Mark Anthony

Are Coal Stocks Heating Up?

Thanks for the article. Very insightful. Especially your mentioning of India's new demand of 175M tons of coal to be imported annually.

Try to expand your thinking a bit. All these new demand of coal importation means one thing: Sea bound transportation! Dry bulk shippers are what you need to play it. My favorites are EXM, EGLE, TBSI, DRYS etc.

Indian's new demand on coal is going to suck so much coal out of South Africa that it will lead to another electricity crisis of ESKOM, South Africa's electricity company. In early 2008 an electricity crisis in South Africa drive up price of two PGM metals, platinum and palladium dramatically.

Who stands to benefit? PGM mining companies outside South Africa. There are only two: SWC and PAL. Those are my favorites. Palladium is my favorite metal. I think history is going to repeat itself one more time. Watch any news on ESKOM.

seekingalpha.com/autho...

Mine Deeper to Understand Platinum and Palladium

True North:

Here is the rhodium price chart:
www.kitco.com/charts/r...

You stated that rhodium is only up 48% ytd. Wrong. It's up from $1000 at the beginning of 2009 to now $1800+. That's 80%+ up ytd.

It would seem a bit surprise at first look. There is no rhodium futures market and virtually no investment interest because it is extremely illiquid to sell. More over rhodium is 90% dependent on auto demand, a weak sector. Why the price goes up?

The price goes up because industry users are HOARDING extra ounces for strategic stockpiling. Any extra ounces you can buy now, regardless of your current need, means you do not have to pay 10 times higher price at $18000 per ounce a few years down the road. So it makes perfect economic sense to hoard. Mean while producers do not need to sell all the rhodium product. They can hoard up waiting for much higher price in the future.

The same principle applies to palladium. I don't think industry users are dumb. They understand palladium can not stay this cheap for long. If they have cash, it makes perfect economical sense to buy extra to safe guard against a future price shock.

This is especially important as now the Russian government palladium stockpile has now depleted. The next palladium price shock is all but ensured to occur imminently once that fact becomes widely known.

Three things to buy in palladium:
1. The physical metal.
2. SWC stock.
3. PAL stock.

seekingalpha.com/autho...

I think I must be the most outspoken palladium advocator on the internet. I devoted a lot of time studying the market. Read my articles at above link.

Russia Launching Trading in Platinum and Palladium Futures

Yes I bought quite some tellurium 1.5 years ago. I estimate their value has gone up about triple since I first bought. I plan to keep them for long term investment. Intel has started shipping phase change memory chips. Blu-Ray DVD is now the standard. Tellurium will have a bright future and could hit gold price level. But it will take some time to get there.

Clearly First Solar (FSLR) has stopped building new factories, as even they understand that the world has a limited tellurium supply.

On Apr 23 02:30 AM mc_squared wrote:

> Mark, I wonder what happened to your tellerium ingots? You were very fond of them at some stage.

Russia Launching Trading in Platinum and Palladium Futures

TERN:

There always has been real futures contracts on platinum and palladium traded. You can buy the futures contract, and request delivery of physical metal by the deadline. If you don't take delivery then you will have to sell to unwind positions. So for large investors, there is a headache problem if you have established a large position, how to unwind that position safely.

Hedge funds hate to have to take delivery of physical metals. They don't know what to do with physical metal. Having to sell the metal, or sell the futures contracts to unwind position is a huzzle, because when you sell, you depress the prices and hence diminish your own investment return.

The new Russian PGM futures contract is different in that it is CASH-SETTLED. That means if you hold the futures position, you do NOT need to unwind the position, you do not need to sell the contracts, or be forced to take delivery of physical metal. The counter party directly pays you to settle, if the metal spot price says you have a profit.Hedge funds would LOVE the fact that they do NOT need to worry about how to unwind a large position, like they do with regular futures contracts.

For that reason, the new Russian PGM futures market is extremely bullish for themetals.

Are Safe Haven Investments Really Immune From Current Crisis?

Greg1:

Annual global auto sales is about 70 million units. Electric cars are currently an extremely tiny portion and totally negligible. There are several big problems with electric cars:

1. The batteries have a very low energy density, limited by the battery chemistry. So electric cars are bulky, expensive due to the big battery pack, and they have an extremely limited driving range unsuitable for the daily commuting routine for most people.

2. There is not an infrastructure of power grid big enough to allow massive adaptation of electric cars to replace gasoline engine cars. The electricity supply will have to go up many many times from current level. It's simply infeasible.

3. There is not enough raw material to make enough batteries for electric cars to replace even a tiny portion of current population of automobiles. The batteries use lithium, cobalt, nickel, all are metals of limited supply.

The future of the auto industry is fuel cell vehicles. Fuel cell cars are electric cars in a broad sense as fuel cells generate electricity to drive the car. Fuel cells use much more PGM metals as catalyst. It has driving range even better than a gasoline engine car, but is much more energy efficient.

Safe Haven Investments: Imminent Danger and Opportunities

I called for watching DRYS and I myself entered DRYS long positions aggressively around about $4 a share. Now DRYS has almost equal weight to the SWC positions I hold. I no longer own SIL at this point. It is a good stock to buy but when the price falls below $1 it's going to be quiet for a while until silver is up significantly.

Safe Haven Investments: Imminent Danger and Opportunities

The naked shorting of up to $2.29 TRILLION U.S. T-Bonds are so disturbing that the US government started an investigation about it. Here is Jim Sinclair's comment about it:

216.157.72.247/index.p.../

Quote Jim: "It is ok to naked short anything against anyone until it costs the Treasury money. This is the financial equivalent of “Let Them eat Cake.” Somebody is going to the guillotine for these “Fails to Deliver.""

The original Bloomberg news report:
U.S. Treasury Opens Probe Seeking Improper Trading (Update1)
By Rebecca Christie and Vincent Del Giudice
www.bloomberg.com/apps...

Safe Haven Investments: Imminent Danger and Opportunities

Anglo Platinum's Polokwane Smelter, one of the two smelter that teh company owns, and the world's largest PGM metals smelter, was shut down by an accident:

platinum.matthey.com/m...

The company said it will take six weeks to repair. Don't count on it. There was another shut down of the smelter in September 2005. Their initial accessment was a 3 weeks down time. Ended up shut down for more than three months.

Safe Haven Investments: Imminent Danger and Opportunities

Kire:

What pink sheet stock did I mention? The only thing with a .pk I mentioned is NILSY.PK, Norilsk Nickel. They are not a small penny stock. Norilsk Nickel is gigantic. I do not recommend penny stock.

PaulTaut:

No one can get market timing correct so why even bother to attempt to time the market. Most savvy investors have totally given up trying to time the market moves and they concentrate on valuation only. Jim Rogers has not sold a single share of his Chinese shares. If he thought he could time the market he would have sold and then try to buy back cheaper. Jim Rogers is a billionaire because he recognize what he can not do and should not do, and concentrate on what he can do and should do. That is concentrating on valuation and be patient, let the market play its timing game.

When most people are by-standers, it's time to jump both feet in to buy.

Safe Haven Investments: Imminent Danger and Opportunities

Fred:
Thanks for the clarification. I meant to use Noah's Ark for an analogy, without elaborate the details.
I read "...and God resolved that he would never again curse the ground because of man, nor destroy all life on it in this manner. Man in turn was instructed never to eat any animal which had not been drained of its blood"
Wonder why all the red meat sold in grocery stores do not have their blood properly drained and they hence taste foul, betraying the Christian tradition. In China, a country without much Christian tradition, people care a big deal that blood of any slaughtered animal must be completely drained or they would not buy. It's also the tradition of many cultures. Just an interesting fact.
I shall read the Noah's Ark story again.

Safe Haven Investments: Imminent Danger and Opportunities

Paulo:
Do I not know PAL has temporarily shut down production? I personally contacted PAL repeatedly in the past two months to urge them to shut down production and turn around to buy cheap palladium from spot market. They decision to shut down pleased me more than anything else. Read my past articles.

SeeTheLight:
Is it going to be a V-shaped or L-shaped recovery? Nickel went from $4 to $5.86, a raise of 46.5% in three trade days. Obviously it's a 'V" for Victory, not a 'L' for loser. Do you want a V or L?

User287863:
If Norilsk Nickel shuts down, it does not just shut down nickel production, but it will shut down all metals. All the metals are produced together from the same mineral ore. It is very late in the mining process, in the refining process, that metals finally separate from one another.

Muddling:

I encourage you to do more due diligence research. My past articles can be good start as they contains lots of links to relevant information. Mid to long term, palladium is super bullish due to factors both on the tight supply side, and on the emerging demand side. Short term set back does not reflect the supply/demand dynamics, but is merely a result of liquidity squeeze. Industry users forced to sell their precious metal inventory to raise cash for regular operations. They have to buyback.

Today's news, GM global auto sale down 10% year over year. GM should be one of the worst performing auto makers. So globally maybe overall auto demand is down 5%. Consider auto demand is 50% of PGM metals demand, that slash away just 2.5%, which is not very significant. Tightening environment requirement means more PGM metals will be used in each vehicle. This increased loading MORE THAN compensates the drop of total vehicles sold.

Ever increasing popularity of hybrid vehicles like Prius also means MORE PGM consumption. That's because frequence shut-down and re-start of the main engine of hybrid vehicles means the vehicle will operate at cold start temperature more often. When temperature is lower, the catalytic converter needs to contain much more PGM metals to be effective enough to meet EPA requirements.

I am absolutely super bullish on palladium. I do NOT hold on and pump my favorite palladium stocks just because I hold them and I want to get even. There are lots of excellent silver and gold stocks beaten down to very attractive prices. I should and would have jumped ship if I do not believe palladium is the most bullish precious metal of all. The bullish arguments simply can not be disputed.

Safe Haven Investments: Imminent Danger and Opportunities

Muddling:
I looked at your blog. You seems to be a serious stock trader wanting to make money, not a basher. So all I want to tell you is each and every statement you made above is wrong and not logical. Use your brain, think logically, do your research, you might get a better conclusion. Read my past articles to understand the background of the palladium market. It's good to ask hypothetical questions but it's even better if you can draw logical conclusions. Good luck!

Survival of the Fittest: Save Haven Investments

SLW has counter party risks. Anything that has counter party risk needs to be avoided nowadays. I have already explained what SLW's counter party risks are. No need to repeat here.

Another news from Russia this morning:
www.reuters.com/articl...

Russia's third largest nickel producer, Ufaleynickel, responsible for slightly less than 1% of global supply, now SHUT down production due to low nickel price.

When can we expect the No. 1, Norilsk Nickel, to shut down? It can not be too far away. They are running out of cash fast. That's bullish for palladium and palladium producers.

Survival of the Fittest: Save Haven Investments

No Norilsk's balance sheet. They had $4.8B at the end of June. That's for the whole Norilsk International Group. Counting just the main Russian mine, they probably have $4B cash.

Stock buyback costs them $1B. Leaving $2B in cash.

Operating loss due to low metal prices probably costed another $1B so far. Leaving $1B.

Debt due in November is another $600M gone. Leaving maybe $400M. They can not afford to let the cash run to zero. They have to have a minimal cash amount for normal operation. I really do not think they can sustain operation loss for long, before they have to shut down.

The nickel price is just too low. They are operating at heavy loss. They have to shut down soome or be forced to do so. Why is it so hard to understand? If a mine is not making money it is shut down. Happens all the time. When Norilsk shuts down, it will send palladium price skyrocketing for sure.

Survival of the Fittest: Save Haven Investments

SeeTheLight:

It is completely misleading, if you look at Norilsk Nickel's H1, 2008 financial report, without considering how much the metal prices have changed since then. Please study the numbers and do the math with current metal prices:
www.nornik.ru/en/inves.../
I will not list all the math details here. But all things equal, with the new metal prices, if you re-run the H1, 2008 financial result, the sale s revenue should be written down by at least -$4.594B. That's more than enough to bring them from a comfortable $2.68B profit, to a very uncomfortable -$1.914B loss.
The nickel price today is less than 1/6 where it was in May, 2007. So don't even pretend that Norilsk Nickel can make a profit at such low price. They can not.
About the stock buyback, Mr. Mikhail Prokhorov himself openly condemned the stock buyback and said it brings the company to the brink of bankruptcy:
malaysia.news.yahoo.co...