Mark Anthony

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.

Winners and Losers in Today's Market

The BDI shipping index has been up strongly for 10 consecutive days now. How often do you see something up 10 consecutive days?

This is a clear indication that shipping rate has bottomed and is rebouncing strongly. Once shipping rate recovers, of course the value of ships will also recover and that will make the loan covanent thing no longer relevant shortly.

The shipping remains one of the best sectors to be in. EXM is still a better buy than DRYS. I can not recommend DRYS even though it has dropped a lot, due to the on going share dilution. We will have to wait for the dust to settle on DRYS. But many other shipping stocks are very good buys as BDI continue to go up.

On precious metals, I want to bring attention to recently announced Norilsk Nickel palladium production drop, from 3.10M ounces a year to 2.705M ounces in 2008 and a further drop to 2.5M ounces in 2009. That's very good news for SWC, the world's only remaining producing primary palladium producer. Palladium is the most bullish of all precious metals due to the fundamentals of supply and demand.

www.nornik.ru/_upload/...

Also a strike is looming in South Africa PGM industry. I think the mining companies will WANT a strike to boost prices of PGM metals and hence boost revenue:

www.platinum.matthey.c...

Winners and Losers in Today's Market

My warning on DRYS was so timely. DRYS dropped from $12.50 to $6.50 in just two days. The crowd in DRYS is just too crowded.

That said DRYS is now way oversold and must rebounce strongly, as shorts need to cover and longs need to jump back in. The Baltic Dry Index has been up strongly for NINE successive days. The fundamentals of shipping is strong. All shipping stocks are excellent buys at current level.

On precious metals, SWC remains the best as it is the best player on the precious metal with most bullish fundamentals, palladium.

Winners and Losers in Today's Market

Remi:

You forget what an economic crisis we are facing. Apple is a good high tech company. It's just that consumers will have to stick to their basics and cut spending on un-necessary luxuries. Nothing is missed if one does not have an iPot or iPhone. I would rather keep my car, than to keep my iPhone, if I have to choose keeping one of these two. We will see in a few quarters how Apple does. For now, precious metals and shipping is the best thing you can buy.

Looking for Opportunities in an Irrational Market Place

User 339541:

13.698M per day versus 12.904M per day is the number of barrels PER DAY. The difference is 0.794M, PER DAY. One week is 7 days. So times 7 gives you 5.558M barrels extra oil import for the week.

The Real Rationale Behind Current Supply and Demand for Oil and Other Commodities

Do you guys see the blatant price manipulation on SWC today, Jan. 6, 09, when palladium price is flying up 8% for the day!!! The shorts are really becoming desperate if you look at the movements on daily chart.

PAL is up 16.5% and SWC is down?

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!

Are Safe Haven Investments Really Immune From Current Crisis?

Absolutely shocking development today in the palladum market:
www.themoscowtimes.com...

Russia's Norilsk Nickel, supplier of 45% of the world's palladium and holder of 55% stake in SWC, America's ONLY mine of the strategically important palladium and platinum, is now so desperate for some cash that it needs to sell its strategically critical asset for a mere $230M cash?

Just last year Norilsk spent $6B in CASH to acquire a much smaller potato, Lion Ores. They now much be in a very bad shape in terms of cash liquidity if they need to sell SWC for a mere $200M cash. They are hurt by current low nickel price, as nickel is their main product and palladium is only 5%. Heavy loss could force them to shut down the mine at any time. If that happens it cuts off 45% of the world's palladium, and could send the metal to the moon instantaneously.

On another thought, the Russians are not dumb. If they want to sell SWC they will want to fetch a better price. They have the power to jack up palladium price, hence jack up SWC share price, so they can fetch a better cash deal. Jump on board if you think that is a reasonable conclusion!!!

Are Safe Haven Investments Really Immune From Current Crisis?

DaveW:

I admit I made some wrong judgement at the start of March. I kept monitoring South Africa's electricity crisis and I know supply is continuously restrained and the global market should continue to be tight. That, plus investment demand of precious metals, are bigger over-riding factors than the lower demand in auto sectors.

The thing I miss is I did not pay attention to the short term impact of the credit crunch. It causes investment firms to sell their PGM metal holdings to raise cash liquidity, when they should be buying. It also causes auto makers to sell off their PGM inventory, at a time they really need to hoard more, knowing the ongoing long term electricity crisis in South Africa. I should have paid more attention to GM's balance sheet and know how bad a shape they are in, and I should have known they MUST be forced to sell their PGM inventory, even though rationally they should be buying and hoarding. But at the end of day, they still have to buy the metals when their inventory runs out.

Now is the time to talk about supply destruction as suppliers are all hurt by low prices. It's unsustainable. Palladium is unique that it is mostly a BY-PRODUCT, not a main product. So it is less price elastic moving in both ways.

Low nickel price will kill Norilsk Nickel. Low platinum price will kill South Africa. If that scenario plays out, it leaves SWC and PAL the only one in the world supplying palladium and they are not any where close to being able to supply enough to the world. It will lead to a situation where you could have palladium price several times higher than platinum, instead of current palladium being 5 times cheaper than platinum.

Your worry about PAL is legitimate. For the same reason I have put more in SWC than PAL now. I have repeatedly urge PAL to suspend sale at current low palladium price. They don't seem to be anxious at this time. If they are anxious about the fate of their business there are many things they can do to turn the market around. Nearly major stake holder George Kaiser does not seem anxious either. If he is anxious he could do many things to corner palladium market and turn his investment around just as well. Knowing these I will continue to hold PAL.