better public transportation and train systems. Therefore, higher oil prices will pressure the U.S. more than Europe.
Therefore, other than small rallies upward, I expect that the dollar is going to continue its bear market [9-10% down in 2011] and continue to move lower against other major world currencies.
Disclaimer...This is just a research piece and not an investment advice. Investors are strongly encouraged to execute their own due diligence before making any investment decision or strategy execution.
Tuesday, February 22, 2011
WHY YOU NEED TO BE BULLISH ON SILVER? By Shan Saeed
Silver has had an incredible run over the past year or
so... Where do you think it's headed in 2011? Might touch $49/ounce
Silver has definitely been very exciting. The price has
basically more than doubled [ 83% in 2010] and many of the stocks have done much
better than that... Silver has already touched $33/ounce [first in 31 years] on 21 Feb, 2011. Its in backwardation phase, which is common in commodities but rare in precious metals. But its happening...... [what’s Backwardation: When spot price is higher than future price] So you could be forgiven for asking how long that
can continue. I think the bullish case for silver going forward comes down to three main factors.
FIRST is industrial demand. Everyone knows industrial use is much
greater for silver than gold, and that does make it more susceptible
to an economic slowdown. But what's interesting is these industrial
uses are growing rapidly. But this silver investment could be one of the cheapest ways to protect your money from the decline of the U.S. dollar.
For example, all of the following uses for silver are increasing:
medical, apple i-phone, plasma tv, electronics, food processing, water treatment, paper,building materials, wood preservation, textiles, consumer products...
the list goes on and on. Every bandage-maker, for example, now offers
a silver-based product. You can buy silver-laced toothbrushes,
hairbrushes, combs, and make-up applicators. In England, you can buy silver-based soap.
The takeaway is that all these uses are on the rise, so even in an
economic slowdown, there is a higher level of base demand. The demand
for any individual application could decline, but the total number of
applications for silver is increasing. Over time, I think we'll see
increasing levels of demand.
SECOND major factor is investment demand. Investment demand is
soaring and can't be ignored. The U.S. mint sold more one-ounce Silver
Eagles in January than in any other month since they began creating
them in 1986. China's net imports of silver quadrupled in 2010.
Against all this you have the fact that most Americans don't own any
gold or especially silver. So even though there's already incredible
investment demand, the potential for it to increase is still
tremendous.
THIRD factor is supply. Ask yourself what's wrong with this
picture: Total global demand for silver is about 897 million ounces a
year. Total global supply is about 729 million ounces a year.
Sources:
Deutsche Bank
Credit Suisse
JP Morgan
Goldman Sachs
UBS
HSBC
Citibank
Nomura
ICBC
China Construction Bank
Scrap currently makes up the difference, but I think the crucial point
to recognize is that producers can't dig up enough silver to meet
current demand.
So what happens if industrial uses continue to rise? What happens if
investment demand continues growing? What happens if we do get some
type of currency collapse?
Vietnam has already devalued its currency Dong [ 8.5%] on 20th Feb-2011 to boost exports, which is not the solution to her problem. Moody’s downgraded Vietnam and Japan in recent reports. More to come from advance economies whose policy makers are still in the reactive mood. Europe is shivering with fiscal profligacy.
There were few bottleneck issues with physical supply in 2008, where mints
across the world couldn't keep up with orders. A lot of it was due to
them being unprepared for the rush, and they've since improved some of
their operations. That's great.
But even with all the improvements, even after adding equipment, even
after adding staff, even after adding work shifts... they're still
having issues. Over the past three or four months we've been hearing
about mints having delays, temporarily running out of stock, etc. So
it's still a problem.
And if all the factors I just mentioned come into play, then I think
you could say "bottleneck, meet desperation." Regardless of how well
prepared a manufacturer might be, demand at some point could
legitimately overwhelm the system, and I think that's a very real
possibility. Anything could happen. But the scary thing is, we may not
have enough supply to meet demand if we get a mania.
So based on these factors, my view is that silver can continue rising
for quite some time. I don't think it stops until SLV, the silver ETF,
is a favorite of the fund managers... until Silver Wheaton is a market
darling of the masses... until Pan American Silver is Wall Street's
top pick for the year... That's when I'll be looking for the end of
this silver bull market.
Many people don't realize this, but silver rose 3,647% in the
1970s, from its November '71 low to its January 1980 high. If you were
to apply the same percentage rise to our current bull market, silver
would climb another 500% from here, and the price would hit $160 an
ounce. Those are just numbers, but it shows that we have an established
precedent for the price to go much higher.
It's the fundamentals, of course, that will determine how high the
price ultimately goes. Show me a healthy dollar, show me no threat of
inflation, show me a responsible government that stops printing
money... Show me a repentant Iran and North Korea...Show me that Middle East is at peace with rulers[ Jordan, Egypt, Tunisia, Bahrain, Morocco, Saudi Arabia, Kuwait] acting normally and not running from the country. Show me that the
sovereign debt issues in Europe are resolved... Show me positive real
interest rates... Show me that unemployment is plummeting, that bank
closures have stopped, that real estate is recovering...Show me all that and I'll talk about the gold and silver run being over... But until those things start changing in a big way, I'm still buying.
Silver bears often suggest that a large part of the rally in the
last bull market was due to the Hunt brothers, who were accused of
trying to corner the market. What is my take on that?
I'm skeptical that the reason silver went as high as it
did was primarily due to the Hunt brothers' activity in the market.
It's interesting to note that they bought silver primarily because
they mistrusted the government, and because they thought silver was
going to be confiscated. Remember... gold ownership was illegal when
they first started buying silver in the early '70s.
Yes, they [ Hunt brother] bought a lot of silver... But if you look at the
correlation, you'll notice the price didn't necessarily move up when
they bought. In fact, when the rumors that they were trying to
"corner" the silver market really started going mainstream, which was
in the spring of 1974, the silver price dropped solidly for the next
two years. One would think that the price would've risen not fallen if
silver was being "cornered."
Secondly, if you look at price charts, silver moved in lockstep with
gold back then. They rose and fell pretty much together. They both
peaked on the very same day, January 21, 1980. So unless the gold
market was equally spooked by what the Hunt brothers were doing with
silver, it seems a stretch to assume they were the primary cause of
the rise.
Lastly, you have to consider that it was the mainstream media that largely promoted this idea the Hunts were "cornering" the market. With that in mind, one has to be suspicious that was, in fact, the case.
To be clear, I'm sure they had some effect, but to suggest they were
the main impetus behind silver's tremendous rise doesn't seem wholly
accurate. And look at the price today... It's outperforming gold in
our current bull market, just as it did in the '70s, and there's no
Nelson Bunker Hunt around. Besides... who's to say that we won't see other "Hunts" come along today and try to buy up large quantities of the metal? I wouldn't rule it out.
So again, I think it's more important to look at silver's fundamentals
for any kind of price projection than a one-off event. And those
fundamentals are very bullish.
ECONOMIC CRASH
I elaborated this earlier... but if the economy crashes, silver is likely to suffer more than gold due to its large industrial use component. Another factor is that silver is not bought by central banks, so one source of demand for gold is not present with silver.
But I think the bigger trend of a currency crisis is going to dwarf
those concerns. I see lot of currency intervention in the global financial markets. Chinese yuan would be under pressure from USA. However, Yuan/Renminbi would appreciate 4-5% in 2011 against US dollar with GDP touching 9.6%
Prudent approach
Silver is more volatile than gold, but that just means you get better
opportunities to buy it cheaper, and probably make more money on it if
you sell near the top. So yes, there are bearish arguments for silver, and one has to be prudent in buying it – you don't want it to be the only asset you own,
for example. But it would be equally a mistake to not own a meaningful
amount.
Good time to buy…
There's your answer. If you have minimal or no exposure, I suggest
buying. Don't rush out and spend all your available cash, because
there will always be corrections, but the less you own, the more you
want to make a plan to add a meaningful amount to your portfolio.
Remember...silver is a currency replacement just like gold. It's
money... and therefore you want to make sure you own enough for both
protection and profit. If you don't own enough, I suggest going into
"accumulation" mode... buying some on a regular basis, like
dollar-cost averaging.
My recommendation which is a conservative by the way – is that approximately one-third of your strategic valued assets be devoted to the precious metals market. That includes gold, silver, and precious metal stocks. That may sound
extreme to some, but I think the risk to currencies right now is
extreme. Chinese government has already communicated to her people to increase their Gold and Silver holding in their asset portfolios. Therefore, being overweight precious metals is justified. Obviously, each individual investor has to be comfortable with what they do.
I generally recommend you hold more gold than silver. I suggest approximately 70%-80% in gold versus 20%-30% in silver. Depending on your situation and risk tolerance, you may wish to have more or less in silver, but again the point is to have meaningful or market focused exposure.
Silver purchased method:
The options are becoming more and more mainstream, so it's
getting easier to buy both metals. The alternatives are growing, and
they're also improving. You basically have two choices: You can either
buy and store it yourself, or you can buy and have someone else store
it for you. Ideally, you want to do both... you want to DIVERSIFY YOUR RISK AND ASSET CLASS.
There are risks to storing metals yourself, such as theft, loss, or
fire. You can put it in a safe deposit box, but then it's in the
financial system and it's subject to banking hours and could even be
susceptible to confiscation, though I'm skeptical that will actually
happen. But I do think everyone should have some physical silver
handy, at least a couple months worth of expenses.
So the short answer is to diversify what you buy and how you store it.
For physical silver, I would stick to buying the popular one-ounce
bullion coins – Eagles, Maple Leafs, etc.
Silver Stocks.
It's pretty clear the go-to stock in the silver industry
– in my opinion at least – is Silver Wheaton. It's definitely been a
sweetheart the past two years. It's given us everything we could want
in a silver stock.
The stock suffered badly in the meltdown of '08, and things did get a
little dicey at the time, but I remember thinking that unless the
world comes to an end and the silver price never recovers, this
company is going to survive and bounce back – in part because of
management and in part because of the business model. They have no
exposure to mining costs, for example.
Shares back then were around $3... If you bought at the time, they're
now a ten-bagger. So it's been an incredible run. The question, of course, is going forward: Since the stock is already at $35, can it be another ten-bagger from here? The company expects to increase "production" by 70% by 2013. And
their costs will basically stay stagnant. Meanwhile, imagine where the
silver price could be in the next two to three years, and you can see
this company can make enormous amounts of cash. Some of that is
probably priced into the stock already, but you can't deny where this
company is headed over the next few years.
Could it have a big correction? Recently dropped as much as
28%, but sure... it could easily fall more than that in a major
correction. But if that happened, I'd consider it a big buying
opportunity. In my opinion, the bigger the correction, the bigger the buying
opportunity, because I really believe the future is very bright for
the company.
NUTSHELL
If you're bullish on gold, I think you need to be bullish on
silver, unless you think inflation will never come to pass. Regardless
of the short-term fluctuations in the market, it's only a matter of
time before the currency issues punch us in the gut and inflation
really takes off.
Second, remember that silver will be volatile, but focus on the
fundamentals and use sell offs as buying opportunities. Until the
fundamentals driving the bull market change, buy.
Bottom line, the bull market is far from over. I think it's going to
go much longer and much stronger... So buying on dips is the best
advice I could give anyone.
DISCLAIMER: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making any strategic investment or strategy implemmentation.
so... Where do you think it's headed in 2011? Might touch $49/ounce
Silver has definitely been very exciting. The price has
basically more than doubled [ 83% in 2010] and many of the stocks have done much
better than that... Silver has already touched $33/ounce [first in 31 years] on 21 Feb, 2011. Its in backwardation phase, which is common in commodities but rare in precious metals. But its happening...... [what’s Backwardation: When spot price is higher than future price] So you could be forgiven for asking how long that
can continue. I think the bullish case for silver going forward comes down to three main factors.
FIRST is industrial demand. Everyone knows industrial use is much
greater for silver than gold, and that does make it more susceptible
to an economic slowdown. But what's interesting is these industrial
uses are growing rapidly. But this silver investment could be one of the cheapest ways to protect your money from the decline of the U.S. dollar.
For example, all of the following uses for silver are increasing:
medical, apple i-phone, plasma tv, electronics, food processing, water treatment, paper,building materials, wood preservation, textiles, consumer products...
the list goes on and on. Every bandage-maker, for example, now offers
a silver-based product. You can buy silver-laced toothbrushes,
hairbrushes, combs, and make-up applicators. In England, you can buy silver-based soap.
The takeaway is that all these uses are on the rise, so even in an
economic slowdown, there is a higher level of base demand. The demand
for any individual application could decline, but the total number of
applications for silver is increasing. Over time, I think we'll see
increasing levels of demand.
SECOND major factor is investment demand. Investment demand is
soaring and can't be ignored. The U.S. mint sold more one-ounce Silver
Eagles in January than in any other month since they began creating
them in 1986. China's net imports of silver quadrupled in 2010.
Against all this you have the fact that most Americans don't own any
gold or especially silver. So even though there's already incredible
investment demand, the potential for it to increase is still
tremendous.
THIRD factor is supply. Ask yourself what's wrong with this
picture: Total global demand for silver is about 897 million ounces a
year. Total global supply is about 729 million ounces a year.
Sources:
Deutsche Bank
Credit Suisse
JP Morgan
Goldman Sachs
UBS
HSBC
Citibank
Nomura
ICBC
China Construction Bank
Scrap currently makes up the difference, but I think the crucial point
to recognize is that producers can't dig up enough silver to meet
current demand.
So what happens if industrial uses continue to rise? What happens if
investment demand continues growing? What happens if we do get some
type of currency collapse?
Vietnam has already devalued its currency Dong [ 8.5%] on 20th Feb-2011 to boost exports, which is not the solution to her problem. Moody’s downgraded Vietnam and Japan in recent reports. More to come from advance economies whose policy makers are still in the reactive mood. Europe is shivering with fiscal profligacy.
There were few bottleneck issues with physical supply in 2008, where mints
across the world couldn't keep up with orders. A lot of it was due to
them being unprepared for the rush, and they've since improved some of
their operations. That's great.
But even with all the improvements, even after adding equipment, even
after adding staff, even after adding work shifts... they're still
having issues. Over the past three or four months we've been hearing
about mints having delays, temporarily running out of stock, etc. So
it's still a problem.
And if all the factors I just mentioned come into play, then I think
you could say "bottleneck, meet desperation." Regardless of how well
prepared a manufacturer might be, demand at some point could
legitimately overwhelm the system, and I think that's a very real
possibility. Anything could happen. But the scary thing is, we may not
have enough supply to meet demand if we get a mania.
So based on these factors, my view is that silver can continue rising
for quite some time. I don't think it stops until SLV, the silver ETF,
is a favorite of the fund managers... until Silver Wheaton is a market
darling of the masses... until Pan American Silver is Wall Street's
top pick for the year... That's when I'll be looking for the end of
this silver bull market.
Many people don't realize this, but silver rose 3,647% in the
1970s, from its November '71 low to its January 1980 high. If you were
to apply the same percentage rise to our current bull market, silver
would climb another 500% from here, and the price would hit $160 an
ounce. Those are just numbers, but it shows that we have an established
precedent for the price to go much higher.
It's the fundamentals, of course, that will determine how high the
price ultimately goes. Show me a healthy dollar, show me no threat of
inflation, show me a responsible government that stops printing
money... Show me a repentant Iran and North Korea...Show me that Middle East is at peace with rulers[ Jordan, Egypt, Tunisia, Bahrain, Morocco, Saudi Arabia, Kuwait] acting normally and not running from the country. Show me that the
sovereign debt issues in Europe are resolved... Show me positive real
interest rates... Show me that unemployment is plummeting, that bank
closures have stopped, that real estate is recovering...Show me all that and I'll talk about the gold and silver run being over... But until those things start changing in a big way, I'm still buying.
Silver bears often suggest that a large part of the rally in the
last bull market was due to the Hunt brothers, who were accused of
trying to corner the market. What is my take on that?
I'm skeptical that the reason silver went as high as it
did was primarily due to the Hunt brothers' activity in the market.
It's interesting to note that they bought silver primarily because
they mistrusted the government, and because they thought silver was
going to be confiscated. Remember... gold ownership was illegal when
they first started buying silver in the early '70s.
Yes, they [ Hunt brother] bought a lot of silver... But if you look at the
correlation, you'll notice the price didn't necessarily move up when
they bought. In fact, when the rumors that they were trying to
"corner" the silver market really started going mainstream, which was
in the spring of 1974, the silver price dropped solidly for the next
two years. One would think that the price would've risen not fallen if
silver was being "cornered."
Secondly, if you look at price charts, silver moved in lockstep with
gold back then. They rose and fell pretty much together. They both
peaked on the very same day, January 21, 1980. So unless the gold
market was equally spooked by what the Hunt brothers were doing with
silver, it seems a stretch to assume they were the primary cause of
the rise.
Lastly, you have to consider that it was the mainstream media that largely promoted this idea the Hunts were "cornering" the market. With that in mind, one has to be suspicious that was, in fact, the case.
To be clear, I'm sure they had some effect, but to suggest they were
the main impetus behind silver's tremendous rise doesn't seem wholly
accurate. And look at the price today... It's outperforming gold in
our current bull market, just as it did in the '70s, and there's no
Nelson Bunker Hunt around. Besides... who's to say that we won't see other "Hunts" come along today and try to buy up large quantities of the metal? I wouldn't rule it out.
So again, I think it's more important to look at silver's fundamentals
for any kind of price projection than a one-off event. And those
fundamentals are very bullish.
ECONOMIC CRASH
I elaborated this earlier... but if the economy crashes, silver is likely to suffer more than gold due to its large industrial use component. Another factor is that silver is not bought by central banks, so one source of demand for gold is not present with silver.
But I think the bigger trend of a currency crisis is going to dwarf
those concerns. I see lot of currency intervention in the global financial markets. Chinese yuan would be under pressure from USA. However, Yuan/Renminbi would appreciate 4-5% in 2011 against US dollar with GDP touching 9.6%
Prudent approach
Silver is more volatile than gold, but that just means you get better
opportunities to buy it cheaper, and probably make more money on it if
you sell near the top. So yes, there are bearish arguments for silver, and one has to be prudent in buying it – you don't want it to be the only asset you own,
for example. But it would be equally a mistake to not own a meaningful
amount.
Good time to buy…
There's your answer. If you have minimal or no exposure, I suggest
buying. Don't rush out and spend all your available cash, because
there will always be corrections, but the less you own, the more you
want to make a plan to add a meaningful amount to your portfolio.
Remember...silver is a currency replacement just like gold. It's
money... and therefore you want to make sure you own enough for both
protection and profit. If you don't own enough, I suggest going into
"accumulation" mode... buying some on a regular basis, like
dollar-cost averaging.
My recommendation which is a conservative by the way – is that approximately one-third of your strategic valued assets be devoted to the precious metals market. That includes gold, silver, and precious metal stocks. That may sound
extreme to some, but I think the risk to currencies right now is
extreme. Chinese government has already communicated to her people to increase their Gold and Silver holding in their asset portfolios. Therefore, being overweight precious metals is justified. Obviously, each individual investor has to be comfortable with what they do.
I generally recommend you hold more gold than silver. I suggest approximately 70%-80% in gold versus 20%-30% in silver. Depending on your situation and risk tolerance, you may wish to have more or less in silver, but again the point is to have meaningful or market focused exposure.
Silver purchased method:
The options are becoming more and more mainstream, so it's
getting easier to buy both metals. The alternatives are growing, and
they're also improving. You basically have two choices: You can either
buy and store it yourself, or you can buy and have someone else store
it for you. Ideally, you want to do both... you want to DIVERSIFY YOUR RISK AND ASSET CLASS.
There are risks to storing metals yourself, such as theft, loss, or
fire. You can put it in a safe deposit box, but then it's in the
financial system and it's subject to banking hours and could even be
susceptible to confiscation, though I'm skeptical that will actually
happen. But I do think everyone should have some physical silver
handy, at least a couple months worth of expenses.
So the short answer is to diversify what you buy and how you store it.
For physical silver, I would stick to buying the popular one-ounce
bullion coins – Eagles, Maple Leafs, etc.
Silver Stocks.
It's pretty clear the go-to stock in the silver industry
– in my opinion at least – is Silver Wheaton. It's definitely been a
sweetheart the past two years. It's given us everything we could want
in a silver stock.
The stock suffered badly in the meltdown of '08, and things did get a
little dicey at the time, but I remember thinking that unless the
world comes to an end and the silver price never recovers, this
company is going to survive and bounce back – in part because of
management and in part because of the business model. They have no
exposure to mining costs, for example.
Shares back then were around $3... If you bought at the time, they're
now a ten-bagger. So it's been an incredible run. The question, of course, is going forward: Since the stock is already at $35, can it be another ten-bagger from here? The company expects to increase "production" by 70% by 2013. And
their costs will basically stay stagnant. Meanwhile, imagine where the
silver price could be in the next two to three years, and you can see
this company can make enormous amounts of cash. Some of that is
probably priced into the stock already, but you can't deny where this
company is headed over the next few years.
Could it have a big correction? Recently dropped as much as
28%, but sure... it could easily fall more than that in a major
correction. But if that happened, I'd consider it a big buying
opportunity. In my opinion, the bigger the correction, the bigger the buying
opportunity, because I really believe the future is very bright for
the company.
NUTSHELL
If you're bullish on gold, I think you need to be bullish on
silver, unless you think inflation will never come to pass. Regardless
of the short-term fluctuations in the market, it's only a matter of
time before the currency issues punch us in the gut and inflation
really takes off.
Second, remember that silver will be volatile, but focus on the
fundamentals and use sell offs as buying opportunities. Until the
fundamentals driving the bull market change, buy.
Bottom line, the bull market is far from over. I think it's going to
go much longer and much stronger... So buying on dips is the best
advice I could give anyone.
DISCLAIMER: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making any strategic investment or strategy implemmentation.
Friday, February 18, 2011
Incredible Geothermal Green Energy Potential --By Shan Saeed
Green energy can change the global energy mix moving forward. By Shan Saeed
It is estimated that huge EGS geothermal resource potential lies beneath the western United States. This is approximately half of the current installed electric power generating capacity in the United States. China is moving into electric cars aggressively. USA could be producing 32 million times more geothermal electrical power than it does at present. I am bullish on Oil, Natural Gas, Ethanol and Geothermal.....
Expert speak about energy
This year's forum in Russia was just as entertaining, and while it didn't have quite a distinguished audience, it did feature Marc Faber and Nassim Taleb in a discussion of whether Russia is the best or worst BRIC. That said, trust both Faber and Taleb not to stick to the script and go off on wild tangents. Sure enough, the line of the night as usual belonged to Faber: "We have a big debate in the world whether we will have a deflationary collapse or an inflationary boom...usually after a period of very heavy money printing war follows." That is the philosophical gist of it. As for Faber's recommendation, it is precisely the asset which has become a short-seller's nightmare in the current geopolitically fragile environment: Oil.
BOTH SAID,
Quote
"Whether you are very bullish or very bearish you should invest in oil."
Unquote
POTENTIAL OF GEOTHERMAL
The U.S. produces more than 100,000 gigawatt-hours per year of geothermal electricity already, but it could produce as much as 3.2 trillion gigawatt-hours. This green energy has UNBELIEVABLE potential globally. The U.S. could be producing 32 million times more geothermal electrical power than it does at present.
STRATEGIC INSIGHT
The Earth's heat never stops—meaning a geothermal power plant can produce electricity as regularly as a nuclear power plant can. And it also has nearly no emissions of the greenhouse gases causing climate change. Geothermal power plants are currently located in areas with natural hot springs and geysers, such as this planned 15MW plant in the US state Nevada.
Enhanced geothermal will be a whole new ballgame. That is where the lion's share of geothermal power can be tapped, but it will require expensive deep drilling technology which has not yet been perfected for this purpose. It will also require new forms of ultra-deep fracking of hot rock, to enhance deep crustal heat exchange for energy extraction.
The hazard of earthquake-triggering is routinely hyped and inflated, as is natural whenever a genuinely revolutionary energy technology is considered. But deep geothermal drilling cannot create new seismic faults where none exist, nor will the technology increase tension on pre-existing faults. Enhanced geothermal can either drill in seismically active -- or seismically inactive regions. In the inactive regions, there is no problem. For seismically active locations, the technology of enhanced geothermal is more likely to prevent large earthquakes, by facilitating smaller tension-relieving quakes. Study of HAARP is important. What happen in 1942 in England? It can provide you valuable insight for future decisions.
The potential is certainly there. But the technology and the economics needs to catch up to the potential. That will take time and investment. By transferring all investment away from wasteful and ineffectual energy mix over to technologies with solid 24 hour / 365 day baseload potential, society would be taking a big step forward. We are surely moving towards clean and environment friendly energy for the future requirement. You bet.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making any strategic investment or moving into implementation phase.
It is estimated that huge EGS geothermal resource potential lies beneath the western United States. This is approximately half of the current installed electric power generating capacity in the United States. China is moving into electric cars aggressively. USA could be producing 32 million times more geothermal electrical power than it does at present. I am bullish on Oil, Natural Gas, Ethanol and Geothermal.....
Expert speak about energy
This year's forum in Russia was just as entertaining, and while it didn't have quite a distinguished audience, it did feature Marc Faber and Nassim Taleb in a discussion of whether Russia is the best or worst BRIC. That said, trust both Faber and Taleb not to stick to the script and go off on wild tangents. Sure enough, the line of the night as usual belonged to Faber: "We have a big debate in the world whether we will have a deflationary collapse or an inflationary boom...usually after a period of very heavy money printing war follows." That is the philosophical gist of it. As for Faber's recommendation, it is precisely the asset which has become a short-seller's nightmare in the current geopolitically fragile environment: Oil.
BOTH SAID,
Quote
"Whether you are very bullish or very bearish you should invest in oil."
Unquote
POTENTIAL OF GEOTHERMAL
The U.S. produces more than 100,000 gigawatt-hours per year of geothermal electricity already, but it could produce as much as 3.2 trillion gigawatt-hours. This green energy has UNBELIEVABLE potential globally. The U.S. could be producing 32 million times more geothermal electrical power than it does at present.
STRATEGIC INSIGHT
The Earth's heat never stops—meaning a geothermal power plant can produce electricity as regularly as a nuclear power plant can. And it also has nearly no emissions of the greenhouse gases causing climate change. Geothermal power plants are currently located in areas with natural hot springs and geysers, such as this planned 15MW plant in the US state Nevada.
Enhanced geothermal will be a whole new ballgame. That is where the lion's share of geothermal power can be tapped, but it will require expensive deep drilling technology which has not yet been perfected for this purpose. It will also require new forms of ultra-deep fracking of hot rock, to enhance deep crustal heat exchange for energy extraction.
The hazard of earthquake-triggering is routinely hyped and inflated, as is natural whenever a genuinely revolutionary energy technology is considered. But deep geothermal drilling cannot create new seismic faults where none exist, nor will the technology increase tension on pre-existing faults. Enhanced geothermal can either drill in seismically active -- or seismically inactive regions. In the inactive regions, there is no problem. For seismically active locations, the technology of enhanced geothermal is more likely to prevent large earthquakes, by facilitating smaller tension-relieving quakes. Study of HAARP is important. What happen in 1942 in England? It can provide you valuable insight for future decisions.
The potential is certainly there. But the technology and the economics needs to catch up to the potential. That will take time and investment. By transferring all investment away from wasteful and ineffectual energy mix over to technologies with solid 24 hour / 365 day baseload potential, society would be taking a big step forward. We are surely moving towards clean and environment friendly energy for the future requirement. You bet.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making any strategic investment or moving into implementation phase.
Thursday, February 10, 2011
How High Will Gold / Silver Go In 2011? by Shan Saeed
Price Outlook and Forecast for Gold and Silver in 2011. How High Will Gold Go In 2011? By Shan Saeed
We are talking about REAL ASSETS over here. We cant devalue or multiply these real assets out of thin air. After stellar years for both gold and silver, what prices will precious metals hit in 2011? Here's an in-depth analysis based strictly on their price behavior in the current bull market.
Strategic Analysis of Prices for Gold:
Look at the annual percentage gains that Gold has registered since 2001 [based on London PM Fix closings]:
Year % Gain
2001 0.7
2002 25.6
2003 19.9
2004 4.6
2005 17.8
2006 23.2
2007 31.9
2008 4.3
2009 25.0
2010 30.7
Sources:
IMF, WORLD BANK, WORLD GOLD COUNCIL, JIM ROGERS, MARC FABER, KITCO, BLOOMBERG, GEO TV, BUSINESSPLUS TV, AAJ TV, ARY NEWS, Financial Times, Wall Street Journal, IHT.COM, nytimes.com, ECONOMIST, BUSINESSWEEK, DEUTSCHE BANK, GOLDMAN SACHS, JP MORGAN, SOCEITE GENRALE, MORGAN STANLEY, BANK OF AMERICA MERRIL LYNCH, RBS, CITIBANK, IBA Library and University of Chicago, Booth School, Library, USA
Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%.
So to make some projections based on what it's done over the past 10 years. From the 12-31-10 closing price of $1,421.60, if gold matched…
• The average rise this decade, the price would hit $1,711.60
• The average rise excluding the three weak years = $1,774.15
• Last year's gain = $1,858.03
• The largest advance to date (2007) = $1,875.09
But what if global economic circumstances continue to deteriorate? What if worldwide price inflation kicks in? And what if government efforts at currency debasement get more abusive? A mania in all things gold lies ahead – what if that begins in 2011? Here's what price levels could be reached based on the following percentage gains.
• 35% = $1,919.16
• 40% = $1,990.24
• 45% = $2,061.32
• 50% = $2,132.40
• 1979's gain of 125.7% = $3,208.55
It thus seems reasonable to expect gold to surpass $1,500 this year [Conservative estimate], as well as reach a potentially higher level since the factors pushing on the price could become more pronounced.
SILVER PRICES: Look at the annual percentage gains that Silver has registered since 2001 [based on London PM Fix closings]:
Here's a look at silver.
Year % Gain
2001 -1.2
2002 3.2
2003 27.9
2004 14.2
2005 29.6
2006 46.1
2007 14.4
2008 -26.9
2009 58.5
2010 83.9
Sources:
IMF, WORLD BANK, WORLD GOLD COUNCIL, JIM ROGERS, MARC FABER, KITCO, BLOOMBERG, GEO TV, BUSINESSPLUS TV, AAJ TV, ARY NEWS, Financial Times, Wall Street Journal, IHT.COM, nytimes.com, ECONOMIST, BUSINESSWEEK, DEUTSCHE BANK, GOLDMAN SACHS, JP MORGAN, SOCEITE GENRALE, MORGAN STANLEY, BANK OF AMERICA MERRIL LYNCH, RBS, CITIBANK, IBA Library and University of Chicago, Booth School, Library, USA
As you can see, silver had its biggest advance in 2010. The average of the decade, again excluding 2001, was 27.5%. And also tossing out the '08 decline, the average gain is 34.3%. So, from the 12-31-10 closing price of $30.91, if silver matched...
• The average rise this decade, the price would hit $39.41
• The average gain excluding 2008 = $41.51
• Last year's advance = $56.22
• The 1979 gain of 267.5% = $113.59
So, $49 silver seems perfectly attainable this year. And that's without monetary conditions worsening.
It's titillating to ponder these advances for gold and silver, especially when you consider we might be getting close to the mania. And if we are, that should do wonderful things to our gold and silver stocks, too.
I would add one caveat: the odds are high that there will be a significant correction before gold begins its march to these price levels. In every year but two ['02 and '06], gold fell below its prior-year close before heading higher. And here's something to watch for: in every year but one ('08), those lows occurred by May.
In other words, a buying opportunity may be dead ahead. And if you buy on the next correction, your gains on the year could be higher than the annual advance. Are you satisfied with the amount of bullion you own if monetary and fiscal circumstances deteriorate? Are you prepared to profit from the mania in precious metals is ahead? If not, start the year right with a RIGHT RISK APPETITE to profit from the ongoing bull market…
Although the silver price has declined by 11% over the past three weeks at the start of 2011 and Gold has lost 7% in value, tightness in the physical market continues as the metal is again in backwardation, i.e. the spot price is higher than the futures price. Silver is in backwardation which is an extremely important development. Backwardation happens regularly in most commodities, but it is rare in the precious metals.
Silver is in backwardation not just in the short-term, this time it is extending twelve months forward! The last time this happened was in January of 2009. Over the next few weeks silver rose from about $10.50 to $14.50, a roughly a 40% move higher. The key to understanding backwardation is that the price must rise to entice holders of physical metal to sell and accept a national currency in return. I think we can expect a similar event to repeat over the next few weeks. A similar type of move would clearly put silver well above its previous high. What this backwardation illustrates is there is a great disconnect between the physical and the paper markets in silver. As I said previously, the silver shorts simply cannot hold the paper price down here any longer without seriously discredit the paper silver market as a price discovery mechanism.”
Some positive development in the silver market, reporting a massive increase in silver bullion demand from China, with the country’s imports surging fourfold in 2010As on so many other fronts, China is turning out to be a game changer. The heat is on in the precious metal market.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence when making any strategic investment or implementation.
We are talking about REAL ASSETS over here. We cant devalue or multiply these real assets out of thin air. After stellar years for both gold and silver, what prices will precious metals hit in 2011? Here's an in-depth analysis based strictly on their price behavior in the current bull market.
Strategic Analysis of Prices for Gold:
Look at the annual percentage gains that Gold has registered since 2001 [based on London PM Fix closings]:
Year % Gain
2001 0.7
2002 25.6
2003 19.9
2004 4.6
2005 17.8
2006 23.2
2007 31.9
2008 4.3
2009 25.0
2010 30.7
Sources:
IMF, WORLD BANK, WORLD GOLD COUNCIL, JIM ROGERS, MARC FABER, KITCO, BLOOMBERG, GEO TV, BUSINESSPLUS TV, AAJ TV, ARY NEWS, Financial Times, Wall Street Journal, IHT.COM, nytimes.com, ECONOMIST, BUSINESSWEEK, DEUTSCHE BANK, GOLDMAN SACHS, JP MORGAN, SOCEITE GENRALE, MORGAN STANLEY, BANK OF AMERICA MERRIL LYNCH, RBS, CITIBANK, IBA Library and University of Chicago, Booth School, Library, USA
Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%.
So to make some projections based on what it's done over the past 10 years. From the 12-31-10 closing price of $1,421.60, if gold matched…
• The average rise this decade, the price would hit $1,711.60
• The average rise excluding the three weak years = $1,774.15
• Last year's gain = $1,858.03
• The largest advance to date (2007) = $1,875.09
But what if global economic circumstances continue to deteriorate? What if worldwide price inflation kicks in? And what if government efforts at currency debasement get more abusive? A mania in all things gold lies ahead – what if that begins in 2011? Here's what price levels could be reached based on the following percentage gains.
• 35% = $1,919.16
• 40% = $1,990.24
• 45% = $2,061.32
• 50% = $2,132.40
• 1979's gain of 125.7% = $3,208.55
It thus seems reasonable to expect gold to surpass $1,500 this year [Conservative estimate], as well as reach a potentially higher level since the factors pushing on the price could become more pronounced.
SILVER PRICES: Look at the annual percentage gains that Silver has registered since 2001 [based on London PM Fix closings]:
Here's a look at silver.
Year % Gain
2001 -1.2
2002 3.2
2003 27.9
2004 14.2
2005 29.6
2006 46.1
2007 14.4
2008 -26.9
2009 58.5
2010 83.9
Sources:
IMF, WORLD BANK, WORLD GOLD COUNCIL, JIM ROGERS, MARC FABER, KITCO, BLOOMBERG, GEO TV, BUSINESSPLUS TV, AAJ TV, ARY NEWS, Financial Times, Wall Street Journal, IHT.COM, nytimes.com, ECONOMIST, BUSINESSWEEK, DEUTSCHE BANK, GOLDMAN SACHS, JP MORGAN, SOCEITE GENRALE, MORGAN STANLEY, BANK OF AMERICA MERRIL LYNCH, RBS, CITIBANK, IBA Library and University of Chicago, Booth School, Library, USA
As you can see, silver had its biggest advance in 2010. The average of the decade, again excluding 2001, was 27.5%. And also tossing out the '08 decline, the average gain is 34.3%. So, from the 12-31-10 closing price of $30.91, if silver matched...
• The average rise this decade, the price would hit $39.41
• The average gain excluding 2008 = $41.51
• Last year's advance = $56.22
• The 1979 gain of 267.5% = $113.59
So, $49 silver seems perfectly attainable this year. And that's without monetary conditions worsening.
It's titillating to ponder these advances for gold and silver, especially when you consider we might be getting close to the mania. And if we are, that should do wonderful things to our gold and silver stocks, too.
I would add one caveat: the odds are high that there will be a significant correction before gold begins its march to these price levels. In every year but two ['02 and '06], gold fell below its prior-year close before heading higher. And here's something to watch for: in every year but one ('08), those lows occurred by May.
In other words, a buying opportunity may be dead ahead. And if you buy on the next correction, your gains on the year could be higher than the annual advance. Are you satisfied with the amount of bullion you own if monetary and fiscal circumstances deteriorate? Are you prepared to profit from the mania in precious metals is ahead? If not, start the year right with a RIGHT RISK APPETITE to profit from the ongoing bull market…
Although the silver price has declined by 11% over the past three weeks at the start of 2011 and Gold has lost 7% in value, tightness in the physical market continues as the metal is again in backwardation, i.e. the spot price is higher than the futures price. Silver is in backwardation which is an extremely important development. Backwardation happens regularly in most commodities, but it is rare in the precious metals.
Silver is in backwardation not just in the short-term, this time it is extending twelve months forward! The last time this happened was in January of 2009. Over the next few weeks silver rose from about $10.50 to $14.50, a roughly a 40% move higher. The key to understanding backwardation is that the price must rise to entice holders of physical metal to sell and accept a national currency in return. I think we can expect a similar event to repeat over the next few weeks. A similar type of move would clearly put silver well above its previous high. What this backwardation illustrates is there is a great disconnect between the physical and the paper markets in silver. As I said previously, the silver shorts simply cannot hold the paper price down here any longer without seriously discredit the paper silver market as a price discovery mechanism.”
Some positive development in the silver market, reporting a massive increase in silver bullion demand from China, with the country’s imports surging fourfold in 2010As on so many other fronts, China is turning out to be a game changer. The heat is on in the precious metal market.
Disclaimer: This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence when making any strategic investment or implementation.
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