Ian R. Campbell

China Wants a Global Currency? Here's How

I found this article to be a well written and thoughtful commentary on how things have gotten to where they are. The question I have of Dr. Morici is: Exactly what U.S. goods and services does he see 'China and others' purchasing that would allow the 'U.S. economy to grow robustly'? It seems to me that U.S. manufacturing jobs lost are unlikely to be recovered given the 'country comparative' wage discrepancies, and 'service offerings' are unlikely to be exportable over time as exportable services are based on knowledge offerings that can be replicated in developing countries. I comment on this article today on www.SRPBlog.com.

Retail Sales, Jobless Claims Quite Misleading; Commodities the One Bright Spot

I agree with the author’s assessment. About 4 weeks or so ago a commentator coined the phrase ‘green shoots’. Everywhere you now look you can find the words ‘green shoots’, irrespective of for what news source the commentator works for or what country he/she works in. For example, if you review the articles posted on the StockResearchPortal.com Home Page ‘Today’s News’ feature you will find multiple articles that have used that term over the past three days. I find many article headlines to be ‘attention seeking’ rather than factual. I understand why this is the case – to attract readers to articles – but headlines are just that. It is important to read the articles in detail and form one’s own opinion as to whether the commentator writing the article reaches the right conclusion based on the facts at hand. With respect to ‘green shoots’ I suggest like any plant the root structure and the type of soil the plant is growing in both are fundamentally more important than what one observes above the ground. It is obvious that ‘seed cast on rocky ground’ cannot have the same long-term impact as ‘seed cast on rich earth where there is a long and growing season, a balanced amount of rain, and a farmer who weeds and otherwise cares for his crop prior to harvesting it’. Again, in my view this latter thought must bring into play the fact that the U.S. is the world’s largest economy and that it currently continues to face ongoing job losses, increasing deficits, reduced retail sales, and a current Administration that continues to talk about increasing Medicare and social services in a manner that to me suggests it is weighting those ’social benefits’ to a greater degree than it should until the U.S. economy begins to grow out of its current economic malaise. To take the analogy further, America is ‘fertilizing its soil with ‘bail-out’ and ’stimulus’ packages. To me the important questions are:

• Has America now recognized the damage it has done to its ’soil’ by overproducing from it?:

• Has America left it too late to fertilize and refurbish its ’soil’ in a way that prospectively will be meaningful?; and,

• If America hasn’t left it too late to rehabilitate its ’soil’ is it clever enough not to repeat the mistakes of the past that led to where the U.S. economy is today?

Why Physical Gold Is Superior to Mining Stocks for Long-Term Investors

I certainly agree that physical gold and mining stocks are different from one another, and that holding some amount of physical gold as a ‘safe-haven’ is eminently sensible. That said, I don’t think of physical gold so much as ‘an investment’ per se – but rather think of it as a ‘foundation’ on which to build an investment portfolio. As one of my friends who inherited significant wealth said to me one day: “I have always owned the amount of physical gold that would enable me to continue my lifestyle and give me a base from which to rebuild my wealth if I lost everything else I own”. Obviously not everyone is in my friend’s position with the ability to do such a thing, but I think his thinking is sensible.

Mining stocks on the other hand I do see as investments, with multiple reasons why holding them is a higher risk proposition than holding physical gold. However, with higher risk ought to come higher return. I believe mining stocks generally are stocks one ought to expect to realize higher than average returns on, or they should be avoided. It is essential to understand the speculative nature of, and risks inherent in, mining stocks – see ‘Valuation of Mining Companies’ in the E-Learning section of StockResearchPortal.com. To assist investors in their mining and oil & gas company research, StockResearchPortal.com recently introduced 16 new data components that topically segregate and filter all Press Releases fed to the website - for example, ‘Drilling Discovery News’ and ‘Resources and Reserves’ being 2 of the 16. We are unaware of any other website that does this, and think investors will find these data components very time-saving and extremely useful.

What You Need to Know About Commodity Markets, Gold and Oil

I was pleased to see this interview with Jeff Christian posted as a Seeking Alpha article. Jeff is a contributor to the StockResearchPortal.com Newsletter introduced just last week. The newsletter is e-mailed to all StockResearchPortal.com subscribers who opt-in to receive e-mails from us. We are delighted to have Jeff as a contributor to our Newsletter given both his ‘expert reputation’ and thoughtfulness. For me, this article does not disappoint in terms of the latter. I have summarized and commented on it on SRPBlog.com this morning and have directed readers back to Seeking Alpha to read the interview fully and in context. As an aside, for anyone interested in Mining and Oil & Gas Stocks listed on the Toronto/Toronto Venture exchanges, we yesterday introduced 14 new data components to StockResearchPortal.com that topically segregate and filter company Press Releases for website users - for example, ‘Drilling Discovery News’ - something we are unaware of any other Internet Research website doing.

China's Buying Spree

Good on Peter Cooper for summarizing China's ongoing interest in acquiring assets it thinks strategic to it. I have said in several posts on SRPBlog.com I believe strategic investment by China in natural resource companies in particular are inevitable. Given China’s stated concerns with respect to the stability of the U.S.$ and its large U.S.$ holdings I expect to see a great deal of this type of activity being announced in the next several months as China works to convert its U.S.$ to strategic hard assets. Yesterday we introduced 14 new data components to StockResearchPortal.com, a website focused on the 1,650 Mining and Oil & Gas companies listed on the Toronto/Toronto Venture exchanges. These components topically segregate and filter company Press Releases for website users - for example, 'Drilling Discovery News' is one of the 14 new components. To our knowledge no other Internet research website does this. It will not surprise me if a number of the larger companies that can be systematically researched through StockResearchPortal.com turn out to be strategic targets for Chinese investment. I encourage Mr. Cooper to continue summarizing Chinese strategic investments in subsequent Seeking Alpha articles.

Gold Losing Its Shine as Supply Surges

I commented in a post today on SRPBlog.com with respect to ‘old’ jewelry sales in the U.S., and made a more general comment about the possible effect of ‘old’ jewelry sales world wide on the gold supply/demand equation. I have little doubt that it will have some effect. I am not nearly so optimistic as the author of this article on the current economic climate resulting in ‘mid-digit U.S. inflation over the next few years’, and so continue to see gold as a good ‘safe haven’ in the event of either hyperinflation or deeper recession/depression in the U.S. and, as a result, all or most other world economies.

Smart Money Continues to Accumulate Gold

I find it interesting that those following gold are focused to the degree they seem to be on the day-to-day fluctuations in the gold price. To me the important thing as a ‘taxable investor’ is the long term trend which I see as a function of economic fundamentals going forward, and a resultant trend to physical gold (either directly or through an ETF) as a ‘safe haven’ investment. Importantly, I use the phrase ‘taxable investor’ for two reasons. First, in my view it is much more sensible to speculatively trade and take profits if the trader is a non-taxed entity than if he/she/it is taxable on profits taken. Second, by my definition an investor is a holder for some reasonable time period and not a trader. If you are interested in doing so, you can find Economic and Gold Mining Company Research at stockresearchportal.com.

Junior Gold Stocks: Bent, Not Broken

This is one of the best articles I have read on the Junior Gold Sector - and I have read a lot of what has been written on this sector. In my opinion Scott Wright is to be highly complimented on it. I agree with most of what Mr. Wright says, and have summarized and commented on his article today on the bolg - srpblog.com - a blog associated with stockresearchportal.com. StockResearchPortal.com is a research website that in part focuses on the junior gold sector. For those of you interested in gold stocks you might considering visiting the StockResearchPortal website and subscribing - subscription is free. If you take the time to learn how to use StockResearchPortal.com, we think it will help you identify the 'high potential' juniors that Mr. Wrights speaks about in his article.

If the Fed Is Printing Money, I'm Buying Junior Gold Miners

At a high level I agree with the author with respect to ‘well researched’ junior gold explorers and producers who have NI 43-101 Resources and Reserves, external and internal infrastructure in place or access to it, and so on. My detailed views on these things and what I think investors need to review when researching gold explorers and producers are summarized in the E-learning book titled ‘Valuation of Mining Companies’. That E-book that can be accessed at no cost under the E-learning tab on the home page of StockResearchPortal.com;

That said, in my view anyone who lacks both detailed fundamental knowledge of mining and the junior miners should either not buy them or should gain that fundamental knowledge before buying them. Failure to understand and apply knowledge of the key drivers to researching them carefully before investing in one or more junior miners is more likely than not to result in losses rather than gains in any market condition; and,

For what it is worth, I would never invest in a junior gold explorer or producer without first talking to the company’s President ‘one on one’ and forming my own impression of the ‘cut of their jib’. I have found that an easy way to gain access to those Presidents is to first buy, say 1,000 shares of a company that looks interesting as an investment, and then calling the President of that company and introducing myself as one of his shareholders. I have yet to have my calls screened, or to have a President refuse to talk to me as one of his/her shareholders.

What the Fed's Announcement Means for Gold

Based on all I have read in the past two days, I am confident Cooper is right in his analysis of ‘why the gold price’ has gone up so much in the past two days. That said, I see Cooper’s view as only a symptomatic market reaction to the far deeper economic problems I see us all facing – much like a person who goes to the doctor with a migraine headache to be told they have an incurable brain tumor. Intuitively – forget economic theory and modeling – I can’t see how the U.S. can simply ‘inflate itself’ out of its debt obligations where so much of those debt obligations are held by trading partners. I continue to feel sorry for both President Obama – who increasingly seems to me to be trying to concurrently deal with both economic and social issues which I think is completely wrong-headed at this juncture – and Ben Bernanke. Inevitably both will be tarred and feathered as the people who were ‘on watch’ as the U.S. economy continues to deteriorate. To me this will be unfair because I think no matter what in the end history says about George W. Bush and Alan Greenspan, history likely will be kinder to them than it ought to be.

Cooper at the end of his article says: “Beware being left sat on cash when you should be owning gold and silver as a hedge against desperate actions by the central banks”. To use a double negative, I don’t think this is stupid advice.

Five Metal Royalty Companies to Consider

I would like to thank Mr. Tischendolf for writing this article. I have never spent time analyzing any of these companies other than Silver Wheaton which I owned and sold at a profit about 3 years ago. I would not describe Silver Wheaton as a ‘royalty company’, although I can see why someone might. I think of Silver Wheaton as a ‘silver arbitrager’ since it is committed to purchase silver from producers who primarily produce other metals, and profit or lose from the spread between the price it is contractually committed to pay for the silver and the market price of silver when it sells it. That said, I have planned for some time to study Royal Gold in particular. The referenced article has caused me to focus on doing that. I will write a blog post on my findings (stockresearchportalblo...) in the next ten days.

Why Gold Miners Aren't Glittering

To make a general statement that ‘brokerage analysts’ expect gold prices to drop makes little sense to me, as many expect it to rise (although the gold price has fallen about U.S.$50 since the article was written, being about $925 this morning). It is accurate to say the price of bi-metal production by gold miners has fallen, but unlike base metal miners who produce gold and silver as bi-metals resulting in what can be substantial cost credits to them, gold miners profits typically are not so influenced by bi-metal prices. Moreover, reduced production by base metal miners (which currently is happening) means less gold supply to the extent that is important to the gold price. So far as demand for jewelry dropping, I suspect that gold ‘safe-haven’ investment demand is more than offsetting that – and in any event both these things should be reflected in the gold price, and should not by viewed in isolation influence the stock market pricing of gold shares. My own belief, as a generalization, with respect to the market price of gold company shares is that they tend to follow both the short-term gold price and the general market – which two things are not always weighted in exactly the same way by investors on any given day or short-term time period. That said, there is little doubt the long-term gold price is a key driver that bears directly on long-term gold company share values, everything else equal.

Gold Equities Look Underpriced - Wellington West

Wellington does not provide sufficient information to assess its conclusion that “Tuesday’s mini-correction in gold equities implies an embedded price of $685”. That said, assuming this number is credible I think Wellington’s conclusion makes good sense for both reasons it states, being:

• given investment funds in aggregate are finite at a given point in time diversion to ETF’s may have resulted in less interest in gold equities because of the elimination of ‘input cost risk’. However, I think a more likely reason for such a diversion (if indeed that has happened) has to do with the ‘falling tides lowers all boats’ theory. I have been surprised – and have personally seen it as a selective buying opportunity – that gold stocks fell with the general market as they did last fall. That was particularly true of the junior mining stocks, although based largely on antidotal evidence I believe part of those price drops related to ‘cash calls’ on fund managers; and,

• the reduced ‘input cost’ position Wellington puts forth. Obviously, operating costs are ‘fact specific’ to each company’s operations and needs to be analyzed as such. Further, from a current share valuation point of view one would have to be convinced that such ‘input costs’ will continue into the long-term in order to place much ‘valuation weight’ on this position. This is because share value determinations are best generated employing the discounted cash flow valuation methodology which present values all future ‘free cash flow’ valuations over several future years.

Anyone interested can visit my website (see above) and access a lengthy paper on 'Valuing Mining Companies' by clicking on the E-Learning tab in the Main Navigation Line of the site.

Value of Junior Miners Stabilizes Relative to the Price of Gold

I think there is little doubt that common shares of Junior Gold Mining Companies – for the ‘right’ juniors – may rise significantly in the event of continuing escalation in the gold price. That said, to speak in generalities is in my view foolish. Buying shares in the ‘wrong junior gold mining companies’ likely won’t get you very far unless you get very lucky. Junior gold miners as a group were badly beaten down in price last fall. Many – particularly those without NI 43-101 (or in the case of non-Canadian listed companies the equivalent) Resources or Reserves, or without excellent incremental drilling prospects – perhaps should have been. If an investor knows how to screen for and analyze such companies, I think that in the current environment it may be appropriate to borrow the ‘back up the truck’ phrase often used by Doug Casey (a well-known Newsletter Writer) when he writes up a company he likes. If readers are interested in doing their own due diligence I suggest they read the 17 Post Series published last fall on stockresearchportalblo... titled ‘The Valuation of Mining Companies’. As discussed in that series of Blog posts, In any economic environment it goes without saying that investing in junior miners, be they 'gold' or prospective miners of any other metal, is highly speculative.

Gold: Now Demonstrating Trust in Obama

I find the title of this article 'Gold: Now Demonstrating Trust in Obama' confusing. At first I thought Mr. Sobolev was suggesting that the recent gold price rise somehow was related to 'gold purchasers' 'trusting' President Obama and that was why the price had gone up. That made no sense to me. In the end, as I read this article it is just another 'inflation is going to come and gold is a good place to be' article. Personally, I am far from certain rampant U.S. inflation is a 'for sure thing'.