OJO Zafado

The Case for $1300/Oz Gold

For trading the Yuan/Renminbi there is the recently available CNY & CYB of Wisdom Tree . Cover Your Butt! A chart of EVDVF shows broadly diverse generous dividend paying Canadian play, with perhaps some overhanging tax issues. Canada is of course like Australia & Mexico a part of the BRIC juniors. With the Loonie again over par and their economy sporting a thining $3 billion current accounts surplus, you can get some decent total return on the China currency appreciating. Any country like Canada, Mexico, Brazil, or Australia are good surrogets for the Renminbi as they are beneficiaries of the continuing rise in value of hard assets. They also have currency Etfs. FXC, FXM, BZF,& FXA respectively. As one other poster noted fleeing the US dollar may be warranted on the basis of holding value in your investments. The Oligharcy has unwittingly duped themselves. The Globalization they so ferverently advocated has now resulted in the unitizing of "value". Anyone with $500 to open a Scottrade account can now switch their savings out of the US dollar with a couple key strokes. This is no different than the Fed giving up the printing of money in favor of xferring a $100 billion of electronic created money to major European Banks through a one month TRCA. We now see the Congress trying to thwart this action into ETFs like USO,USG, UHN, IEO etc with legislation to curb/ limit futures trading. That one issue should be enough to scare investors out of the dollar. Even the Dow global Titans are losing ground as even their global businesses are not enough to over come Stagflation!

The Case for $1300/Oz Gold

As far as naysayers go , they probably watch too much Rush and O'Reilly. You even have the Prince of the oligharchy, Kudlow denying the very serious problems that are indemic to the US economy and by extension it's currency. We must now wait another 3 weeks for the next Treasury TIC report. March -$45 billion! Many of us agree with the author's assertions that the Chinese have enough fiat linen currency on hand from Uncle Sam and are now looking to place the value of their economy into other areas. They have undertaken the building of a strategic petroleum reserve as well as entered the international LNG market as buyers. Risking being branded racist, I will cite the degradation of what used to be Rhodesia. The nation of South Africa is now heading down the same road as "Zimbabwe". If you destroy all the white people like they did in Haiti and Zimbabwe you can create a nation where extreme poverty and genocide reign supreme as the top industries. We have already seen a huge spike in N/A coal GACHF from +$1 to $7. FDG from $20-$40 to $72 etc. This due to a world wide coal shortage as S African output is curbed by a grossly mismanaged economy. The more they screw things up the more they screw things up. At the root of their problems are their ideas for solutions. What we have been doing so far is really achieving our goals so lets do some more of it! It is the goals that are a problem! This is going to manifest itself in the world's largest gold producer (China) having a very strong currency while production of gold , platinum and palladium from So Africa declines. We have seen what declines in Russian and Mexican oil production have done in the oil market. The US economy is in worse shape than almost any can imagine. Even the most timid proposals for facing up to the current accounts deficit severely ballooning in the NEAR years are trashed by Congress. McCain would try some reality in curbing future entitlements while the OBama would increase taxes to try and sustain a system that is in fact spelling the doom of the US economy. The US economy is what backs the US $. Without a strong economy the US dollar will continue to slide, perhaps precipitously. World gold production is quite likely to decline even as the demand continues strong. Watch the TIC reports. Three negative reports in a row may lead the Treasury to start cooking that economic barometer as well. The US government and their people are in major denial that an economy built on a huge foundation of Federal, State, County , town , city government and personal debt devoid of a strong manufacturing job base will not collapse! The richest nation on earth is now facing an increasing mortality rate from hyper and hypothermia amoug the youngest and oldest in our society. As heating oil climbs to $5 gal and the Nat Gas market reacts to the equvalent BTU pricing people are going to br increasingly unbearably hot in Summer and freezing cold in Winter. The next President no matter who he is will do little or nothing to reign in Ben the Dollar Slayer. (S)He will just be the next leader of the "Free Money World". A few billion in aid to Egypt so they can subsidise their gasoline at less than 1/3 what we pay. A few hundred billion each month in TRCAs and TFAs to keep the free money flowing. We might as well elect "ALF" "Hey!!!, No problem!!!!" as President. Of course this spells the eventual doom of Ben as he will no doubt at some point be exposed as a "Dummya" Toady and resign in disgrace over the whole dollar and economic situation spiralling out of control. His will be a very sincere heartfelt apology to the American people. Five percent dividends will not cut the mustard when we find the 4 major banks still floating out new tax advantaged subordinated debt paper at +8% and paying less than 4% on one year Cds that are 100% taxable. FNM-PRP 6.3% tax advantaged ADJUSTABLE! rate. Even the GSEs are up against it! The math no longer works in America! Calculus is something that forms on teeth and Statistics is what they use to calculate bridge girder specifications! The only thing left to do is to replace the Criminal Jackson on the $20 bill, with Ron Reagan! "Social security is a sacred trust between the American people and their Government". A beautiful piece of wordsmithing, legitimizing the nation's sense of entitlement and the tyranny of the old!

What's Behind the Market's Rise?

Bear fund has it right. The problem in terms of defining what has value is truely a threat to the US currency itself. "Shut off the printing press..." Well that is the way to look at it, but does not fully state the severity of what is going on. Last week the FED incresed it's TAF from $50 to $75 billion and the TRCA with the ECB and SNB from $75 to $100 billion. There are no printing materials or costs. It is only a few key strokes and a pressing of the "enter" button. People are closing their money market accounts and moving to brokerage accounts so they can put the $2500 min balance into GLD, SLV,DBP,or PMY. Those along with something like a FNM-PrP that has inflation protection and pays 6.3% tax advantaged. The ETF has become a great danger to the currency as they allow anyone to have something of value instead of linen fiat currency. A 1979 10 Pound Sterling note is now worthless as they were replaced by new currency and are no longer honored. Same for any Guilder or Lire. In 1979 you could have gotten about 10 gallons of gasoline for the value that was in that ten pound note. Today if you have a one ounce silver coin minted in 1979 irreguardless whether Mexican, Canadian, US or other nation it would buy 4 gallons of gas. You might have to shop it around a little but would get +$16 in your pocket. In 1979 that ten pound note would buy 3-4 of those one ounce silver coins. If you had the silver coins....and not a worthless piece of paper. The War on terror has been extended to the war on drugs on the American people. Now we see the gov't trying to manipulate the energy futures market. +$5 gasoline now seems a certainty, as does $5-$6 heating oil. Now we see the Gov't trying to head off the hundreds perhaps thousands of deaths that are now likely to occur as young children and the elderly die next winter of hypothermia. The nation of drunken sailors has finally put their own ilk into the control of our gov't and financial institutions. I am continuing to lighten up in partial positions my energy stocks and funds.. I am letting the rest run. RJI,DBA,MOO,GLD,GDX,IE... SNG,BTE etc are all working for me. I think the fundamebntals SU@K! We are heading for a retest of the March lows as we head into the "Summer Doldrums" market. The effects of +$4 gasoline, road diesel, and heating oil is starting to really scare the mob. They sleep unaware of a clarion call from the US Treasury. The Treasury this week reported the March TIC. It was more bad news for the US dollar and lower interest rates in the real market. With a couple exceptions last year when it also went negative the TIC has consistently been about PLUS $60 billion a month. There was a $100 billion in reversal in the TIC as last months $65 Billion surplus was replaced by a $46 billion Negative flow of cash out of the US. If this persists for several straight months it will put some major pressure on US Treasury prices. You can get out in front with a PST or DXKSX. These are the times that try men's souls. Fortunes will be made and lost! Forget invading IRAN. How about aiming a few cruise missiles at the TATA Motors factory kicking out those "NANOs"!

ETF Update: Use Oil, Gold ETFs to Offset Gas Price Increases

As in a previous alpha alert it is explained that owning these Futures trade or commodity funds may at year end have some onerous tax consequences. I think if you are trying to create a hedge against oil prices for paying for your rising personal gasoline and heating oil/Nat Gas costs you would do better investing in O&G trusts. PBT,CRT,SJT(San Juan?).BPT and NGT. While there are the vagaries of the foreign tax situation the Canadian Trusts for the most part remain undervalued. It is the tax cloud hanging over them that makes them the value they are. The BTE is screaming higher, the PVX and PWE remain true "value plays" in the sector,while crack spreads remain problematic for HTE. It is in great shape to rebound if there are indeed gasoline shortages do develop in the summer months. PGH with very large reserves is chugging along and should continue to reflect the market. Along with BTE, AAV are both prime candidates for aqcusition by larger entities like ERF or PWE. Many of these are getting involved in oilsands projects. These are not great investment for trust owners as they have long lead times to producing accretive cash flows. ERF is one I would avoid on that basis. It is a long term soundly run trust but... Of some interest is the ETF ENY which has a rotational platform strategy to be invested in oil sands for the most part but also under certain market conditions rotate out into the O&G trusts. The dividend s in that one seem to vanish down a rabbit hole. Anyone have a thought on that? Nearly all these trusts in Canada pay out tax advanged/qualified dividends. That is a vagary as well in terms of future US tax laws. The foreign tax credit that is now allowed on these trusts' witholdings may be reduced or eliminated as well. The US Dollar is in the strengthening mode we are told by the talking heads. Owning the Loonie assets in a country very uncomfortable with the erosion of it's current accounts SURPLUS down to $3billion dollars may not be all that risky. These trusts mostly pay monthly income streams that if you use a separate credit card to pay for your gasoline with you can apply it directly to the monthly bill. The US dollar can only have a short lived rally with the Gov't and the 2 year politicians commited to inflating the nation out of the collapsed economic model built on a foundation of personal, town & city,County,State and Federal Gov't debt. The shoes continued to drop in Europe this week with more major banks and financials writing down huge losses. Soc Gen, Fortis and Credit Agricole were amoung the usual suspects fessing up to billions more in losses. Meanwhile C and Deutsche banks were trying to pawn off some of their Leverasged buyout debt on a european Warren Buffet type "guy". It seems Guy Hands of Terra Capital found their offers to sell this junk not to his likeing for lack of an "adequate risk return" Also from over the pond they are shaking the LIBOR trees again. Shocked!, shocked! we are to find LIBOR numbers, 2.68% for 3 months to be not "quite right"! I say...! Not to worry Ben the Dollar Slayer floated out a doubling of the TRCA last week to the ECB and SNB to the tune of $100 billion. So the Europeans now have lots of liquidity to deal with the problems we exported to them in the first place. Mean while the developing nations most of which receive US forein aid continue to subsdise the price of gasoline to their consummers. We give Egypt $1,7 Billion a year in aid so they can indirectly subsidise the price of gasoline @ $0.90/gal. Pay no attention to the men behind the curtains

What’s Behind the Slide in Gold and Silver?

I had a great move up on Friday in my shares of DXKSX! My money is where most of the sentiment towards bonds seems to be! Thank you Mr Padman... This is an opinion I was seeking when I started to read the posted article. I did get a nice pop in my newly acquired GLD shares as well as my holdings in GDX today. The talking heads on the tube seem evenly split on the action to be seen next week in US $ valuations. Some are saying the Euro should fall below 150 and that oil could retreat to as low as $90 by the end of the month. The markets on Friday, certainly were not buying into that as the Fed flooded the world with a few hundred million dollars more in liquidity. I will now go back and try to find the conclusions of the author somewhere in the middle of the text. Good luck to all!

What’s Behind the Slide in Gold and Silver?

As of noon 5/2 we find the interest rate on the Ten year treasury increasing by 2.5% and the bond losing value, down 26/32s in price. The financials are ralllying on the Fed anouncing it is increasing the emergency borrowing facility from $50 to $75 Billion, increasing liquidity to the banking system. Gold & Oil & are rallying as well on this gratuitous conspicuous shifting of the printing presses into 4th gear.

What’s Behind the Slide in Gold and Silver?

Soup ~Your post is of course the meat of the issue. But what about a comparision on the basis of taxation? The FNM Preferred P has a guaranteed minimum yield. It sells so dramatically below par as to make the yield appear tempting. It is an adjustible rate yield based on an inflation related index & best of all! it is 15% tax qualified. People in bonds and CDs are getting slaughtered to feed the masses by the US tax system!

What’s Behind the Slide in Gold and Silver?

It is difficult to interpret what the conclusions are of the author given all this technical charting and sniping at the world's Gov't "men behind the curtains". While a particularly dry text it is has some merit based on the use of so many critical euphemisms. I am particularly enamored with some not used here like, "Ben the Dollar Slayer", " Henchman of the Dummya" . The sentiment of the author's remarks would seem to echo those as apt descriptions. So I guess my question is , based on all this discussion was my purchase of a partial position in GLD @ $83.73/=~$850 an ounce yesterday, ill timed? I have watch listed the DBP as it is a dual participant in the Silver and gold market. Still there seems no really good US based ETF yet that can match US Investors' "basket" diversification as reflected in it's mutual fund UNWPX. UNWPX is a $5K initial investment and has a 6 month trading restriction. An ETF where you could take partial positions and not be penalized for a trading decision would certainly be welcome. There are some of these funds trading in London and Canada that like UNWPX contain palladium, platinum, rhodium and other precious metals in addition to silver and gold. I own RJI and find it a very good fund if not for it's higher expense ratio. I will add to DBA if it drops a little more to below $35. MOO is my most heavily weighted of these three. I am not selling any of it. There seems to be no end in sight to $ destruction, with even McCain trying to out Democrat the Democrats with how much tax money he can give away to buy votes. He will end ALL earmarked pork barrel spending to pay for his proposals. This is just more of the "DUMMYA" cut taxes and dramatically increase spending on EVERTHING. As if McCain will have any ability to end pork when elected given the state of the country and the Congress most likely to sliding even further into the control of the Democrats. The Democrats at least propose some tax enhancement to get the Fed to rescue Student loans, and save Medicare and Social security. Abrubtly withdrawing from IRAQ and leaving behind the collaborators to fend for themselves could serve as a sobering lesson to the rest of the Eh-rab world. The nearly 5million refugees we have thus far created could be doubled in number and a wave of genocide of Eh-rabs killing each other will certainly ensue. That would save us $800 billion a year. So the Obama guy really will cut spending! Never the less the author's observations of those running the EC , seems to indicate at least some concern for how to maintain the confidence in linen fiat currencies. Reguardless of the current rally in the bear market for the US $ it seems it is destined for some hard times globally in the longer term. There is a real rise in demand worldwide for commodities and a huge amount of linen curency out there as the US has exported it's inflation machine worldwide. The Chinese had so much linen that they found the idea of a Strategic Petroleum reserve to be an excellent idea and have started one of their own. That is alot of linen money that could have gone into purchasing more US treasuries that are losing alot of value. Value, which has nothing to do any more with losing alot of money. We know that "they" were cooking the LIBOR rate numbers until recently. Does any one have an opinion on whether or not the US Treasury may be cooking the TIC data that is 3 months delayed and reported around the 15 th of each month? Are gold and silver likely bottoming here or are they going some or alot lower with this Faux $ rally?

The 7 'Golden Rules' of Picking a Gold Stock

I wouldn't give two dollars for a fifty guilder note! Alot of people who travel around the world thought they were saving enough of the local currency to pay a cab fare or buy a newspaper the next time they were in that country. But many found themselves stranded with defunct banknotes not easily redeemed or even worthless. It is not just the Euro thing. A ten pound note printed in 1979 with Florence Nightingale printed on the back side is not worth nearly $20. As with a defunct Guilder note it is not worth $2. A beautifully minted one ounce silver bullion coin minted in 1979 that would have cost $4.00 plus sales tax, shipping and even contained the premium of the minting, would now be worth $18. You could have bought 4 of them for that 1979 10 Pound note. Today you could cut that $4.00 silver coin into pieces of eight and still get nearly $2 for each piece selling or trading it as scrap. In 1979 you could have also bought 5 gals of gas for $4. Five gallons of gasoline now costs $17. Isn't that remarkable that with an ounce of silver you can still buy approximately the same amont of gas as you could buy 30 years ago. The currencies are just paper! The ETFs however are not! KOL, UHN,GLD,SLV,CUT,NLR,DB... you name it and there is an ETF for it. There are a few that have not come to pass Platinum? for instance ...yet. This is a fundamental change in how currencies printed on paper will be percieved into the future. The author is correct to point out the world inflation that we the United States created by exporting all of our printing press dollars all over the world to supply the shelves of Walmart and the refineries of Exxon-Mobil. Now we pull up to the pump and feel gsoline has quadrupled in price but it really hasn't in terms of a true measure of valuation. Most of our current difficulties in this vein are just due to the election of the most ineffective leadership the nation has ever seen. Americans are mezmerized by the TV sound bites of O'Reilly and bored by reality. In hind sight we see that the FEd has put our economy on a rollercoaster and seems bent on continuing the process. When interviewed by Congress the Dollar Slayer freely discusses the negative impact of uncontrolled deficit spending far into the future. He then steadfastly refuses to comment on tax policy. More tax cuts and more spending of paper checks now electronically deposited not backed by anything more than more tax cuts and more spending. America now believes in this as a solution like some new found religion. You need no physical anything to support faith. The Barbarians are at the gate and they are us. They are also known as baby boomers.

Who's to Blame for the Commodities Boom?

The author recognises ,"had the government not increased the deficit by cutting taxes and increasing spending" the Laffer Curve turning into "Killer Bend" resulting Ben the Dollar slayer panicing at the wheel, driving the bus off the road and over the cliff. No one invested in hard assets has been hit as hard as those with out this diversification in their portfolios. I am doing quite well in GDX,DBA,RJI,DXKSX,PFBD... and being over weight in O&G with IEO,PXE,and a slew of Canroys. If only I had not taken the 40% gain in GACHF and 35% gain in FDG. Selling GACHF at $2 turned out to be not too shrewd! But now I am getting excited about SXRZF. The Stan with out the Oliver.

Who's to Blame for the Commodities Boom?

Observation on Canroy valuations may be true. What no one seems to be realizing is that there is a dual tax change going on here. At the same time the tax status changes the 15% with holding will be eliminated. Also these investments will become much more attractive to investors in tax sheltered accounts who are currently paying a foriegn tax for which they can get no Foreign Tax Credit. They will under the curent tax treaty be exempt from Canadian taxes on their investment. The Canadian Nat Gas market is key now to establishing a direct link in Nat Gas prices to crude. As long as oil stays above $100/BBL the development of the tarsands will accelerate. This process is expensive as it is alot like ethanol. Tremendous Nat Gas amounts are used to extract the oil. This has already resulted in exports of gas to the US in being curbed. AAV and BTE remain the "best" in terms of capitalization. Both are most vulnerable to vultures swooping in and paying a 15-20% premium. PVX & PWE remain the most under valued. PGH is nearly all Nat Gas so that still has legs. The timber trusts CFPUF,TWTUF and ATBUF have all seemed to bottom after lumber futures made a Quad bottom. It is perhaps a little early but not too early to dip a toe. ATBUF perhaps the smallest but +40% owned by BAM is converting to a REIT and will realize (IMHO) a 40% gain in 18 months.

Gold Correction - I'm Not Worried

I already own the GDX and bullion. I am thinking of a diversification into DXKSX. There are some major anomalies in these markets. Inflation is clearly a problem. The Fed actions have created some wierd effects. You can typically get 7-8% on A1-Aa3 investment grade subordinated long term debt a prices below par, while the medium term bonds of the same issuers are yielding 3.75-4.75%. Municipal bond & TIP funds like PMX & WIA Iare kicking out 5.75%. This is a very ominous sign for the longer term effects and sustainability of recent Fed actions. It would seem we are very near the bottom in short and medium term Gov't debt rates. There is a "Basket" precious metals fund that trades in London. Here the closest thing that seems available is the DBP that holds ~20% Silver but no US traded funds have shown up? for trading the basket with the other precious metals including platinum, palladium, molybdenum, rhodium, etc. Anyone have a recommendation?