Russell Upsomgrubb

Silver Prices Are About to Fall

Warren Buffett is perhaps the most successful investor of all time and just bough Burlington Northern, making a huge bet going forward on the growth of the American economy over the next 5-10 years. If he is correct, I see the dollar strengthening over time. The consensus on Wall Street is so often wrong and the vast majority of traders are short the dollar. Buffett is an investor, not a trader. He believes in the long term creation of wealth, not trying to get rich overnight. Mark Faber, a doomsayer, claims the value of the dollar will eventually fall to zero. Gee, I'll bet he owns a lot of gold.

How to Catch the Corporate Bond ETF Wave

Doh!! You put the HYG chart up twice rather than the second one being LQD.

Inflation Expectations and the Price of Gold

In Jim Rogers' recent Bloomberg interview, he said he preferred silver to gold because the IMF was desperately trying to sell its gold. Not according to the IMF website:

www.imf.org/External/N...

World Gold Council Throws Water on COMEX Rumors

Cramer changes positions on stocks so often it's like he's performing a financial version of the Kama Sutra.

How the Gold Game Could End

Every central bank around the world is printing paper currency to deal with the bad debt in the form of sub-prime mortgage backed securities that was exported by Wall Street globally, after getting Fitch, Moody's and S & P to stamp this dreck AAA. Either the economy recovers and foments hyperinflation or we slip further into a morass of residential and commercial foreclosures. Gold wins in both scenarios, as the paper money devalues or in being seen as a safe haven. First come the foreclosures of homes, the biggest asset, then the auto loan defaults, and finally the unsecured credit card debt. The latter two have not shown up on banks balance sheets as yet. Not to mention the billions of dollars of short-term commercial paper that comes due over the next three years with little chance of it being refinanced as more retailers go bankrupt in an economy that is 2/3 driven by consumption. General Growth Properties, one of the biggest mall owners in the country, just declared bankruptcy. While there are televised ads for the purchase of gold coins , they seem to be outnumbered at least two to one by commercials offering to buy your gold jewelry. That type of anecdotal evidence leads me to believe gold has more upside. I guess we'll see what happens when home sales are reported this week.

Resurgent Dollar Leaves Gold in the Dust

All the central banks in the world have been on a currency printng spree- as one writer put it the dollar has been like the winner of a beauty contest in a leper colony. The US banks spread those fake AAA CDOs around the world, the 70 billion the government is putting into the housing market will do little to counter the trillions in real estate value that has been destroyed, and why should other countries continue to pile into T-bills with the 10 year paying under 3% after we just got done running this sub-prime mortgage backed securities Ponzi scheme on them?

Gold: The Only Remaining Bubble?

The chart sure looks like the parabolic one of oil at its high.

Merrill Lynch Kisses Up to Gold, Predicts It Will Hit $1,500

Demand for gold jewelry has little to do with the demand for gold as a hedge against a falling dollar. Jewelry is marked up 3-4 hundred percent compared to its actual value. Trillions of dollars will be required to bail out insolvent banks and the government doesn't have any so they will just print it. Billions of dollars in short term commercial paper come due this year with little chance of it being refinanced. Central banks around the world are printing currency that is backed by nothing but faith. I've never owned gold before but this time it's different. When the price of gold has risen above the S & P index in the past it has peaked from 2 to 4 times the index. There are a ton of call options on gold that expire the third week of February. There will be a number of trading opportunities, but longer term the flood of paper will bring inflation.

5 Alternative Energy Stocks Worth Researching

Well, I would start here and see how cheap land is selling in rural Texas.

www.glo.state.tx.us/

5 Alternative Energy Stocks Worth Researching

The majority of TPL's remaining land is in Hudspeth and Culberson counties, nowhere near the the majority of the windiest places in Texas, as shown on this map:

www.infinitepower.org/...

TPL's oil and gas royalties are a depleting asset and most of their land in urban areas has already been sold. They get revenue from grazing leases. They must, however, according to their original charter, continue to buy back shares of the trust each and every quarter and retire them. It will take a long time for all the shares to be bought. Currently, the stock is trading at a multiple too high compared to their earnings and at almost 20 times book value.

Is Natural Gas Down for the Count?

Natural gas is a regional commodity, unlike the world market for oil. Cheniere Energy(LNG), was all the rage a couple years ago with their plans to build LNG re-gassification plants along the Gulf Coast. The stock is at $3.34 because the three countries with the most natural gas reserves in the world are Russia, Qatar and Iran and that gas is going to whoever will pay the most. While it doesn't have to be refined, freezing natgas into a liquid, transporting it in refrigerated tankers and then re-gassifying it is an expensive process. India has little in the way of domestic natural resources, China imports 50% of its energy needs and Japan and Europe have no domestic reserves to speak of. The price of domestically produced natural gas in the US will have to go up to attract any LNG from abroad. According to the Energy Information Agency(www.eia.doe.gov/emeu/i...), all of North America had proved reserves of 274 trillion cubic feet at the end of 2007. Natural gas in Canada is used in the production of getting oil out of the tar sands. By comparison, Qatar had 910 trillion cubic feet, Iran had 974 trillion cubic feet and Russia had 1,688 trillion feet of proved reserves. All of Europe had 234 trillion and Japan had 1 trillion.

Housing: Barron's Calls a Bottom

Using historical drops in housing starts to state your case doesn't work this time. The exotic loans available today- interest only, negative amortization, etc. with no money down weren't available before. The banks did the same thing with credit card debt and auto loans, packaged them as securities and sold them to other banks. How many car ads have there been over the last five years advertising no money down and no interest for 60 months? That shoe has yet to drop. And, because of the mark to market rule on CDOs, the banks themselves really can't predict their writedowns because if no buyers step up to purchase these risky securities, the market will dictate lower prices.

High-Yield Canadian Royalty Trusts: What's the Catch?

It's my understanding that if this tax change does become law in 2011, most trusts will just convert to MLPs anyway. PWE has set aside a substantial amount of money for future taxes, which resulted in a $0.77/share loss in the 2nd quarter of 2007. PWE is also involved in a program to recapture C02 which helps to mitigate its increase in provincial taxes in Alberta, home of the oil sands.

Small Homebuilders: A Bargain vs. Book Value

BHS, back around November of 2005, had a tender offer for their shares at $55. At that time and currently, BHS was a subsidiary of Canadian conglomerate Brascan, now known as Brookfield Asset Management (BAM). Brascan tendered 10 million of their own shares of BHS, so I tendered all of mine. The stock has tanked since thenGuess who has been buying back the shares on the cheap since then? I wouldn't go near that stock. Foreclosures were just up 48% over last year. The top three states were California, Nevada and Florida. BHS operates in two main areas- California and the Washington, D. C. area. They only have 10 million in cash and 800 million in debt. The recession is yet to come

Jim Cramer's Mad Money In-Depth, 3/5/08: Killinger Makes a Killing

Only Canadian energy trusts can continue to add assets and their distributions are considered qualified dividends rather than royalties and are taxed at a different rate. From Investorguide.com:

U.S or Canadian
There are a few key differences between Canadian energy trusts and U.S. royalty trusts. U.S.-based royalty trusts (which are legally precluded from making acquisitions financed by new debt and/or equity and, therefore, cannot as readily replace depleted reserves) are essentially blow-down investment vehicles. Canadian energy trusts are very different. In fact, Canadian energy trusts have managed, during certain extended periods, to actually increase per trust unit production, discounted cash flow value and distributions, in addition to maintaining reasonable monthly or quarterly distributions on the trust units. The ability to acquire assets and finance them with new equity, combined with a tax-efficient structure, leads to a financial vehicle that is radically different from its U.S. counterpart.