Saturday, June 30, 2012

Bullish on Mexican and Brazilian markets:--By Shan Saeed
I was yearning for many years to share my strategic insights on these markets. Here I am why I think highly about Brazil and Mexico economies for sustainable investments. I wanted to write this piece about these giant nations of the South American continent and how they have progressed in the last 20 years is simply remarkable. The reasons are simple: Investors should consider Mexican and Brazilian markets for their strategic investments.  United States may be the cleanest of the dirtiest shirts among major markets these days but investors should keep an eye on Mexico and Brazil since both these countries have great potential. Brazalian and Mexican governments have used their natural resources very strategically for the benefit of their investors and entrepreneurs. Biofuel, Sugar, Oil, Copper, iron ore, Coffee, Soyabean, Cotton, Silver, Fruits, Vegetables have helped these countries to maintain a healthy export oriented growth. Agriculture is the best investment for the next 5-10 years.
These countries have a strong and attractive balance sheets, higher growth rates, and more attractive exportable natural resources and higher interest rates, as well. America is the cleanest dirty shirt in terms of financial markets. I see a lot of blood in the American and European financial markets going forward till 2015. Printing money will not solve the problem. Quantitative easing is just like fantasy money with no legs. QE will lead to inflation and lower the standard of living of many people in the advance economies. The Federal Reserve just released the results of a three-year study on household wealth, and the results are shocking ...As of 2010, the typical U.S. household had the same net worth they had back in 1992.
That’s right. Even Washington admits that the recent financial crisis has already erased a staggering 39% of the average American’s wealth. Think about it: 20 years of your hard work down the drain! But what’s worse is that this wealth destruction is just a foreshadowing of what’s about to happen ...Washington and Wall Street have now pushed america into the largest financial bubble ever. And when this bubble bursts it will dwarf every other financial crisis in American history.

It’s where money is moving towards out of Euro land and out of all the risky peripheral countries. All big investors are moving their funds in Mexico, Brazil, Chile, Peru, Singapore, China, Malaysia, Thailand, Philippines, Turkey, Mongolia, Vietnam, Kazakhstan, Indonesia and South Korea.
The United States carries lower comparative debt burdens than European countries, is home to the world's reserve currency and has stable property rights. Still, investors shouldn't take such traits for granted. It’s not ultimately and inevitably secure in this position. More and more of the world's top initial public offerings are taking place in emerging markets these days. Three of the top-10 initial public offerings in the last three months took place in Brazil, Malaysia and Mexico as reported by the Financial Times. The Facebook IPO grabbed headlines due to its sheer size at raising an initial $16 billion. Europe, meanwhile, hasn't been a good place for companies to go public lately.
Market conditions make these deals very challenging, and in many cases it seems that issuers and their advisers have simply not recognized the degree of price sensitivity. More market practitioners need to be willing to accept that several elements of European IPO market practice remain flawed.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

The Double-Whammy for Gold
All along, the real issue has been the very survival of the European Union. Every time Ms. Merkel dug in her fashionable heels to oppose the cash flow needs of Spain, or Italy, or Greece, it raised the stakes that the EU could fall apart. And to be fair, Greece's repeated failure to hit budget targets had the same result.
But now, at the very least, we are seeing a commitment to the survival of the EU. And that means the euro can, and will, rally against the U.S. dollar. And the relative strength of the dollar has been the key to gold prices.
If you analyze the 1-year chart of the U.S. dollar vs. the euro, the dollar has steadily climbed in value against the euro. And as you might expect, while the dollar rallies, gold has steadily declined. Now that the survival of the EU is more likely, the U.S. dollar won't be as vital as a safe haven. You can expect to see money come out of U.S. Treasury bonds. You can expect oil to rally. You can expect to see the euro move back above $1.30.
But the biggest move is likely to come from GOLD. Because not only is there now less risk in the global economy, there will also be more cash flying around. That will lead to an overall weakening of currency and a very high probability of inflation. Inflation and a falling U.S. dollar: that's the formula for new highs from gold.
New Highs for Gold are coming:
Gold is on the verge of running above $1,600 an ounce. That is a critical level. Because once the $1,600 price level falls, I expect all time highs for gold. This is going to happen. The time to buy is right now.
You could buy gold coins. You could buy shares in the Gold Trust SPDR (NYSE: GLD). But the very best way to profit from the next leg of the gold bull market is to buy into some junior gold miners.  The junior gold miners have been absolutely crushed over the last year. You can pick up shares of companies that control billions of dollars worth of gold for ridiculously low prices.
I'm talking about prices as low as 50 cents a share! It will be pretty tough to go wrong with an entry price like that. And your upside from here is tremendous.  Mark my words: GOLD RALLIES BIG.

Sunday, June 24, 2012

By Shan Saeed
Oil is taking a back seat and falling prices are a big headache for few decision makers globally. As I write this, oil has broken the $81-a-barrel mark. This is the first time crude has traded below $80 since last October. Many oil market observers are rejoicing, pronouncing "the era of high oil prices" over as new supply comes to the market from the Bakken and Eagle Ford.
Some are even calling for oil to hit $40 a barrel and touch Dec 2008 levels. And who can blame their enthusiasm? I mean, this is a win-win for the economy and the consumer alike. Lower gasoline prices mean more cash available for discretionary spending for consumer in the short run.
Yes, lower oil prices are good for everyone (except drillers in shale oil), but it doesn’t mean they’re permanent. In fact, one particular market action by the Chinese may predict where oil prices are headed in the future...

According to Bloomberg:
Taking advantage of lower oil prices, China is hoarding crude at the fastest rate since the Beijing Olympics four years ago as the slump in international prices prompts it to import unprecedented volumes even as refining slows.
The world's second-biggest oil consumer built up a surplus of about 90 million barrels of crude in the first five months of the year in 2012, government data show.
China, which imports more than half its crude, is constructing about 200 million barrels of storage capacity in the second stage of a plan for strategic reserves to help it manage price swings. Overseas purchases rose to a record last month even as processing by refiners including China Petroleum & Chemical Corp. (600028) and PetroChina Co. slackened.  China is one of the main reasons I believe oil prices will remain high. Emerging market contributes to higher oil prices as well.
Last year China overtook the United States as the world’s largest energy consumer. China is now the world’s second largest oil consumer. In 2010, China also overtook Japan as the world’s top automaker and Germany as the world’s largest auto exporter.
Iran's Threats Could Make You Rich!---Analyze the Chinese market
It's simple: Tension in the Middle East drives up energy prices. This also makes the share prices of certain North American companies skyrocket — handing early investors with massive capital gains.
The fact remains that car ownership in China is insanely low compared to the industrialized West. China has roughly 52 automobiles per 1,000 people, while the U.S. and Europe have approximately 457 automobiles per 1,000 people. So even though the sector is growing at a robust clip, the automobile culture in China is still very young. Think of it as the U.S. in the 1930s.
If China were to catch up with the trend of other industrialized nations, the ratio would roughly be 10 cars for every 100 people. The same is true of other countries where incomes are rising, such as Brazil and India. So even though the global economy is slowing down, the Chinese are gobbling up oil at what they consider to be bargain-basement prices.
China, whose overseas oil purchases are second only to the United States', plans to have stockpiles equal to 100 days of net imports by 2020. Happy investing in the oil market.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

Wednesday, June 20, 2012

I am bullish on Palm Oil-----By Shan Saeed
Agriculture is the best investment for the next 5-10 years. I am bullish on agriculture because of 3 reasons
1.    Weather patterns are changing
2.    Huge gap between demand and supply
3.    Under-investment in agriculture in the last 25-30 years.
This lesser-known commodity could be one of best investments in emerging markets now.  I wrote this piece on April 6, 2012.
With the world’s need for both edible fats and oils rising at a nearly unsustainable rate, palm oil represents a massive opportunity to fill that growing demand.  Emerging markets are in an explosive growth phase in caloric needs.  As they rise in wealth, so will their demand for calories and as such so will the demand for meat and dairy, the primary sources of saturated fats, which, despite propaganda to the contrary are absolutely essential for proper growth, development and maintenance of human beings. 
Tropical countries have an advantage in that they can produce both palm and coconuts whose oils are rich in saturated fats; providing a relatively cheap source for them as well as high caloric density.  Palm and coconut oils alleviate that creating a low cost entry point into a higher calorie dietary cycle.  In essence, palm and coconut farming can be seen as a substitution effect for animal husbandry to some extent.
The reason as to why palm oil is the disruptive technology of food production is simply because it is more than ten times more efficient per acre than soybean oil and seven to eight times more efficient than rapeseed oil.  Every acre of palm planted yields nearly 11 times the volume of soybean oil and seven times the rapeseed oil.  Total land under cultivation is somewhere around 15 million hectares, which is less than 2% of that which is dedicated to soybean production.   
Indonesia and Malaysia produce 87% of the world’s palm oil or 38 million tonnes.  Thailand and Nigeria are next, producing 2.2 million.  Nigeria has put 2.5 million hectares under cultivation that has yet to begin producing in quantity.   It is estimated that Indonesia has the ability to triple its output while Malaysia is  going through some constraints. Thailand’s industry is struggling with low yields, 60% of the world average, but the industry there is still very immature. 
The global demand for palm oil has risen by a CAGR of 7% for the past 10 years, doubling in demand and tripling in price.  The economics of palm oil are so strong that that have driven production beyond that of soybean oil in less than 10 years.  Oil seeds in general represent less than 5% of the total land under agricultural use.  Palm trees, which produce economically for 25-30 years without replanting account for less than 0.1%.   Countries like Benin and Kenya have ideal conditions for growing palm as does the northern portion of Brazil.  Colombia’s production is rising. 
At this point part of the palm oil market is being siphoned off into the biodiesel industry, with a number of counties using a 5% biodiesel mandate to support the price similar to the corn/ethanol subsidies in the U.S. and Europe.  But, regardless of that, and the sustainability of it which is suspect at best, the world is trying to figure out how it is going to feed all of these people being lifted out of poverty in the world’s emerging markets. 
While Nokia is trying to figure out how to connect the next billion people to the internet and Facebook wants to give them a platform to express themselves, there is still the looming problem of how they are all going to get fed.  Malthusians of every stripe have been wrong since Malthus himself wrote; misunderstanding the impact of price on supply and demand, so there is little doubt that all of these people will get fed.  The key to affecting this outcome is increasing energy per acre and no crop comes close to palm.  The question is at what price in who is going to benefit the most from it? 

Outlook in Malaysia.
The iShares Mayalsia Index ETF (AMEX:EWM) has significant exposure to their palm oil industry directly, and since it represents a significant portion of their export market, even more so indirectly.   Genting Plantations is a rising Malaysian player with a young acreage profile that should see yields expand at a CAGR of 14%, according to a recent report by HSBC, for the next 3-5 years.  It is widely held by a number of agricultural ETFs, including EWM and the PowerShares Global Agricultural ETF (AMEX:PAGG), which also holds Singapore’s Wilmar Industries as its top holding
Palm oil trades in sympathy with soybean oil and crude oil.  This is due to substitution effects with both soybean oil and diesel fuel.  So, it is vulnerable to large swings in the price of crude oil, but only large swings.  With Malaysia announcing that their palm oil stockpiles are at 13 month lows the recent 15% move down in price to $924 per metric tonne is a normal reaction when the price of palm oil nears parity with soybean oil (black line in the chart).  So much of the verbiage surrounding palm oil has to do with its use as a sustainable biofuel and its carbon neutrality, or lack thereof.  While it is the best choice for making biodiesel due to its insanely high yields and sunlight conversion rate its need as a food source will be far greater.  
If one believes in the long term peak oil story or simply believes that demand will far outstrip supply at the current prices regardless of the politics, then that would also support the thesis for a massive expansion of palm plantations around the world over the next decade.  An acre of land can create enough fuel to power a Volkswagen (NYSE:VW) Polo 60,000 miles, or the average usage by five Americans. 
Doing a little math, current land under cultivation is approximately 38 million acres which produce 350 million barrels of biodiesel per year, 0.9 million barrels per day.  Since diesel constitutes approximately 24% of total oil consumption that means at 90 million barrels of crude used per day, current palm oil production could support between 4-5% of the world’s current diesel needs.  That would constitute the upper limit on biodiesel production in the world, regardless of the price. Happy investing in Palm Oil.
The energy production per acre from palm oil is disruptively large compared to other edible oils and represents a great long-term investment opportunity, regardless of the short-term softness in price.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

Tuesday, June 19, 2012

Greece election: The next 3-months =====By Shan Saeed

My prediction after Greece Election: New Democracy (ND) and PASOK (P) will form a new government. Of significance is that another socialist party, The Democratic Left (DL), will join in with ND & P. This makes the coalition more credible as Fotis Kourelis runs DL. Fotis is well liked and respected in Greece. Syriza and the Communist parties will form the opposition. I have no idea what the far right parties will do. For a time, maybe. The DL party is in favor of rewriting the deal reached with Germany. I think that talk of this will happen in the coming days. It's not possible to be pleased with anything that happens in Greece these days. People are moving out of Greece and going to London for a few months. Everyone will go the Olympics and try not to think about life in Athens. I fear that social unrest is going to spring up again. This is the real reason, I see lot of blood in the global financial markets esp in Europe.

Greece is flat broke. In a few weeks the government will not be able to pay workers. When this happens, the strikes will resume. So what are the chances of another bailout package from Brussels? Brussels is not the decision maker for Greece bail out. The decision on more aid for Greece comes from Berlin. I think the Germans will say, “No.” So Greece will be forced out of the Euro? I think, Yes, this is a possibility. Greece is not competitive at all. It is 40% less competitive than even Spain. So ultimately some form of devaluation must happen.

Timing of Grexit? Where will the money come from that Greece needs to stay alive? I tell you again that it must come from Germany. We may hear that Germany is willing to renegotiate parts of the bailout, but significant new money from Germany is not in the cards. There will be another crisis in less than three-months. You bet. 

Disclaimer: This is just my research piece and not an investment idea. 

Sunday, June 17, 2012

Money printing will create havoc globally. Invest in GOLD

Right now, its just coming out of the bottom of this cycle. The last three times this happened — 2000, 2004 and 2008 — all yielded great buying opportunities for gold and gold equity stocks.

It is funny how cycles often lead the fundamentals. Right now we are in the midst of this bottoming and the fundamentals are setting up perfectly.  Regardless of whether the anti-austerity or pro austerity parties get into power in Greece, I see a Greek exit from the euro and a default within the next 3 to 9 months. I just don't think Greece can meet the austerity measures imposed upon it. Greece is a weak economy and champion of tampering with figures. I say ECONOMIC figures.


Once Greece exits the euro, then the European Central Bank (ECB) can really begin to print money to buy Spanish, Italy, Irish and Portuguese debt. The ECB knows that Greece is a basket case and that the nation is beyond help. However, Spain and Italy can still be saved. That is why I see a Greek exit as positive because that will allow the ECB to deal with Spain and Italy. Then we have economies in China and India slowing. They will both be loosening monetary policy and cutting rates later this year further


Many called the recent Chinese rate cut a surprise as they called the recent Indian rate cut the same thing. However, it didn't surprise me. Both countries are going to grow about 1 percent lower than their recent averages so they are going to start to ramp up loans and borrowing again with loose policy.
Then it s the Americans. America is seen as the tallest midget. However, the United States is still a basket case. The deficit is $1.6 trillion, there are no plans to deal with this and won’t be any until December at the earliest.

The U.S. economy is showing signs of slowing. I expect that by year’s end, the Fed will start some sort of QE3 to spur growth and markets. June 19th -20th are important dates for the american people and investors generally. So there you have it: China, India, Europe and the U.S. will all be loosening their monetary policies by year’s end. That sounds like a perfect recipe for gold, commodities and other risk assets.  Therefore, if you see a cheap stock in one of these sectors, I would consider buying it in hope that things will pan out going forward. Happy investment in Gold and Silver

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

Today’s Investment Vehicle: INVESTORS PRUDENCE


How investors can analyse the market with their investment funds. After every decade, a new financial craze sweeps the markets. In the 1980s, junk bonds captured high yields at a time of rapidly-falling interest rates. In the 1990s, investors moved into high-fee mutual funds, which offered a one-stop-shop for diversification.

Over the past decade, two new investment products came to the forefront. The first, collateralized debt obligations (CDOs) blew up spectacularly in 2008. These assets, mortgages in the “it never goes down!” housing market, became increasingly backed by pools of mortgages funded without stringent underwriting standards.

The second product, the exchange traded fund (ETF) has continued to surge with popularity among investors. That’s because ETFs offer the same type of diversification as mutual funds, but often at a fraction of the fees. But all is not well with these products—and investors should be wary.


The biggest problem facing ETF investors today is having too many choices. In the past decade, ETF issuance has greatly surged from 113 ETFs in 2002 to 1,440 in 2012. This 10-fold level of growth isn’t sustainable. Today, investors can find an ETF with a laser-like focus on a specific sector. They can find ETFs that leverage up that sector’s performance by 2 or 3 times—either on the long side, or the short side. 

More importantly, ETFs have already become the most popular investment vehicle today. If ETF growth doesn’t significantly slow over the next few years, it may signal that it’s time to invest elsewhere until the excesses are weeded out. Investors should always beware of new financial products until they’ve had a chance to be proven during a period of market stress. For traditional ETFs, that moment came with the financial crisis. Unleveraged funds performed in line with the overall markets.

But the returns of leveraged ETFs have in many cases failed to perform as they should have. For instance, a double-leveraged ETF that should surge 10% when its tracking index falls 5% won’t necessarily see that kind of return.

Why? For starters, it’s because leveraged ETFs use options. Options impose both an intrinsic value and a time premium on the buyer. As the option moves closer to expiration, the time premium evaporates. As leveraged ETFs “roll” the options by selling soon-to-expire options for ones further out, they have to pay out time premium.  This unfortunate drag means that leveraged ETFs are a poor long-term investment vehicle. Over the short-term, they may perform better than expected, but timing is everything. Unleveraged, broad-index ETFs should provide investors the opportunity for diversification without the problems associated with their leveraged counterparts. 

Investors must nevertheless remain vigilant for any substantial market changes and be willing to act accordingly. Don’t rely on increased leverage to “make up” for lost investment power. Only use leveraged funds when the markets are at extreme points. Its not there yet.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

Thursday, June 14, 2012

Gold and Silver are hedge against financial / economic repression ------By Shan Saeed

Strategic analysis of the Global Economy
I had shared this insight 3-year back in a TV channel that Gold and Silver were hedge against uncertainty and chaos. Gone are the days when Gold/Silver were hedge against INFLATION. Now, I am sharing a new punch line i.e. Gold and Silver are hedge against FINANCIAL & ECONOMIC REPRESSION. We are living in historic times where financial market chaos and uncertainty is giving rise to a new structure and landscape to the global markets.
In order to know what is really going on in the world, investors need to first shut off the parade of mainstream media clowns and start tuning into alternative media. One commentator recently pointed out what should seem obvious to anyone who actually has a brain and uses it.
1.   What is the real story behind the incredible lack of reporting regarding the European crisis — especially in the countries of Greece, Spain, and Italy right now? Spain will leave Euro or Greece or Germany
2.   Why has Citigroup been put in charge of issuing "digital-identity badges" to individuals that work for Defense Department contractors?
3.   What will happen to JP Morgan in the next 2-years? Will it collapse like Lehman Brothers?
4.   Saudi Arabia is pumping more oil to get Obama elected to secure shale gas deals in the long run.
5.   Why does the United Nations want to govern the Internet? Why aren't more people getting upset about their attempted power grab?
6.   Rare earth and Water will become the new source of war in the revised world order?
7.   Will Chin’s economy and growth trajectory cool off?
I am sure many of you could add more questions about other truly serious issues facing the world on an individual, national, or on the global basis. I bring these items to your attention because if you are trying to be a wise investor, it is mighty difficult to have success when you don't know the truth about things.
We are living in a time of unprecedented events. Throughout world history, there have always been good times, bad times, wars, rumors of wars, and problems that may have seemed insurmountable at the moment.
I read an article that clearly illustrates the necessity for alternative media to help us wrap the arms around this situation.
Raoul Pal was a Goldman employee who co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. After Goldman, he was the founder of Global Macro Investor, co-manager of GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. This is not some doomsday sprouting windbag arbitrarily pasting together disparate charts to create 200 page slideshows.
With Pal's resume, this is someone who is well-connected financially and knows things most others don't.
His latest writings—specifically his latest presentation — are what I want my readers/ investors /people to pay attention to, as it portrays the most disturbing and scary forecast related to these derivatives for the global economy:
  • We don't know exactly what is to come, but we can all join the very few dots from where we are now, to the collapse of the first major bank...
  • With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.
  • There are almost no brakes in the system to stop this, and almost no one realizes the seriousness of the situation.
  • The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives...
  • Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations...
  • From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.
  • And then do you think Japan and China would not be next?
  • And then do you think the U.S. would survive unscathed?
  • That is the end of the fractional reserve banking system and of fiat money.
  • It is the big RESET.
Pal continues:
  • Bonds will be stuck at 1% in the U.S., Germany, UK, and Japan (for this phase).
  • The whole bond market will be dead.
  • Short selling on bonds — banned.
  • Short selling stocks  banned.
  • CDS  banned.
  • Short futures  banned.
  • Put options  banned.
  • All that is left is the Dollar and Gold.
It only gets better (we use the term loosely)...
  • We have around six months left of trading in Western markets to protect ourselves or make enough money to offset future losses.
  • Spend your time looking at the risks of custody, safekeeping, counterparty etc. Assume that no one and nothing is safe.
  • After that... we put on our tin helmets and hide until the new system emerges.
How did we allow this to happen?
Do you want to know where we stand and what is going to happen to the U.S. economy and global economies?
Stop listening to the mainstream media and start getting acquainted with what is going on with this terrible derivative situation.
No wonder Ben 'the Liar' Bernanke has to tell so many lies... He told the American public after QE1 there would be no need for QE2 and yet QE2 came in.  As of today, he is telling us there is no need to do QE3 — but plans are already under way for exactly that.
If you listen to what Ben says in the mainstream media, you are almost certain to lose your shirt in the investment world in the coming months and years ahead.
SILVER- Extinct just 8 yrs from now!!!!
That's how long it will take for the supply of silver to be completely wiped off the face of the earth, according to the U.S. Geological Survey. That's why you need to be buying silver right now — only not in the way that you think...90% Silver has been mined. Silver is a poor’s man Gold.
A global economic disaster and resulting paradigm shift had to happen at some point, and it appears that time has come. I think, we are now coming to a point where there is no more "kicking of the can" down the road.
History clearly shows that governments and central banks can hide their mistakes for many years, but they all eventually go bust. What we are witnessing in Europe, in my opinion, is just a precursor for what will eventually come to London, the United States, Japan, and China.
People ask me if the bull market in precious metals is over. Most of these individuals are the very ones who are still listening to the mainstream media, who have a constant propaganda machine to bash the precious metals.
Let's look at this thing from an objective standpoint for the past 12 years to help you understand if you haven't already figured it out...Each and every year for the past 14 years, I have been bullish on owning gold and silver. Now, realize I am not talking about the fraudulent paper representations of gold and silver like pooled accounts, certificate programs, or ETFs...
You will never see the full benefit of those investments as the precious metals soar to levels the average investor can't even understand at this point. The reason: They are not backed with real metal as is fraudulently advertised.
I also want to mention the fact that for eleven years in a row, gold and silver have hit a new high each and every year since 2001.
When gold was at $350, I remember the mainstream media coming out in droves saying how gold would never cross $400 and was most likely headed to $150. Each and every year for the past eleven years, these manipulative morons have said the same thing as gold kept tracking higher and higher. They were wrong, and people like me have been right and got the appreciation for my strategic insight.
Who are you going to listen to? Why would the secular bull market in precious metals be over at this point? Has anything changed for the better?
Of course not. They are getting much worse very quickly... and governments and their central banks don't know what to do about it other than create money out of thin air and pump it into the system.
It's not working. Look at what Merkel and the Euro jackals told us just three months ago that all has been solved with debts in the European Union and not to worry. Now we find out there is plenty to worry about, and QE3 will be happening in a big way despite what the banksters say.
The fact is that after reaching each and every new high the past eleven years, the precious metals markets have always corrected back 10% to 25% from the latest high before trekking to the next new high.
The Reason to own Gold and Silver have never been stronger than right now. They will become even more so in the coming months and years ahead as the calamity of governments and politicians is fully exposed for the entire world to see. Wall Street has been losing "clients" ever since they had to be bailed out by the government...JP Morgan's recent $2 billion trading loss is just the latest example.
And people are going to become irate as they lose their savings, pensions, etc., etc. As Richard Maybury recently said in his Early Warning Report, the evidence is quite clear:
“Socialism doesn't work. The leviathan state in Washington needn't be overthrown because it is committing economic suicide. Like the Kremlin in the Union of Soviet Socialist Republics two decades ago, the whole statist structure is collapsing of its own weight, because it is rotten to the core. The trouble we have been seeing all over the world during the past several years is the beginning of this spontaneous disintegration everywhere.”
Get ready for gold and silver to make a run to the next new highs before the year is out as the problems with debts, fiat currencies, and derivatives all come to a head at once. It's not going to be pretty for those who are unprepared, so do what you can to get your house in order before it's too late...
Secure your future by taking position in Gold and Silver. Ownership of physical gold and silver that is in your possession will be paramount to your financial success in the coming months and years ahead. Eventually, the right mining stocks could offer insane leverage to drastically higher precious metals prices.
And if you want to know who the last man standing will be in the coming debacle, you need only heed this quote by George Bernard Shaw:
You have a choice between the natural stability of gold and the honesty and intelligence of the members of government. And with all due respect for those gentlemen, I advise you, as long as the capitalist system lasts, vote for gold.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

I am not sharing earth shivering news but its a hard fact. But in the so-called modern-day age of high-tech wonders and medical miracles, we now have a titanic problem the world has never seen before: derivative liability on a scale that boggles the mind.
What is even more puzzling is the fact that 90% of the people have absolutely no understanding or the slightest clue how this is now going to affect us.
And the punch line: From a timing perspective, I think 2012 and 2013 will usher the most challenging times for the financial markets globally. 
After hearing this, I have started to wonder about the recent revelations regarding J.P. Morgan Chase and their $2 billion derivative loss (or was that $4 billion?). The latest news seems to indicate $20 billion loss, but suddenly it's starting to sound like just the tip of the iceberg, similar to how the 2008 derivative meltdown started.
For those not familiar with the current derivative liability hanging over the head of the financial system, here are the facts: There is nearly $1 quadrillion (that's 1,000 trillion) of unsecured derivative liability in the world.
This number is absolutely insane! A million seconds is roughly 12 and half days. A billion seconds is 32 years. A trillion in terms of seconds represents 32,000 years. A quadrillion is 1,000 times 32,000 years in terms of seconds.  It's hard to get one's head wrapped around such a number.
The Top 5 U.S. banks make up $230 trillion ($230,000,000,000,000) of this quadrillion dollar liability.
Here is the breakdown of this number as accurately described by noted retired writer Paul Roberts who was famous with the Washington Post...Paul Roberts enlightens us about another $230 trillion:
However, the $230,000,000,000,000 in derivative bets by U.S. banks might bring its own surprises. JPMorgan Chase has had to admit that its recently announced derivative loss of $2 billion is more than that. How much more remains to be seen. According to the comptroller of the currency, the five largest banks hold 95.7% of all derivatives held by banks. The five banks holding $226 trillion in derivative bets are highly leveraged gamblers.
For example, JPMorgan Chase has total assets of $1.8 trillion but holds $70 trillion in derivative bets, a ratio of $39 in derivative bets for every dollar of assets. Such a bank doesn't have to lose very many bets before it is busted.
Assets, of course, are not risk-based capital. According to the Comptroller of the Currency report, as of December 31, 2011, JPMorgan Chase held $70.2 trillion in derivatives and only $136 billion in risk-based capital. In other words, the bank's derivative bets are 516 times larger than the capital that covers the bets.
It is difficult to imagine a more reckless and unstable position for a bank to place itself in, but Goldman Sachs takes the cake. That bank's $44 trillion in derivative bets is covered by only $19 billion in risk-based capital, resulting in bets 2,295 times larger than the capital that covers them.
Bets on interest rates comprise 81% of all derivatives. These are the derivatives that support high U.S. Treasury bond prices despite massive increases in U.S. debt and its monetization.
U.S. banks' derivative bets of $230 trillion, concentrated in five banks, are 15.3 times larger than the USA GDP size 15.1 trillion. A failed political system that allows unregulated banks to place uncovered bets 15 times larger than the U.S. economy is a system that is headed for catastrophic failure. As the word spreads of the fantastic lack of judgement in the American political and financial systems, the catastrophe in waiting will become a reality.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry  a RISK

Monday, June 11, 2012

Smart Money continues to stay in precious metals By Shan Saeed

Gold and Silver will continues to outshine and outsmart other asset classes going forward. Gold and Silver are hedge against financial and economic repression. 
In long-term bull markets, there are often lulls. For example, if you look at the Nasdaq bull market of 1982 to 2000, you will see that at its 1990 low, it had gone nowhere since its 1983 high. That is seven years of near-flat movement despite being in a long-term bull market. Right now, we have seen a near year long consolidation in gold and a near two-year consolidation in the stocks.

However, I still think the long-term trend is to head higher. If you analyse at economic slowdowns in India and China, the eurozone crisis and the looming debt crisis in the United States, there is little else for these countries to do but to cut interested rates and print money. 

Smart money is doing this: Soros Fund Management LLC, founded by the 81-year-old billionaire, more than tripled its investment in the SPDR Gold Trust in the first quarter to 319,550 shares, now valued at $50.2 million, an SEC filing May 15 showed. It held as few as 42,800 shares last year and as many as 6.2 million at the end of 2009.  John Paulson has helped his GLD position in the first quarter. I could imagine that both these big investors are waiting for the long bull run in precious metals. 

Therefore, both are ignoring short-term weakness and getting ready for a huge round of money printing to come. ..Gold stocks are a special opportunity because by certain valuation metrics, they are cheaper than their 2008 lows and are as cheap as they have ever been. Big and valued investment still long gold and gold stocks cheap — this brings a unique opportunity in the gold sector. 

I didn't think it would see as good as buying opportunity in gold stocks as it was seen in 2000 and 2008. However, we have one yet again.  If investors have missed out on the gold bull market, I would use the recent weakness to take advantage and get into the bull wagon. 

NEXT STOP FOR Gold: $1800 or $1900

As long as gold can maintain its support at $1,525 an ounce, 
further gains should be forthcoming. 
What’s the best strategy now? You buy gold. 
The precious metal’s 15 percent correction from last 
September’s 6, 2011 high of $1,923 creates a great opportunity 
to purchase it at a “discount.  Investors stay long above $1,525. 
Every time I hear that to get to that level, I can see big buyers
 — perhaps central banks — adding to their coffers of physical gold.
 That's giving the nice base. To be sure, if gold drops below $1,500, abandon ship. 
But I dont anticipate that. I see a very good chance that 
the Federal Reserve will implement another round of 
quantitative easing [QE-3]. “If the gold stays above $1,600, 
I am definitely see a clear shot to $1,700.

Other financial investors/players are calling the shots as well. 

1. Goldman Sachs predicts a price of $1,940 in 12 months. 
2. Barclays sees an average of $1,790 in the fourth quarter 
3. Morgan Stanley expects $2,000 then. 
4. HSBC eyes $1800 by Dec-2012
4. Shan Saeed expects Gold touching $1900/ounce by Q-4. 2012

Disclaimer: This is just a research paper and not an investment advice. All financial transactions carry a RISK.