S. E. Wells

Use Caution Investing in Gold This Quarter

Sound advice. One should always be aware that one's investments can go down as well as up and take up or dispose of positions accordingly. This is a trader's market. That said, I'm long equities leveraged to gold's moves in the near term. As Gartner says, "Do more of what's working and less of what isn't." For now, gold is working but it would be foolish to blindly assume that this will always be the case.

A Look at the Huge U.S. Hedge Against Fiat Currency

Given the nature of the mind as a smbol processing engine, exactly what constructs does this guy's mind process that aren't "symbols of reality"? Symbols of unreality?

Overbought Majors Need to Readjust

Write more clearly. What, pray tell, is a swing point? What, pray tell, is one to infer as the meaning of a sentence like "reduce lots and targets and bank as you go." I'm sure some understand these terms but I'm also quite confident that more would understand what you are saying if you used plain English to say what you mean.

Great Basin Gold: Stock Looks Ready to Move Up

west coast, I feel your pain. However, there's really nothing wrong with investing in exploration companies, in my opinion, if you time your investments with the natural progression of such stocks. Yes, it is possible to get diluted like crazy and you do have to be on your toes about that. But, there are companies like Seabridge (SA) that have gone the route without diluting their shareholders excessively and their are other companies with so much gold in their deposits that even with the dilution they make you money.

I find that the critical junctures for investing in exploration companies is when they are in a phase transition from raw beginning exploration to advanced exploration (i.e.) one knows they have a viable deposit but doesn't know exactly how viable and when they are making the phase transition from advanced explorer to near term producer. Those, in my opinion, are the sweet spots for investing in explorers. Yes, you'll get diluted even then but with good grades and good political jurisdiction, you'll probably still make good money.

Good luck,

Watching the USD Drop? Here's What You Should Really Be Watching

Info on external debt as a % of GDP (Information from CNBC). We'll be jumping up a few places on this list over the next 10 years or so. Very worrying to me.

20. United States
External debt (as % of GDP): 94.3%
External debt per capita: $43,793
Gross external debt: $13.454 trillion (2009 Q2)
2008 GDP (est): $14.26 trillion

19. Hungary
External debt (as % of GDP): 105.7%
External debt per capita: $20,990
Gross external debt: $207.92 billion (2009 Q1)
2008 GDP (est): $196.6 billion

18. Australia
External debt (as % of GDP): 111.3%
External debt per capita: $41,916
Gross external debt: $891.26 billion (2009 Q2)
2008 GDP (est): $800.2 billion

17. Italy
External debt (as % of GDP): 126.7%
External debt per capita: $39,741
Gross external debt: $2.310 trillion (2009 Q1)
2008 GDP (est): $ 1.823 trillion

16. Greece
External debt (as % of GDP): 161.1%
External debt per capita: $51,483
Gross external debt: $552.8 billion (2009 Q2)
2008 GDP (est): $343 billion

15. Spain
External debt (as % of GDP): 171.7%
External debt per capita: $59,457
Gross external debt: $2.409 trillion (2009 Q2)
2008 GDP (est): $1.403 trillion

14. Germany
External debt (as % of GDP): 178.5%
External debt per capita: $63,263
Gross external debt: $5.208 trillion (2009 Q2)
2008 GDP (est): $2.918 trillion

13. Finland - 188.5%
External debt (as % of GDP): 188.5%
External debt per capita: $69,491
Gross external debt: $364.85 billion (2009 Q2)
2008 GDP (est): $193.5 billion

12. Sweden - 194.3%
External debt (as % of GDP): 194.3%
External debt per capita: $73,854
Gross external debt: $669.1 billion (2009 Q2)
2008 GDP (est): $344.3 billion

11. Norway - 199%
External debt (as % of GDP): 199%
External debt per capita: $117,604
Gross external debt: $548.1 billion (2009 Q2)
2008 GDP (est): $275.4 billion

10. Hong Kong - 205.8%
External debt (as % of GDP): 205.8%
External debt per capita: $89,457
Gross external debt: $631.13 billion (2009 Q2)
2008 GDP (est): $306.6 billion

9. Portugal - 214.4%
External debt (as % of GDP): 214.4%
External debt per capita: $47,348
Gross external debt: $507 billion (2009 Q2)
2008 GDP (est): $236.5 billion

8. France - 236%
External debt (as % of GDP): 236%
External debt per capita: $78,387
Gross external debt: $5.021 trillion (2009 Q2)
2008 GDP (est): $2.128 trillion

7. Austria - 252.6%
External debt (as % of GDP): 252.6%
External debt per capita: $101,387
Gross external debt: $832.42 billion (2009 Q2)
2008 GDP (est): $329.5 billion

6. Denmark
External debt (as % of GDP): 298.3%
External debt per capita: $110,422
Gross external debt: $607.38 billion (2009 Q2)
2008 GDP (est): $203.6 billion

5. Belgium - 320.2%
External debt (as % of GDP): 320.2%
External debt per capita: $119,681
Gross external debt: $1.246 trillion (2009 Q1)
2008 GDP (est): $389 billion

4. Netherlands - 365%
External debt (as % of GDP): 365%
External debt per capita: $146,703
Gross external debt: $2.452 trillion (2009 Q2)
2008 GDP (est): $672 billion

3. United Kingdom - 408.3%
External debt (as % of GDP): 408.3%
External debt per capita: $148,702
Gross external debt: $9.087 trillion (2009 Q2)
2008 GDP (est): $2.226 trillion

2. Switzerland - 422.7%
External debt (as % of GDP): 422.7%
External debt per capita: $176,045
Gross external debt: $1.338 trillion (2009 Q2)
2008 GDP (est): $316.7 billion

1. Ireland - 1,267%
External debt (as % of GDP): 1,267%
External debt per capita: $567,805
Gross external debt: $2.386 trillion (2009 Q2)
2008 GDP (est): $188.4 billion

Great Basin Gold: Stock Looks Ready to Move Up

hardrock, your points about the shallow reef in South Africa I think are fairly well-taken. They will definitely have a competitive advantage over other mines producing from far, far deeper reefs in South Africa. I guess my point was just this: for their South African ops how they stack up against other South African miners isn't really the question. How they stack up against global miners is the question. The reason I won't buy it is I ask myself how they stack up against a Jaguar Mining as a mid-tier producer or RedBack for instance.

While I do expect gold to keep going up for a while, I've been around gold stock investing for a long time (I know a lot about geology and can interpret 43-101 reports competently, etc.) and I try to position myself with companies that can still be profitable if the price of gold drops by 50%. To do that, I've found that the two most important factors are to have high grades and political stability and predictability.

Good luck with Great Basin. You could make a lot with that one. I guess all I'm saying is it doesn't meet my risk profile due to the factors I mentioned.

Great Basin Gold: Stock Looks Ready to Move Up

Well you could be right. But, when I read thru Great Basin's list of mines all I see is political risk. Nevada operation has good grades but the tax take on Nevada operations is up about 15% this year based on an article in Mineweb today and the permitting process is becoming ever more cumbersome there. Kimberly Reef operations in South Africa seems to me a bit imperiled by huge spikes in electricity costs going forward with spillovers of those increased energy costs to show up in wage demands, higher priced steel, etc. Kuril's Island operation in Russia shout loudly of political risks based on the Fraser Institute survey of mining executives assessment of varying regulatory regimes.

For your sake, I hope you're right about Great Basin's prospects but the more valuable a commodity gets the more politicians in the US, South Africa and Russia will want to control it.

As a general question, why would you choose to invest in Great Basin when there are a lot of companies operating in Canada and Mexico with good grades and less political risk? Is there something to Great Basin I'm not seeing?

Gold-Denominated Hedge Funds

Maybe I don't understand something, and I hate to quibble, but there are 12 troy ounces in a pound so a ton of gold should be equal to 24,000 ounces of gold (12 times 2000 pounds). So, where does the 29,167 ounces per ton figure come from? Is it measured in a different kind of ton or something?

Cramer's Lightning Round - Crossing the Rubicon (10/16/09)

New results today from Rubicon with further high grade intercepts up to 4200-4300 feet below sea level extending the depth of the deposit significantly. Additionally, F2 zone extended to nortwest by hole F2-77 where > 1 oz per ton intercepts made. As I said in the post above, think 8 - 11 million ounces when thinking about what Rubicon is or will be worth. This is no open pit property trying hard to make money at sub 1 gram per ton gold content. This is HIGH GRADE in Red Lake. These guys will be able to make money hand over fist if gold drops to $700 an ounce and guess what, it's not going to drop to $700 an ounce any time soon that I can see.

Cramer's Lightning Round - Crossing the Rubicon (10/16/09)

While Cramer may be right about Rubicon in the short term, he is almost undoubtedly wrong long term. Rubicon is underpriced in terms of the gold they have in their deposit. With a market cap of approx. 886 million they are priced for an approximately 3.5 million ounce deposit. The Bruce Channel deposit next door was bought by Goldcorp for approx. $240 an ounce for in-ground ounces before a 43-101 was filed. At 240 an ounce, 886 million works out to about 3.5 million ounces. With their F2 zone and the rest of their 4 km long holdings in that particular claim block (including a few Titan 24 anomalies that look a lot like the F2 zone that haven't even been nicked by a drill yet), think more like 8 to 11 million ounces and you will be much closer to what they should be priced at.

4 Dividend Stocks to Hedge Against Social Security Failure

cross, you have a point about it being possible to shore up the SS program. You can see a fairly detailed plan put together by Bruce Webb and others at bruceweb.blogspot.com/...

Bruce calls it the Northwest plan and it's a pretty smart one. If it were only necessary to do this in isolation, I have no doubt it would work as SS is about the smallest fiscal problem we have. Unfortunately, it being the smallest fiscal problem we have is also why it can't be considered in isolation.

Even with the Northwest plan, the figures I provided showing approx. $2200 per year per taxpayer for 21 years,from 2016 to 2036, still stand. Start adding that to what's needed for health care, military spending (although I think we need much, much less of that than some others do), education, etc. etc. and the whole edifice starts to look really dicey. Like I said earlier, I'm betting my retirement and my money on inflationary pressures coming along for the foreseeable future.

4 Dividend Stocks to Hedge Against Social Security Failure

cross, all I did was lay out the numbers and the numbers came from the SS administration itself and other government sources. To be honest, I fully expect SS to be funded and checks to go out. The political constituency for it will not allow for anything else to happen. It will be my generation that will enforce it because my generation (baby boomers) is the most self-indulgent generation in the history of the US.

A smart person would be making plans on that basis; i.e., steadily increasing rates of inflation for the foreseeable future once the current deflation abates. There is not the political will in this country for sound fiscal policies which leaves one alternative; i.e., inflation to get us out of the debt hole.

To be honest, I don't much care what you do or don't do with factual information or whether you approve or disapprove. That's your perogative and your problem.

4 Dividend Stocks to Hedge Against Social Security Failure

Well, I've done some analysis on the SS issue. If you look at:
www.socialsecurity.gov...

You will find that by SS own findings it will need to start redeeming the trust fund in 2016. The amount that will need to be redeemed between then and 2036 when the trust fund runs out will be north of 7 trillion dollars. Do the math. Add it up yourself. If you assume an average population of approx. 350 million people over the 21 years (add census bureau projections for 2010 and 2040 and divide by two to get the average) it works out to around 350 million people in the US average over that time frame. That works out to $995 per person per year every year from 2016 to 2036 that will be need to be raised in taxes JUST FOR REDEEMING THE TRUST FUND and IN EXCESS OF ALL OTHER GOVERNMENT SPENDING NEEDS FOR THOSE YEARS.

About 46% (from wikipedia based on IRS data) of the populace are taxpayers. That means that for every year from 2016 to 2036 each taxpayer will need to come up with, on average, an additional $2200 in taxes in order to redeem the trust fund.

These figures are based on the Intermediate cost projections of the SS governors themselves.

Like I said, do the math for yourself using SS's own projections and then tell me you honestly think that every taxpayer in the country is going to be able to come up with an additional $2200 per year for 21 years JUST TO PAY BACK TAXES AND INTEREST THAT HAS ALREADY BEEN SPENT FROM THE TRUST FUND.

That doesn't include the rest of the deficits, etc.

Some here may be sanguine about the prospects for SS. Since I can add, subtract, divide and multiply and have done so, I am not.

Newmont Mining: Good as Gold?

NEM disappointed on the earnings scene today missing by 4 cents when reporting 43 cent per share earnings as opposed to an expectation of 47 cents per share. This won't be good for NEM's stock price today. Let's hope a general move up in gold price will overcome this bad news.

Four Speculations for the Month Ahead

Rubicon Minerals is not based in China. It's a small gold exploration and development company in Canada with a notable discovery in Redlake at the F2 - Phoenix zone. I bought a bunch at $.80 a share and it has been a good play. I expect it to trade at $5 plus within the next two years.