Stick with Gold and the Oil Stocks 48 comments
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Americans awoke yesterday morning to scenes of G20 protests in London. There was literally blood on the streets. The talking heads on CNBC scoffed at such “anarchy” and discussed the unmitigated audacity of the common man on the streets to protest in such fashion. I don’t support the smashing of windows, destroying of property, or taking of hostages but I can’t say I’d be beyond tossing an egg or tomato at the bond rating folks at Moody’s, S&P, or Fitch. If I saw Joe Kernen on the golf course, I might even aim a 2-iron in his direction. Of course Joe wouldn’t admit it, but look how he supported policies over the last 8 years which resulted in the biggest decline in US capitalism and democracy in the over 200 year history of the US. Yesterday morning, he even gave himself the title of “capitalism enabler”. What a joke. He’s never produced anything worthwhile in his life unless you own a hot-air balloon.
The CNBC celebrity stars acted as though such protests aren’t possible in the US. Certainly over the past 30 years Americans have lost their zest for protesting in spite of the many reasons why they should have. However, as more and more Americans lose their jobs (and their healthcare along with it…) we just may see more public displays of discontent. After all, if you can’t feed your family or keep a roof over your head, what do you have to lose? Desperate times call for desperate (drastic?) measures. More and more Americans are becoming wise to the fact that US policymakers have been funneling huge sums of money to the ultra wealthy while the middle class tax-payer picks up the tab. They are tired of seeing huge deficits rung up while getting nothing tangible in return (no health care, education, or infrastructure for example).
Meanwhile, their tax dollars are paying for schools, hospitals, roads and bridges in Iraq and we’re heading over to Afghanistan to repeat the blunder there. There is no financial regulation in the US – in fact just the opposite: we have financial policies and regulations that are tools of the ultra wealthy. This isn’t capitalism – it's fascism. It won’t take much more to push Americans over the edge. Unfortunately, the outrage should have come years ago as the game has largely already been played. I can make a small mistake on my income tax form and it’s caught. Yet Madoff can move billions around unnoticed? Please, it was noticed – but tolerated.
Americans are also exasperated with the lack of a strategic long-term comprehensive energy policy. The result is not only higher energy bills, but knowing that they are in effect funding both sides of the war on terror. Meanwhile, Obama and Congress haven’t yet figured out that the solution is abundant, clean, and cheap US produced natural gas and natural gas transportation. So instead of paving the way to a reinvigorated and reindustrialized country, the natural gas industry is going through another washout reminiscent of the 1980’s. What a wonderful reward for all their new technology and bringing to market the huge shale energy supplies. This is not only sad, but strategic and economic suicide.
The CNBC “tools” also spent a great deal of time wondering why the Chinese are making statements “to devalue the US dollar”. Hello? Congress, the Federal Reserve, and the Treasury Department are doing a fine job of that on their own! China isn’t trying to devalue the US dollar - they are trying to figure out how to protect their existing and future investments in US dollars. As they see more financial hijinx coming out of Washington, DC with little attention being expended on the US’s real problem (oil), who can blame them? If I were in their shoes, I’d be promoting a world currency based on a basket of Euros, Yen, Sterling, etc as well. Being connected at the hip to the US dollar is the same as being connected at the hip to ignorant US policy makers. Meanwhile, the Chinese use their US dollars to pick up Russian and Brazilian oil and natural gas on the cheap.
Meanwhile, you’d expect gold to be skyrocketing in this environment, but it is not. Of course, it’s pretty hard to find an American Gold Eagle to bid on these days. As I wrote in a previous article, it’s always very interesting to watch Kitco.com or APMEX.com to see what is available in US Mint Gold coins (not much). I am fond of smaller US Gold Eagles (1/4 or ½ oz) pieces. I mean if we are going to the barter system, you better have some small denominations, right? I like Silver Eagles too. For those of you who don’t like burying the coins around the yard (after all, the safe is the first place an armed robber would look), better to stick with the GLD and SLV ETFs. Send me an email the next time any of you see a quarter or half ounce US gold eagle for sale on either of these two websites. Kitco cracks me up - they label which coins are available for shipping “outside the US only”. What a panic.
Inflation in 2008 was driven by demand. Now, I see some supply problems on the horizon. Anybody look at the dry shipping data lately? Man, there is next to nothing on the high seas these days, hey? The next round of inflation will not be due to a falling US dollar (I am still amazed at the strength of the dollar) as it will be due to a lack of supply of dry goods. That said, there certainly are a lot of automobiles available (heh heh), however, they are the wrong kind of automobiles. How I’d love to see one of those huge shipping tankers full of these headed to the US.
Won’t happen though, Toyota (TM) won’t build them, and Obama won’t even utter the words “natural gas transportation”. Meanwhile, the gun of peak oil is pointed squarely between the eyes of the US. Talk about supply problems…it’s gonna be interesting a few years from now to see all these gasoline powered cars and trucks sitting idle. Today, people are sinking cars and trucks in lakes and ditching them in deserts because they can’t make their payments and hope the insurance will get them out of the bind. Imagine how many vehicles will become a problem as we get further along the peak oil path. Maybe someday we’ll have a tanker of natural gas conversion kits coming over to the US. Not likely.
So, I continue to recommend most people get out of the S&P500 and stick with oil stocks like COP, CVX, and XOM. Anybody note the dividend yield on StatOil (STO) or BP for instance? Just buy them, collect the dividends, and wait for the next peak oil spike. It’s gonna be a doozy.
If you want some comedy while you wait, tune into the CNBC Comedy Channel. They continue to be the funniest act on TV. Meanwhile, you may want to invest in a wood stove, shovel, hoe, and rake and build yourself a garden. Not only will it get you out of your easy chair and outside to enjoy the beautiful spring weather, it will keep you healthy, keep a steady supply of highly nutritious food on your table, and give you a sense of accomplishment. I’d also recommend a chicken coop for fresh eggs but make sure you don’t live in an uppity neighborhood with covenants & restrictions – they frown on that kind of thing. At least for now…
Disclosures: The author owns STO, COP and some gold and silver investments.
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Would/ent Canada be safer? They Don/t hold paper certs or % like
GLD-SLV ..had both.
Seems like a safer.. resource country.
R.O.
On Apr 02 05:31 AM maxiedog wrote:
> The media's presentation of the G20 'protests' to which you refer
> are total hype. There are probably more police and media in London
> than demonstrators and the narcissistic violence is strictly for
> the cameras. The authorities have blanketed the event with security.
> The sad thing is that there is deep anger here over the current economic
> situation but no effective peaceful means of democratic protest.
> The democratic right of assembly and free expression is subverted
> on both sides; by the publicity-seeking 'protestors' and the authorities
> that react to them. Luvvly jubbly for both sides but sour wine for
> democrats.
The Obama administration is becoming notorious for its half-measures and inconsistencies.
I give Obama a lot of credit for firing Wagoner at GM. I think every company with its hands out asking for money should be subject to the possibility of having its CEO and other senior executives fired.
The problem is not only did Obama not apply the same rule to his buddies on Wall street, he almost let the bonuses (at tax payer expense) silently go through until there was public uproar. Why didn't he fire the heads of AIG and other banks/ insurance companies asking for government money?
It is a shame that Obama only has allocated $43 billion to alternative energy, but has given AIG nearly four times that. One has to ask what the return on investment will be from AIG versus an alternative energy infrastructure for future generations.
Reading between the lines I think Obama is more interested in doing a deal with the Russians and leaving the G20 as soon as possible as he has some very pressing financial problems back at home.
I am, by the way, long of gold but also think the S&P is too high and am looking to see it go under 700 soon.
We don't need biofuels. We don't need to invent clean coal. A wind turbine pays for itself in three years and lasts for twenty five. All we lack is the political will to actually change gears, because the change would put existing wealth at risk.
Did Joe Kernen run the national debt up to $12t? I hardly ever turn him on, but I've heard him sigh about the nation's debt over the years.
Bush was indeed a bad president, in my view, but to blame solely his policies on the entire financial bust out is nothing less than insanity, Fitzy.
As I've pointed out to you before, your hard-line leftist ideology trumps any reasoning ability you may have, and that makes you, when you comment on anything political, a mere propagandist. You may want to send a few articles in to the Huffington Post; I think they'd fit quite well there.
Speaking of someone who has never created or produced anything, what about those copycat hippies that you so admire running up and down the streets at the G-20? You must have been a hippie-come-late-to-th... back in your days at GT in the goofy `70s.
Those are children who know not what day it is who've been brainwashed by Marxist professors, evidently much as you've been. I've not seen a one of them who's old enough to know how to clean himself properly, much less have any idea what the G-20 meeting is about. Don't you wear backpacks, as all of them do, Fitzy?
Why is it you can never find anything wrong with a Demoncrat, such as Nancy Pelosi, Barney Frank, Charlie Rangle, John Conyers, John Lewis, John Murtha, Rahm Emmanuel, Christopher Dodd, John Kerry, Chuck Schumer, Al Snore, Diane Feinstein, Barbara Boxer, Harry Reid, Ted Kennedy, or the Clintons? You don't think they had anything to do with causing the financial blow out? If you don't you're more whacked out than I thought.
Besides that, there is a list of kooks if there's ever been one. How do you fit in there, Fitzy?
Fitzy me boy, you're a child of cynicism—born to love the government and to hate freedom. It's your nature to worship whatever promises you it's doing things for the good of humanity—even though objective people have to admit both the intended and unintended consequences are mostly bad and wrongheaded.
Do you not know that the US government is the biggest polluter in the world, Fitzy? Why do you never bring this fact up, you're so concerned about the environment?
However, I do agree with you about China. The Chinese are very nationalistic, and they're interested in protecting their own nation and its interests—not in destroying America. You have a lot of China-haters on this site, though, so you'll probably receive some ire about that comment. Take it like a man; you brought it up!
I only wish the US were more that way.
And although your first five paragraphs have nothing at all to do with your conclusion, I agree with you on the oil stocks. I personally own STO and BP and CEO and PTR, but I think you're early on gold and silver.
The inflated money supply will take a while to produce the high prices you see coming.
The reason you can't find any metal coins is the fear of your most recent god, Obama. Ask a couple of coin dealers; they'll tell you what buyers are telling them they fear. It's not inflation, I can tell you that.
Fitzy, leftists are right sensitive creatures to even the slightest criticism, as you are. Oh, they can pour on the hot coals, but blow a feather back their way and they're on the floor squalling.
Take a break, Fitzy and lighten up. Don't be a baby every day of your life. Take your critic's views like a man. Listen to some of them; they may help you.
Oh, btw, commas and periods always go inside quotation marks in the US. The English place them outside.
Have a good day, but I know you can't, worrying about the planet burning itself into extinction, and all.
As to why so much money has been funneled to AIG, I'd suggest that you read Preview from Europe in this issue, and click on the link leading to an explanation of collateral calls. Does a good job of explaining things in non-financial terms.
On Apr 02 08:12 AM longoil wrote:
> Fitzman,
>
> The Obama administration is becoming notorious for its half-measures
> and inconsistencies.
>
> I give Obama a lot of credit for firing Wagoner at GM. I think every
> company with its hands out asking for money should be subject to
> the possibility of having its CEO and other senior executives fired.
>
>
> The problem is not only did Obama not apply the same rule to his
> buddies on Wall street, he almost let the bonuses (at tax payer expense)
> silently go through until there was public uproar. Why didn't he
> fire the heads of AIG and other banks/ insurance companies asking
> for government money?
>
> It is a shame that Obama only has allocated $43 billion to alternative
> energy, but has given AIG nearly four times that. One has to ask
> what the return on investment will be from AIG versus an alternative
> energy infrastructure for future generations.
Couple of points I'd like to add to your suggestions:
First, CNG conversion kits ARE available right now for only a couple of thousand dollars and can be installed by a "shade tree" mechanic to your existing car. If your home is supplied with natural gas for utilities, you can even set up for a small cost your very own CNG private "pumping station" for refueling. Go to Google and enter CNG and you'll find a wealth of info. The "show stopper" problem is that in the United States we have EPA regulations that do not allow any modifications to an existing engine pollution control components (including and especially the control computer chip) and massive fines are levied against owner and mechanic if caught. It's a shame these laws can't be amended for a CNG conversion because pollution is actually reduced! So retrofit conversions have a political road block and not a technical, marketing, or cost issue.
Second, I agree that oil companies will be a reliable wildly appreciating equity. However, I would shy away from the big integrateds (both domestic, e.g. XOM, CVX, etc. and foreign, e.g. TOT, Shell, etc.) and US based oil producers (e.g. OXY, APA, APC, etc.) because in this country any refiner and/or retail distributor (and possibly US sourced suppliers) of fossile fuels will be taxed severly by environmentally blackmailed politicians. I believe the safest bet is to own the big Canadian oil producers (e.g. CNQ, SU, NXY, and TLM). After all, their oil sands reserves are said to match the original size of the Saudi oil discovery. Right now we are their largest customer and the oil comes directly to us via pipelines (thus making a mockery of the political flag waving against "foreign oil"). If the Obama administration limits "oil sands sourced" oil imports due to carbon emmissions concerns, then Canada will simply add more pipelines directed to their Pacific coast and sell it to China. The additional advantage in owning Canadian oil companies is due to currency issues. When you buy shares in a Canadian oil producer, even though you buy in Dollars from American exchanges, those are actual real shares of stock (not ADRs as is the case for most all other foreign equities) in US dollars. If you believe that in the future our American dollar will eventually depreciate especially against the commodity based Canadian economy and its dollar, the you get an extra "kicker" in equity valuation as the dollar declines. Since the Canadian shares and their US shares are the same, go graph any of these oil producer stock prices for the same company on a Yahoo chart (it will work, e.g. SU and Canadian SU.TO plotted simultaneously) along with the currency exchange rate CADUSD=X). You will see almost 100% correlation between these stock prices and changes in the foreign exchange rates match almost perfectly with the exaggerated changes occuring between the prices of Canadian and US stock share prices. Thus you can see the Canadian Dollar was the strongest at May 20, 2008 simultaneousl with the stock price (it had been getting stronger against the dollar for several years and the US stock prices showed it by increasing faster in prices than their Canadian counterparts). When the oil producer equity market started its decline after May 2008, you'll notice that by June when the US dollar started its strengthening, the price of US based shares of Canadian oil producers declined FASTER. We are at the bottom now and as the dollar will eventually depreciate due to both inflation and weakening relative economies, the US priced Canadian stock shares will eventually zoom up with an additional "kicker" added! Thus you can keep your US dollars and have them grown as if you played the foreign exchange market simultaneously as a side bet.
I understand your point that AIG has to honor collateral calls, demands made by banks on the insurance contracts it has written.
My issue is why are we rewarding bad performance in the insurance industry with bonuses, while at the same time Obama wants to punish well run companies (i.e. most oil companies) not asking for bailouts with windfall taxes. It is very anti-American.
kind of liked your investment advice. i accumulated gold and silver back in the 90s. i don't much like slv or gld because i suspect they can't cover all their shares. everybody probably keeps a safety deposit box. it is an expense most of us already have. mine is crammed full. if we get a nice hit on gold and silver i will probably take the opportunity and just upsize my box. using this it is good to keep an eye on te criminals in washington, and be ready to retrieve your metals incase obamamama starts sniffing around like a porker after truffles.
i kind of like bhp too. i sold out while i could still take a nice profit. just trading these days as i just don't trust investing in this environment. maybe if cvx and xom get hit some more i will start to accumulate again.
i didn't much like bush but in comparison to obamamama he looks a little better everyday. i still call terrorists, terrorists instead of man-made- disaster-makers or whatever the new pc crap is.
pickens still tilting at windmills? he made money selling clne when it was up, shorting it on the way down and he still has his handout. maybe he should get a bailout.
o.k. fitz just for you and your dogma.
dumocrats good
reprobates bad
obamagirl smart
rush dumb
bush bad obama good
enjoy the kool-aid. the algore theory should make it refreshing
I'm sure you think I'm picking on you or that I'm naturally critical, but I'm not.
I just read an excellent article on this site that you should read and try to model yourself after if you really want to help people.
It's called "Buy China: It's Actually Benefiting from Global Recessions," by Darren Jiang.
Jiang makes his case without making personal attacks, as you do (and did on your most recent article and which add absolutely nothing to the writing except to show your political bent), and he tosses in not one political or ideological statement.
He presses what he believes to be the good in investing in China by both quantifying and qualifying the nation and its investment status, and he points out what he sees as the negatives.
Moreover, the writing (syntax, etc.) is pretty darn good.
Take a look at it, Fitzy. It might knock some of those hardened scales off of your eyelids.
Here comes the Z5
Mar. 15, 2009
Ehud Zion Waldoks , THE JERUSALEM POST
Zion Badash, 18, from Savyon, has invented a device to reduce emissions from internal combustion engines in most vehicles by as much as 40 percent and significantly cut gasoline consumption.
The compact contraption called Z5 has no moving parts and can be easily self-installed in cars.
After two years of research and development, it went on the market three months ago - and by all accounts is selling like hot cakes.
"Some of the people who come to us want to reduce their emissions and others want to save money on gas," Badash told The Jerusalem Post on Friday.
While it is being marketed for automobiles, the Z5 will theoretically work with any type of engine, from huge electric turbines to home generators.
The initiative has been a private one, with no government funding contributing in any way, according to Z5 marketing director Eli Mor. Zion's father is securing the patent.
"We've started marketing the Z5 in Israel, Turkey, Great Britain, the US and on the Internet," Mor told the Post. "It goes for $208. We are also in negotiations with automobile manufacturers."
According to an IBA English News report on the Z5, a government-approved mechanic independently confirmed that the device reduced emissions in all sorts of vehicles, from trucks to cars.
The story of the Z5 began two years ago, when Badash was 16.
"I was walking down the street in Tel Aviv, noticing how hard it was to breathe and watching the exhaust come out of cars, and it really personally bothered me," he said.
"I came back home and thought to myself, 'Even after all of the technological advances, it still seems like an old movie with black smoke belching out behind the cars.'
"At that time, I didn't have a lot of knowledge about engines. I knew that there must be some problem with the engine's combustion [to have all that black smoke coming out] and I knew that an engine is about the combination of two elements: gas and air. I started looking into the gasoline side, but there had been lots of efforts to improve the gas - all sorts of additives - and none had really worked.
"So I started to think about the air side. I realized that if I wanted to change anything, I had to treat the air before it reached the combustion chamber."
From that initial brainstorm, after much trial and error, the Z5 emerged. In layman's terms, the device, built from a special alloy, improves the air flow into the engine in such a way that the combustion is much more efficient. By being more efficient, the car both uses less fuel and produces fewer emissions.
How does a teenager with a dream and lots of will power actually create a product? Trial and error, according to Badash.
"We had an old large generator in our house that used to put out lots of black smoke. I started trying to put different metals into the air filter. Then I would measure the amount of gas used and try and gauge whether less black smoke was coming out."
"It took a long time, with a lot of trial and error, until one day I realized that I was actually making a difference in the amount of smoke coming out," he recalled. "Well, I was very excited when I realized that I had discovered something which worked. It's not every day that a 16-year-old invents something.
"I went to my father and we took it to the next level. We spent two years perfecting it, finding the right metals. Now we've started to market it."
The next step for this budding inventor and entrepreneur is one familiar to most 18-year-olds here: Badash will soon be drafted into the IDF.
Asked whether he had any other ideas up his sleeve, Badash replied with a laugh, "We'll start with this right now and see where it goes."
This article can also be read at www.jpost.com /servlet/Satellite?cid...
[ Back to the Article ]
> Oh, btw, commas and periods always go inside quotation marks in the
> US. The English place them outside.
LOL, your whole post is wrong, including this.
In US English, periods and commas go inside quotes only if they are part of the quote. Otherwise, they go outside.
On Apr 02 09:41 AM fireball wrote:
> hey fitz
> kind of liked your investment advice. i accumulated gold and silver
> back in the 90s. i don't much like slv or gld because i suspect they
> can't cover all their shares. everybody probably keeps a safety deposit
> box. it is an expense most of us already have. mine is crammed full.
> if we get a nice hit on gold and silver i will probably take the
> opportunity and just upsize my box. using this it is good to keep
> an eye on te criminals in washington, and be ready to retrieve your
> metals incase obamamama starts sniffing around like a porker after
> truffles.
> i kind of like bhp too. i sold out while i could still take a nice
> profit. just trading these days as i just don't trust investing in
> this environment. maybe if cvx and xom get hit some more i will start
> to accumulate again.
> i didn't much like bush but in comparison to obamamama he looks a
> little better everyday. i still call terrorists, terrorists instead
> of man-made- disaster-makers or whatever the new pc crap is.
> pickens still tilting at windmills? he made money selling clne when
> it was up, shorting it on the way down and he still has his handout.
> maybe he should get a bailout.
> o.k. fitz just for you and your dogma.
> dumocrats good
> reprobates bad
> obamagirl smart
> rush dumb
> bush bad obama good
> enjoy the kool-aid. the algore theory should make it refreshing
I think not and bankruptcy may well be the answer you get when you call it in. Just another Ponzi
I wonder what the Feds can do to those who own gold miners?
Any body got an answer? Tell Bindlepete@yahoo.com Thanks.
no comment on HR1835, Dan Boren et al bipartisan introduction??
I doubt they will do anything to them. Roosevelt confiscated gold, but didn't confiscate gold stocks.
It is one thing to confiscate a commodity, it is a far bigger step to start confiscating people's stock. A couple of restraining factors in my view: 1). how do they decide what is and what is not a precious metals stock 2). Confiscating precious metals stocks would create huge ill in countries like Canada. We can't afford to alienate Canada, we are going to need their oil. (and when gas reaches $10 per gallon, you will no longer hear the Democrats thumbing their nose at environmentally dirty oil from tar sands)