A number of sources claim that we have hundreds of years worth of natural gas reserves remaining in the USA. Is that really so?

The most authoratative natural gas information is available from EIA.

The inflation vs. deflation debate has heated up again. The debate looks far from being settled, even among professional investors. This may be the single most important debate in the investment world.

Jim Rogers, Peter Schiff, James Sinclair, Gerald Celente, Marc Faber and Congressman Ron Paul are on the inflation camp. The argument is simple: As the US government racks up trillion dollars of deficit spending, the money can come from neither raising tax, nor borrowing. So the only way out is print money out of thin air. In history, any time a government chooses to solve its fiscal problem through massive money printing, it always leads to hyper-inflation at the end. So that is going to happen. It might be postponed a bit but can not be avoided.

In a volatile market, rather than trying to get ahead of the daily movements, successful investors spend their efforts figuring out the big picture of long term fundamentals. Many people often draw the wrong conclusion when their views are too narrow: They look at only the demand side and forget the story on the supply side, or they fail to see the effect of government intervention or speculative forces.

Recently, in researching the market trends of currencies, commodities and shipping, I made a stunning discovery, yet almost no one else discussed it in any public literature.

The palladium bull case is getting better by the day, as the Russians are finally going to make their checkmate move, tomorrow:

Russia to launch platinum, palladium futures trade
MOSCOW, April 14 (Reuters) - Russia's RTS exchange will launch trading in platinum and palladium futures contracts from April 15, adding to existing contracts on gold and silver, the exchange said on Tuesday.

The news over the weekend was that the IMF is going to sell 403.3 metric tons of gold. Wow! 400 tons of gold!

Except that this is old news. The IMF has been making a lot of noise about selling 403.3 metric tons of gold for nearly a year now (some say for over a decade!). So what exactly is new? They never sold an ounce of gold. I will believe the IMF gold sell when it happens.

The Baltic Dry Index (BDI), a shipping index considered one of the most reliable global economic indicators, has been surging up for 17 consecutive days as of Feb. 11, 09. It's not often that something just keeps going up for 17 days. The BDI’s strong rally has caught a lot of people’s attention. However, dry bulk shipping stocks like DryShips (DRYS), Excel Maritime Carriers Ltd. (EXM), Eagle Bulk Shipping Inc. (EGLE), Genco Shipping & Trading Ltd. (GNK), TBS International Inc. (TBSI) and Navios Maritime Holdings Inc. (NM) plummeted instead of moving with the BDI. So, what's going on here? Let me digress a bit before talking about the fundamentals of shipping.

Despite a 17-day rally, most people remain skeptical about the outlook of the BDI. In a recent post, Trader Mark asked "What's Really Going On." Most believe the BDI rally will be short-lived, so when BDI finally dropped for two days, Bespoke Group declared: "BDI rally is DEAD!"

Gold rush 2009 is on, as gold is the front-runner in precious metals, so far. Gold is now only 10% away from its early 2008 high; silver is off 39%; platinum is still off 57% from its high; and palladium is still off 67%.

Don't buy the front-runner, buy the laggard, palladium! Chasing the front-runner and big crowds is the fastest way of losing money. Just look at recent bloodshed in DryShips (DRYS), a front runner in shipping stocks. I switched from DRYS to Excel Maritime Carriers Ltd. (EXM) and cautioned about DRYS in mid-January 09. So, I was lucky to have avoided the massacre in DRYS. There are inherit problems in DRYS that are now exposed, but big crowd sentiments added to the severity of plummet.

Today's market is full of opportunities to make money or rather to lose them. Just remember: The market always makes the biggest group of people lose the largest amount of money to allow a few to get obscenely rich at the same time.

For your own good, you should always avoid the biggest crowd, and go to quiet, secret places few have notice. This is true for making money and for life in general. Imagine you are at a place with hundreds of thousands of people, and a situation of imminent danger arises.There are only two bridges leading to safety - one is narrow and in terrible shape, and another is big and in solid shape. Which one would you choose? I would rather foolishly run to the dangerous one, knowing that all the smart folks will rush to the safer bridge, and collapse the safer bridge due to the sheer weight of the big crowd. That's the philosophy of life.

I am convinced that the bullish fundamentals of palladium are even better in 2009. Recently, Impala Platinum (IMPUY.PK) updated its estimate of platinum and palladium supply/demand data for 2008. Did you notice the significant drop in the Russian supply? The annual sale of Russian Strategic palladium stockpiles, about 1.5M to 2M ounces a year, finally ENDED! Back on June 11, 08, the palladium market had a knee-jerk response when Norilsk Nickel (NILSY.PK) merely suggested the termination of the stockpiled palladium sale. Now that it really is ENDING, how will people react when it becomes widely known? Russia maintains a Defense Strategic Stockpile for its own wartime needs, not for selling PGM metals below cost to the world.

In Impala's estimates, recycling accounts for 1.1M ounces of palladium supply in 2008. The CPM Group estimated the recycling to be as high as 1.6M ounces a year. The good news is this supply will also be removed in 2009. A new catalytic converter contains about four grams of palladium, while an old one has about two grams left. Recycling recovers about 75%, or 1.5 grams each, worth about $9 in palladium at today's price. The PGM recycling process is a long, complicated and costly one, and at today's low price, there is simply no incentive for recycling. Stillwater Mining (SWC) is better off dropping the PGM recycling business and concentrating on mining. This could also boost the metal's market price, as it would free-up large working capital that was locked up in the recycling materials inventory, and enhance the company's balance sheet, as a result.

We saw another irrational knee-jerk market reaction on Jan. 7, when the price of oil dropped more than 12% in one day in response to EIA's weekly inventory report. The report actually showed an increase of 6.68M barrels, and the unwarranted knee-jerk reaction shows the market interpreted the data completely wrong. If you scrutinize the data - oil price should jump up, not down.

If oil is being hoarded, of course the inventory will jump up. The data shows that last week’s U.S. oil imports increased dramatically over the same week a year ago: 13.698M barrels a day versus 12.904M. Therefore, for the week, an extra 5.558M barrels of oil was imported. If the U.S. is buying more crude oil, of course, inventory will raise. When Americans are buying more, shouldn't the oil price be driven up in the international market? Inventory was up NOT because Americans are consuming less, but because we imported much more.

The market irrationality has reached a new record. Spot price for crude oil free falls to $31.41 a barrel (WTI Cushing Spot) two days after OPEC cut production by 2.2MB per day and made clear that they wanted to see $75 oil and will continue to cut if necessary. As OPEC vowed to keep cutting until they see $75 oil, oil should go up, but it actually went down. What gives?

In search for an answer, people blame it on "the oil demand has collapsed". Global oil demand did NOT suddenly collapse in the two days after the OPEC announcement. Look in a mirror for the answer. Yes that says you! Every one bet on raising oil after OPEC cut. The market ALWAYS fools most of the people most of the time, logical or not. Fundamentals work in long terms, not in short term moves. If you bet on short term moves, try to bet against most people, instead of betting on fundamentals.

Congratulations to our President-elect, Mr. Obama. It's fitting that an African American shall take up America's top job to salvage this country from an imminent political, social and economic collapse. Closer ties with Africa, a land blessed with rich natural resources, might provide the best opportunity we desperately need to save America and continue our prosperity!

Circuit City (CC) bankrupted. General Motors (GM) could be next and Ford (F) is not much better. Mean while we are bailing out AIG for the second time (or maybe the third time) in just a few months as it seems to be just another growing black hole. And who will bail out the Federal Reserve Bank or the US Government itself?

When people see danger in the market, their natural response is to liquidate everything and move everything into cash in order to ride out the storms. The conventional wisdom is "Cash is King." However, conventional wisdom doesn't work anymore, as this is unconventional time. If you are fully loaded in cash or U.S. Treasury Bonds, this news, first noted by Karl Denninger, should completely shock you out of your shell:

According to an October 19 article in Investment News, $2.29 Trillion Dollars US Treasury Bonds Failed To Deliver.

My  Oct. 22, 2008 article discussed the breaking news that Norilsk Nickel (NILSY.PK) was open to offers to buy its majority stake in Stillwater Mining (SWC), America's only PGM mine. Yesterday, as the news spread, SWC's share price plummeted 25% on fears that Norilsk was dumping its shares, which could then depress the share price.

However, upon further research, I am growing more and more suspicious about the credibility of the news story. It could well be a false rumor, after all. I still do not have a definite confirmation or denial of the authenticity of the original news story, but I will discuss why I now suspect the story could be a false rumor.

Important update [Oct. 23, 08]: The story of Norilsk selling its SWC stake might NOT be true. Please see my latest post that deals with these suspicions, and do your own due diligence.

This is the fourth part of my series articles discussing the true valuation of physical assets, paper assets and currencies, vital knowledge needed to survive the unfolding global financial crisis. If you haven't read the previous articles, you can read them here:  part 1, part 2, and part 3.

Is it deflation, stagflation, or hyperinflation, that we're seeing in the current global economic crisis? That's the quadrillion-dollar question investors must get right. This article will answer that big question but it is also meant to be a sequel to part one and part two of my previous, serial articles talking about valuations of physical and non-physical assets as well as currencies. Please read the first two articles if you have not. It's critical to understand valuation of commodities and currencies first, before the big question of inflation versus deflation.

Recently, as the credit crisis unfolded, we saw the worst commodity price plummet in history, while the U.S. dollar index rallied amid the unfolding financial crisis. Many people wonder that the commodity bull market has ended as the global economy enters a recession. They reason that due to the credit squeeze, people cut back on spending, because they could not borrow any more.

All investments are about buying something at a lower cost to get a higher return later. Therefore, investors should try to understand the value of things they buy and sell. Warren Buffett said you should never buy something that you do not understand. At a time of crisis such as the one we face now, in order to survive and prosper, investors must have a profound understanding of values not just of things physical, but of non-physical things as well.

In my last article, I discussed why physical things have intrinsic value and how they are determined. This article is meant to be a sequel, so I shall continue by discussing the values of non-physical assets. Such discussion is urgently needed, and is made even more relevant today due to the unfolding global financial crisis and the Bailout Fiasco.

Yesterday, barely one week after the fall of Fannie Mae (FNM) and Freddie Mac (FRE), we saw the fall of the third and fourth largest financial institutions at the same time. Lehman Brothers (LEH) filed for bankruptcy, and Merrill Lynch (MER) sold itself to Bank of America (BAC) in a hurry.

The Dow plummeted more than 500 points. We are now looking at an unprecedented financial tsunami and it is at times like this that people MUST preserve their wealth through safe haven investments, or risk losing everything.

In recent weeks, we have seen the worst sell-off of commodities in the history of commodity trading. The magnitude and viciousness of the sell-offs made many traders wonder whether a slowing global economy could mean commodities are no longer bullish fundamentally. 

These commodities sell-offs are precisely synchronized , which subject them to suspicion of market manipulation and government intervention. Grains, precious metals, base metals all move up together one hour, then all fall off a cliff the next hour.

Originally posted August 26

The 29th Olympics Games has concluded nicely in Beijing, and so ended the One Dream of One Harmonic World. The War of Georgia broke out on the very eve of the Olympics Opening. The fireworks we watched were so brilliantly streaming! And the rockets' red glare, the bombs bursting in air, gave proof through the night that our planet was still not peaceful.