Mark Anthony

Silver Unmasked

Describing all the new application of silver is nice. But without quantified data no conclusion can be drew. Global annual silver mine production is about 20,000 metric tons, plus lots of recycling.

I believe from an industrial supply/demand point of view, silver is NOT in deficit. But silver is still way much more bullish than gold, because silver is much more suitable for small investors. We are not quite there yet, as most of the average folks still do not understand the danger of dollar collapse, and do not know to buy precious metal to protect themselves.

The most bullish precious metal, should be palladium. It's bullish on many fronts:

seekingalpha.com/autho...

1.There will be a well documented industrial shortage, as Russian Government palladium stockpile sales, which supplemented the market one to two million ounces each year for almost two decades, has now ended, as the stockpile is depleted. This is HUGE. In 2000/2001 a mere rumor that thy were stopping the stockpile sale drived palladium from $300 to $1100 in a few months.

2. Historically palladium and platinum are traded at similar prices. They two are equally rare, equally expensive to produce, and equally useful.

3. Global palladium mine production is only 6M+ ounces. There is huge opportunity for some big investor to corner the market to rip huge profit from the world's only two primary palladium producers, SWC and PAL.

4. Huge potential for palladium as Cold Fusion is probably human's only real hope to overcome the Peak Oil energy crisis. Cold Fusion rely on palladium.

Invest in palladium by buying the physical metal and buy shares of SWC and PAL. My 401K is 95% in SWC and PAL.

Investing In a Resource-Constrained World (Part V)

Two days ago, on March 23, 2009, the day of 20th anniversary of the original Cold Fusion announcement, and on the exactly same university campus, scientists have reported CONVINCING new evidenced that cold fusion is REAL. And looks like scientists agree, and the news of the break through is now ALL OVER the global news medias:

stockology.blogspot.co...

Read and follow the links. Enjoy!

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...

Survival of the Fittest: Save Haven Investments

Extremely important update. I now suspect the news that Norilsk is selling its SWC stake could be a false rumor. I still do not have confirmation whether it is false or true. But read my latest comment:

stockology.blogspot.co...

Survival of the Fittest: Save Haven Investments

SeeTheLight:

If Norilsk is running out of cash, they have to SHUT DOWN Norilsk mine immediately. This is NOT something they have a choice. If your business is losing money and you rou out of cash, then the business is closed.

Norilsk is hurting from current low nickel price and is suffering from heavy loss of $1B to $2B per quarter, based on my estimate based on current metal prices.

They spent $6.3B in CASH last year to purchase a very marginal small nickel player LionOre. And now they need to sell SWC for less than $200M in cash? The only reason they would do this, selling SWC at the low, is they desperately need even just $200M in cash.

How long can $200M cash last them if they are losing $1B to $2B per quarter? Again, when you run out of cash, the business MUST be shut down until it can be profitable again. And that removes 45% of the world's palladium supply instantly, benefitting SWC.

Survival of the Fittest: Save Haven Investments

Jake:

I don't necessarily believe the official book of the Russians. They are all crooks. Their actions speaks louder. Why are they so desperate to sell their SWC stake for a mere $200M. It's a very small amount of cash. Last year they spend $6.3B cash to acquire something much smaller than SWC.

I believe a Norilsk shut down is imminent. It won't come back even palladium price goes up, because palladium is only a minor percentage of the revenue. They are hurting on low nickel price.

Commodity Roundup: What To Be Bullish On Now

Some important contents about a wonderful story are missing. You must read the original on my blog to see those missing contents. Please click below to read the original blog article:
stockology.blogspot.co...

Investing In a Resource-Constrained World (Part V)

Jed:

Thanks for coming here and explain your stand points. I enjoyed your debate with Mike.

Whether any one knows cold fusion or not, he/she should accept that experiments ALWAYS trump over theories. That's the basis of any science and if any one has a problem with this principle, he/she can not discuss matters of science.

People who have done cold fusion experiments day in and day out for 19 years, as well as people who interacts with such scientists, of course are way much more entitled to discuss cold fusion experiments, than people who hasn't even bothered to check out some of the papers written. That is, unless you believe all the cold fusion researchers are part of a gigantic conspiracy to create a giant hoax for 19 years.

From what I read about cold fusion, I have to agree that the experiments are real and repeatable, and the cold fusion researchers are trust worthy people. Some of them are very reputable in their research fields.

And people have to respect the fact that even APS (American Physical Society) sponsored talk sessions during the March Meetings in recent years. That is a pretty big deal and a big endorsement that the experimental phenomenas are real.

I just hope a commercially viable demo can be produced soon. As claimed by a Russian scientist:
www.hindu.com/seta/200...

Investing In a Resource-Constrained World (Part V)

Jed Rothwell:

I appreciate your discussion with Mike on cold fusion. I believe for the field to move ahead it is very necessary for you guys to come out of the closet, do public demostrations, discuss with the public on open forums like here and else where, and do all you can to raise public awareness.

Mike:
Who said you need to doubt the second law of thermodynamics and principles of quantum mechanics to accept the cold fusion experiments? I think my education allows me to speak on matters related to physics. It is exactly because the second law of therodynamics, as well as the uncertainty principle, that allow cold fusion to happen, when judged from a classical (non-quantum mechanical) point of view, the coloumb barrier was impossible to overcome. In any case, solid experimental result always trump over any theory, even Newton's theory or Einstein's theory. These cold fusion researchs do the experiments and see what happens. They have to believe their own eyes. So the research has continued on for 19 year and now has attracted renewed interest from the researchers community. No crackpot could have survived 19 years of scrutiny by experiments.

My main focus is palladium and platinum investment. This thesis is based on many many bullish factors, cold fusion, if successfully commercialize, is just the ice on the cake. But we do not need to count on cold fusion demand on palladium.

Jed, you are saying if cold fusion is successful it does not need palladium? I do not understand. All cold fusion experiments use palladium. There may be a few attempt of using other metals, but they at best could only be described as marginally successful, and there is been no confirmation on non-palladium based experiments.

I guess your logic is you believe the limited supply of palladium makes it impossible to commercialize cold fusion. And hence if the latter is to be successful it must see a non-palladium solution?

I can assure you the world has plenty of palladium to supply the hydrogen fuel cell and the cold fusion industry, it's just NOT at current price level. There's plenty of low, very low ore grade palladium mines, impossible to produce economically at current metal price, but will become profitable to produce when the metal price goes much higher.

Mike:

You can not believe how the establishment have dominated the science community suppressing real science while allowing absolute crackpots to prosper. You attempt to submit a cold fusion paper. Doesn't matter you call it something else, you make menioning of nuclear reaction without the extreme high temperature condition, it's automatically rejected without reading it through.

I am even surprised that APS would conduct cold fusion discussin sessions durin the March Meetings of recent years.

One example of the biggest crackpot theory in modern history that dominate the science community is the Global Warming Theory. It started as a simple hypothesis that higher concentration of carbon dioxide in the atmosphere may help raise the earth surface temperature ever slightly by a small fraction of one degee. That in itself is a legitimate science pursuit. But it now grow into a full blown catastrophe theory claiming that the polar ice cap is melting and that half of the world's coastal cities will all be submerged and all that, complete pananoid.

A temperature raise of 0.2 degree due to CO2 will not be able to melt an inch of polar ice, for any three year old who understand that ice melts at or above melting points.

But Al Gore win the Nobel Prize nevertheless with a few video showing the supposed melting of polar ice. I voted for him but I am disappointed at his lack of common sense.

Cold fusion could not gain funding support because there is a huge vested interest in the hot fusion gangs to see cold fusion supressed. There are hundreds of billions of dollars involved here.

Watch the "War Against Cold Fusion" video on YouTube.

Investing In a Resource-Constrained World (Part V)

A must watch YouTube video of a Congressional Speech:
youtube.com/watch?v=e-...

Investing In a Resource-Constrained World (Part V)

Dear Jed Rothwell:

Thanks for visiting here and leave your comment. Your link is broken. Here is the correct link to the book you wrote. I encourage people to have a look:
lenr-canr.org/acrobat/...

I admire and appreciate the courage you and your scientist colleagues have in continuing the cold fusion research for 19 years, against adverse social and peer pressures. That's the kind of courage required for science to progress.

I understand that you as a scientist, not an investor, would hesitate to give people investment advices. Nor should you give such advices. We the investors look at things from our prospect of supply and demand of commodities, cold fusion is just one of the things we look at, among others.

In your book on page 39 you do express worry that the world may not produce enough palladium for cold fusion. But I think free economy will work here. The application demand will drive up price and hence make low grade ores economical to produce to satisfy demand. Please read this government report on PGM availability:
www1.eere.energy.gov/h...

I guess that makes the case for palladium investment even stronger. And the stocks of PAL and SWC are even better leverage than the physical palladium metal as investments.

Once again thank you for coming by. Please keep us informed of the latest cold fusion developments. You probably should talk to a venture capitalist for research funding support for cold fusion.

Investing In a Resource-Constrained World (Part V)

There has been a gigantic paradigm shift event in the palladium market today. You really need to know it. Look at that huge spike in the metal lease rate, which never happened before:

www.kitco.com/charts/p...

Reason for the spike? Read this:
www.bloomberg.com/apps...

I quote: "The metal rallied after Russia's OAO GMK Norilsk Nickel, the world's biggest producer, said its stockpiles of the metal may be ``depleted'' in one to five years as the government reduces its holdings."

Why the fuzzy math of "one to five years"? By using such a large margin of uncertainty, probably they are telling us, the stockpile actually has already depleted. This confirms what I infered from an earlier piece:
www.bloomberg.com/apps...

Quote: "Most of the company's stockpile is ``not necessarily in Russia,'' though an unspecified portion is being kept at Russia's State Fund of Precious Metals and Precious Stones, Berlin said. ``It's better when the exact locations of the stocks aren't known'' by the public, he said."

So there is nothing left inside Russia?

This is a huge huge event in palladium. Time to load up PAL and SWC tomorrow if you see what's unusual in the palladium lease rate spike!!!

Investing In a Resource-Constrained World (Part V)

Mike:

You are wrong on Aluminum, Nickel and PGM metals. Aluminum resource on earth is virtually unlimited, so aluminum production is just a matter of consuming electricity to refine the metal. Attracted by higher prices of aluminum, production will ramp up, bring in competition, and the higher cost of electricity will diminish profit margin. So aluminum producers are NOT good long term players.

What do you mean catalyst converters and hybrid batteries will "phase out"? They can't phase out, you can not sell a new vehicle without a catalyst converter that is up to the environmental standard, nor can you deliver a hybrid vehicle without the big battery pack. Catalyst converters reduced so much air pollution which indirectly saved so many lifes who would otherwise die from air pollution. My calculation says each half ounce PGM metals used in catalyst converters saves an average of one human life. As long as you burn oil, or even ethanol, in vehicles, you need to have catalyst converters.

Know why rhodium proce went from $300 to almost $10000 in just 4 years? Catalyst converter demand. You need just a little bit of rhodium for a particular characteristics that nothing else can replace, on top of platinum and palladium used. If auto makers have to choose between producing a vehicle that can be sold legally, or stop using rhodium, guess they have to pay to play no matter how high rhidium price goes up.

Higher gasoline price forces many people to rush to retire their oil guzzlers well ahead of their useful lifespan. But they still need to drive and so they need to buy fuel efficient small cars. So here you have a booming new car demand which boosts the PGM demand. Auto makers just couldn't respond to the paradigm change fast enough and did not switch enough production capacity to small cars. But they will switch and they will see auto sales boost once they do.

The big problem with solar industry is the long payback period of solar panels. If we had decades of lead time it would have worked out. But we lost that already. We no longer have time to ramp up the solar industry to make a significant difference in the structure of our energy supply.