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  • The Highly Worrisome U.S. Unemployment Situation [View article]
    I was researching comparative Asian wage data the other day and was astounded with what I found. Textile workers earn $2.99 an hour in India (PIN), $1.84 in China (FXI), and $0.49 in Vietnam (VNM). This is an 18 fold increase in labor costs from ten cents an hour since Chinese industrialization launched in 1978.
    This compares to the $8 an hour our much abused illegals get at sweat shops in Los Angeles, and $10 in some of the nicer places. What’s more, the Indian wage is up 17% in a year, meaning that inflation is casting a lengthening shadow over the sub continent’s economic miracle. A series of strikes and a wave of suicides have brought wage settlements with increases as high as 20% in China.
    This is how the employment drain in the US is going to end. When foreign labor costs reach half of those at home, manufacturers quit exporting jobs because the cost advantages gained are not worth the headaches and risk involved in managing a foreign language work force, the shipping expense, political risk, import duties, and supply disruptions, just to get lower quality goods. Chinese wage growth at this rate takes them up to half our minimum wage in only five years.
    This has already happened in South Korea (EWY), where wage costs are 60% of American ones. As a result, Korea’s GDP growth is half that seen in China. These numbers are also a powerful argument for investing in Vietnam, where wages are only 27% of those found in the Middle Kingdom, and where Chinese companies are increasingly doing their own offshoring.

    This is why I have pushed the Vietnam ETF (VNM) on many occasions. I know every time I do this I get torrents of emails from that country bitterly complaining how difficult it is to do business there, and how the hardwood trees are still full of shrapnel left over from the war, and why I shouldn’t buy a 50 acre industrial park there. But, the numbers don’t lie.

    The Mad Hedge Fund Trader -
    Aug 29 10:40 PM | Likes Like |Link to Comment
  • Why U.S. Unemployment Figures Are Completely Misleading [View article]
    I was researching comparative Asian wage data the other day and was astounded with what I found. Textile workers earn $2.99 an hour in India (PIN), $1.84 in China (FXI), and $0.49 in Vietnam (VNM). This is an 18 fold increase in labor costs from ten cents an hour since Chinese industrialization launched in 1978.
    This compares to the $8 an hour our much abused illegals get at sweat shops in Los Angeles, and $10 in some of the nicer places. What’s more, the Indian wage is up 17% in a year, meaning that inflation is casting a lengthening shadow over the sub continent’s economic miracle. A series of strikes and a wave of suicides have brought wage settlements with increases as high as 20% in China.
    This is how the employment drain in the US is going to end. When foreign labor costs reach half of those at home, manufacturers quit exporting jobs because the cost advantages gained are not worth the headaches and risk involved in managing a foreign language work force, the shipping expense, political risk, import duties, and supply disruptions, just to get lower quality goods. Chinese wage growth at this rate takes them up to half our minimum wage in only five years.
    This has already happened in South Korea (EWY), where wage costs are 60% of American ones. As a result, Korea’s GDP growth is half that seen in China. These numbers are also a powerful argument for investing in Vietnam, where wages are only 27% of those found in the Middle Kingdom, and where Chinese companies are increasingly doing their own offshoring.

    This is why I have pushed the Vietnam ETF (VNM) on many occasions. I know every time I do this I get torrents of emails from that country bitterly complaining how difficult it is to do business there, and how the hardwood trees are still full of shrapnel left over from the war, and why I shouldn’t buy a 50 acre industrial park there. But, the numbers don’t lie.

    - The Mad Hedge Fund Trader
    Aug 29 10:40 PM | 1 Like Like |Link to Comment
  • Why U.S. Unemployment Rate Is 12.1% [View article]
    I was researching comparative Asian wage data the other day and was astounded with what I found. Textile workers earn $2.99 an hour in India (PIN), $1.84 in China (FXI), and $0.49 in Vietnam (VNM). This is an 18 fold increase in labor costs from ten cents an hour since Chinese industrialization launched in 1978.
    This compares to the $8 an hour our much abused illegals get at sweat shops in Los Angeles, and $10 in some of the nicer places. What’s more, the Indian wage is up 17% in a year, meaning that inflation is casting a lengthening shadow over the sub continent’s economic miracle. A series of strikes and a wave of suicides have brought wage settlements with increases as high as 20% in China.
    This is how the employment drain in the US is going to end. When foreign labor costs reach half of those at home, manufacturers quit exporting jobs because the cost advantages gained are not worth the headaches and risk involved in managing a foreign language work force, the shipping expense, political risk, import duties, and supply disruptions, just to get lower quality goods. Chinese wage growth at this rate takes them up to half our minimum wage in only five years.
    This has already happened in South Korea (EWY), where wage costs are 60% of American ones. As a result, Korea’s GDP growth is half that seen in China. These numbers are also a powerful argument for investing in Vietnam, where wages are only 27% of those found in the Middle Kingdom, and where Chinese companies are increasingly doing their own offshoring.

    This is why I have pushed the Vietnam ETF (VNM) on many occasions. I know every time I do this I get torrents of emails from that country bitterly complaining how difficult it is to do business there, and how the hardwood trees are still full of shrapnel left over from the war, and why I shouldn’t buy a 50 acre industrial park there. But, the numbers don’t lie.

    The Mad Hedge Fund Trader
    Aug 29 10:40 PM | Likes Like |Link to Comment
  • Options Trading: A Little Knowledge Is A Very Dangerous Thing [View article]
    I strongly urge readers of this letter to log on to Amazon and by a copy of Options for the Beginner and Beyond by W. Edward Olmstead. Options contracts offer investors a wonderful instrument for minimizing risk, while maximizing the upside, and I am going to recommend many more such strategies in the future. So, if you want to have the slightest idea of what I am talking about, get yourself some grounding in this important field by reading this book. You don’t have to be a math genius to figure this stuff out, and the risk reward benefits are great.
    Olmstead, a math professor at Northwestern University, starts out with a basic Options 101 course, going into the merits of puts and calls. He catalogues the exchanges where they are listed, and the vast number of products that can be traded, including stocks, bonds, commodities, currencies, and precious metals. He goes into the mundane, but important details on the administration side of things, such as settlements. For the more technically inclined, he launches into options theory pricing, and goes into the origins and utility of the Black-Scholes equation. We learn about the arcane world of what traders call “the Greeks”, the deltas, thetas, and vegas of individual positions. He then launches into basic option strategies, like call and put spreads, ratios, straddles, strangles, collars, and condors.

    The Mad Hedge Fund Trader -
    Aug 29 10:37 PM | Likes Like |Link to Comment
  • Basic Options Trading E-Book  [View instapost]
    I strongly urge readers of this letter to log on to Amazon and by a copy of Options for the Beginner and Beyond by W. Edward Olmstead. Options contracts offer investors a wonderful instrument for minimizing risk, while maximizing the upside, and I am going to recommend many more such strategies in the future. So, if you want to have the slightest idea of what I am talking about, get yourself some grounding in this important field by reading this book. You don’t have to be a math genius to figure this stuff out, and the risk reward benefits are great.
    Olmstead, a math professor at Northwestern University, starts out with a basic Options 101 course, going into the merits of puts and calls. He catalogues the exchanges where they are listed, and the vast number of products that can be traded, including stocks, bonds, commodities, currencies, and precious metals. He goes into the mundane, but important details on the administration side of things, such as settlements. For the more technically inclined, he launches into options theory pricing, and goes into the origins and utility of the Black-Scholes equation. We learn about the arcane world of what traders call “the Greeks”, the deltas, thetas, and vegas of individual positions. He then launches into basic option strategies, like call and put spreads, ratios, straddles, strangles, collars, and condors.

    - The Mad Hedge Fund Trader
    Aug 29 10:37 PM | Likes Like |Link to Comment
  • Options Trading For The Dividend Growth Investor [View article]
    I strongly urge readers of this letter to log on to Amazon and by a copy of Options for the Beginner and Beyond by W. Edward Olmstead. Options contracts offer investors a wonderful instrument for minimizing risk, while maximizing the upside, and I am going to recommend many more such strategies in the future. So, if you want to have the slightest idea of what I am talking about, get yourself some grounding in this important field by reading this book. You don’t have to be a math genius to figure this stuff out, and the risk reward benefits are great.
    Olmstead, a math professor at Northwestern University, starts out with a basic Options 101 course, going into the merits of puts and calls. He catalogues the exchanges where they are listed, and the vast number of products that can be traded, including stocks, bonds, commodities, currencies, and precious metals. He goes into the mundane, but important details on the administration side of things, such as settlements. For the more technically inclined, he launches into options theory pricing, and goes into the origins and utility of the Black-Scholes equation. We learn about the arcane world of what traders call “the Greeks”, the deltas, thetas, and vegas of individual positions. He then launches into basic option strategies, like call and put spreads, ratios, straddles, strangles, collars, and condors.

    The Mad Hedge Fund Trader
    Aug 29 10:37 PM | Likes Like |Link to Comment
  • Is Barrick Gold A Good Value Stock? [View article]
    One of my best calls of the year was to plead with readers to avoid gold like the plague, periodically dipping in on the short side only. The barbarous relic has been in a bear market since it peaked at $1,922 an ounce at the end of August last year. Gold shares have fared much worse, with lead stock Barrack Gold (ABX) dropping 36% since then and the gold miners ETF (GDX) suffering a heart rending 43% haircut.

    However, the recent price action suggests that hard times may be over for this hardest of all assets. Despite repeated attempts, the yellow metal has failed to break down below the $1,500 support level that I have been broadcasting as the line in the sand.

    It has rallied $170 since the last try a few weeks ago. (GDX) has performed even better, popping 20%. For the last month, the entire precious metals space has traded like it was a call option on global quantitative easing (see yesterday’s piece). Dramatically worsening economic data is increasing the likelihood of further monetary easing generating a nice bid for gold.

    Now the calendar is about to ride to the rescue as a close ally. It turns out that in recent years, there has been a major seasonal element to the gold trade, almost as good as the November/May cycle that drives the stock market. Gold typically sees a summer low. Then traders start anticipating the September Indian wedding season when the purchase of gifts and dowries become a big price driver. That explains why India, with a population of 1.2 billion, is the world’s largest gold buyer.

    Next comes the Christmas jewelry buying season in western countries. That is followed by the gift giving and debt repayments during the Chinese Lunar New Year, during which we see multi month peaks in the yellow metal. That is exactly what we saw this year. The only weakness in this argument is that a slowing Chinese economy could generate less demand this time.

    These are heady inflows into such a small space. All of the gold mined in human history, from King Solomon's mines, to the bars still in Swiss bank vaults bearing Nazi eagles (I've seen them) would only fill 2.5 Olympic sized swimming pools. That amounts to 5.3 billion ounces, about $8.6 trillion at today's prices. For you trivia freaks out there, that is a cube with 66 feet on an edge. China is the largest producer (13.1%), followed by Australia (10%) and the US (8.8%).
    Peak gold may well be upon us. Production has been falling for a decade, although it reached 94 million ounces last year worth $153 billion at today’s prices. That would rank gold 5th as a Fortune 500 company, just ahead of General Electric (GE). It is also only .38% of global public debt markets worth $40 trillion.
    That is not much when you have the entire world bidding for it, governments and individuals alike. Talk about getting a camel through the eye of a needle! We may well see the bull market end only when those two asset classes, government bonds and gold, see outstanding values reach parity, implying a major increase in gold prices from here. That is well above my own personal target of the old inflation adjusted high of $2,300. No wonder buying is spilling out into the other precious metals, silver (SLV), platinum (PPLT), and palladium (PALL).

    The thumbnail technical view here is that we have broken the 200 day moving average at $1,649, so we may have a clear shot at a new high. There may be an easy $100 here for the nimble, and more if we break that. The current global mood for more quantitative easing and lower interest rates certainly help. If you had any doubts for the need for such easing, taking a look at the chart below showing global Purchasing Manager Index’s heading in a clear southerly direction.

    Not that it needs it, but gold is about to get some free advertising at this week’s Republican national convention in Tampa, Florida. The right wing of the party has long advocated a return to the gold standard, and a Romney win could take us closer to that goal. I don’t think there is a chance in hell of this every happening, as it would be hugely deflationary. Still a vocal and very public discussion of the topic can’t be bad for gold prices.

    When playing in the gold space, I always prefer to buy the futures or the (GLD), the world’s second largest ETF by market cap, either outright or through a longer dated call spread. The dealing costs are far too high for trading physical bars and coins, and can run as high as 30% for a round trip.

    Having spent 40 years following mining companies, I can tell you that there are just way too many things that can go wrong with them for me to risk capital. They can get nationalized, suffer from incompetent management, hedge out their gold risk, get hit with strikes or floods, or get tarred by poor equity market sentiment. They also must endure the highest inflation rate of any industry, around 15%-20% a year, which hurts the bottom line.

    Better just to stick with the sparkly stuff.

    The Mad Hedge Fund Trader -
    Aug 29 10:35 PM | Likes Like |Link to Comment
  • Battle Of The Heavyweight Gold Diggers; Who Comes Out On Top? [View article]
    One of my best calls of the year was to plead with readers to avoid gold like the plague, periodically dipping in on the short side only. The barbarous relic has been in a bear market since it peaked at $1,922 an ounce at the end of August last year. Gold shares have fared much worse, with lead stock Barrack Gold (ABX) dropping 36% since then and the gold miners ETF (GDX) suffering a heart rending 43% haircut.

    However, the recent price action suggests that hard times may be over for this hardest of all assets. Despite repeated attempts, the yellow metal has failed to break down below the $1,500 support level that I have been broadcasting as the line in the sand.

    It has rallied $170 since the last try a few weeks ago. (GDX) has performed even better, popping 20%. For the last month, the entire precious metals space has traded like it was a call option on global quantitative easing (see yesterday’s piece). Dramatically worsening economic data is increasing the likelihood of further monetary easing generating a nice bid for gold.

    Now the calendar is about to ride to the rescue as a close ally. It turns out that in recent years, there has been a major seasonal element to the gold trade, almost as good as the November/May cycle that drives the stock market. Gold typically sees a summer low. Then traders start anticipating the September Indian wedding season when the purchase of gifts and dowries become a big price driver. That explains why India, with a population of 1.2 billion, is the world’s largest gold buyer.

    Next comes the Christmas jewelry buying season in western countries. That is followed by the gift giving and debt repayments during the Chinese Lunar New Year, during which we see multi month peaks in the yellow metal. That is exactly what we saw this year. The only weakness in this argument is that a slowing Chinese economy could generate less demand this time.

    These are heady inflows into such a small space. All of the gold mined in human history, from King Solomon's mines, to the bars still in Swiss bank vaults bearing Nazi eagles (I've seen them) would only fill 2.5 Olympic sized swimming pools. That amounts to 5.3 billion ounces, about $8.6 trillion at today's prices. For you trivia freaks out there, that is a cube with 66 feet on an edge. China is the largest producer (13.1%), followed by Australia (10%) and the US (8.8%).
    Peak gold may well be upon us. Production has been falling for a decade, although it reached 94 million ounces last year worth $153 billion at today’s prices. That would rank gold 5th as a Fortune 500 company, just ahead of General Electric (GE). It is also only .38% of global public debt markets worth $40 trillion.
    That is not much when you have the entire world bidding for it, governments and individuals alike. Talk about getting a camel through the eye of a needle! We may well see the bull market end only when those two asset classes, government bonds and gold, see outstanding values reach parity, implying a major increase in gold prices from here. That is well above my own personal target of the old inflation adjusted high of $2,300. No wonder buying is spilling out into the other precious metals, silver (SLV), platinum (PPLT), and palladium (PALL).

    The thumbnail technical view here is that we have broken the 200 day moving average at $1,649, so we may have a clear shot at a new high. There may be an easy $100 here for the nimble, and more if we break that. The current global mood for more quantitative easing and lower interest rates certainly help. If you had any doubts for the need for such easing, taking a look at the chart below showing global Purchasing Manager Index’s heading in a clear southerly direction.

    Not that it needs it, but gold is about to get some free advertising at this week’s Republican national convention in Tampa, Florida. The right wing of the party has long advocated a return to the gold standard, and a Romney win could take us closer to that goal. I don’t think there is a chance in hell of this every happening, as it would be hugely deflationary. Still a vocal and very public discussion of the topic can’t be bad for gold prices.

    When playing in the gold space, I always prefer to buy the futures or the (GLD), the world’s second largest ETF by market cap, either outright or through a longer dated call spread. The dealing costs are far too high for trading physical bars and coins, and can run as high as 30% for a round trip.

    Having spent 40 years following mining companies, I can tell you that there are just way too many things that can go wrong with them for me to risk capital. They can get nationalized, suffer from incompetent management, hedge out their gold risk, get hit with strikes or floods, or get tarred by poor equity market sentiment. They also must endure the highest inflation rate of any industry, around 15%-20% a year, which hurts the bottom line.

    Better just to stick with the sparkly stuff.

    - The Mad Hedge Fund Trader
    Aug 29 10:35 PM | 1 Like Like |Link to Comment
  • Will Higher Gold Prices Help Your Gold Stock Portfolio? [View article]
    One of my best calls of the year was to plead with readers to avoid gold like the plague, periodically dipping in on the short side only. The barbarous relic has been in a bear market since it peaked at $1,922 an ounce at the end of August last year. Gold shares have fared much worse, with lead stock Barrack Gold (ABX) dropping 36% since then and the gold miners ETF (GDX) suffering a heart rending 43% haircut.

    However, the recent price action suggests that hard times may be over for this hardest of all assets. Despite repeated attempts, the yellow metal has failed to break down below the $1,500 support level that I have been broadcasting as the line in the sand.

    It has rallied $170 since the last try a few weeks ago. (GDX) has performed even better, popping 20%. For the last month, the entire precious metals space has traded like it was a call option on global quantitative easing (see yesterday’s piece). Dramatically worsening economic data is increasing the likelihood of further monetary easing generating a nice bid for gold.

    Now the calendar is about to ride to the rescue as a close ally. It turns out that in recent years, there has been a major seasonal element to the gold trade, almost as good as the November/May cycle that drives the stock market. Gold typically sees a summer low. Then traders start anticipating the September Indian wedding season when the purchase of gifts and dowries become a big price driver. That explains why India, with a population of 1.2 billion, is the world’s largest gold buyer.

    Next comes the Christmas jewelry buying season in western countries. That is followed by the gift giving and debt repayments during the Chinese Lunar New Year, during which we see multi month peaks in the yellow metal. That is exactly what we saw this year. The only weakness in this argument is that a slowing Chinese economy could generate less demand this time.

    These are heady inflows into such a small space. All of the gold mined in human history, from King Solomon's mines, to the bars still in Swiss bank vaults bearing Nazi eagles (I've seen them) would only fill 2.5 Olympic sized swimming pools. That amounts to 5.3 billion ounces, about $8.6 trillion at today's prices. For you trivia freaks out there, that is a cube with 66 feet on an edge. China is the largest producer (13.1%), followed by Australia (10%) and the US (8.8%).
    Peak gold may well be upon us. Production has been falling for a decade, although it reached 94 million ounces last year worth $153 billion at today’s prices. That would rank gold 5th as a Fortune 500 company, just ahead of General Electric (GE). It is also only .38% of global public debt markets worth $40 trillion.
    That is not much when you have the entire world bidding for it, governments and individuals alike. Talk about getting a camel through the eye of a needle! We may well see the bull market end only when those two asset classes, government bonds and gold, see outstanding values reach parity, implying a major increase in gold prices from here. That is well above my own personal target of the old inflation adjusted high of $2,300. No wonder buying is spilling out into the other precious metals, silver (SLV), platinum (PPLT), and palladium (PALL).

    The thumbnail technical view here is that we have broken the 200 day moving average at $1,649, so we may have a clear shot at a new high. There may be an easy $100 here for the nimble, and more if we break that. The current global mood for more quantitative easing and lower interest rates certainly help. If you had any doubts for the need for such easing, taking a look at the chart below showing global Purchasing Manager Index’s heading in a clear southerly direction.

    Not that it needs it, but gold is about to get some free advertising at this week’s Republican national convention in Tampa, Florida. The right wing of the party has long advocated a return to the gold standard, and a Romney win could take us closer to that goal. I don’t think there is a chance in hell of this every happening, as it would be hugely deflationary. Still a vocal and very public discussion of the topic can’t be bad for gold prices.

    When playing in the gold space, I always prefer to buy the futures or the (GLD), the world’s second largest ETF by market cap, either outright or through a longer dated call spread. The dealing costs are far too high for trading physical bars and coins, and can run as high as 30% for a round trip.

    Having spent 40 years following mining companies, I can tell you that there are just way too many things that can go wrong with them for me to risk capital. They can get nationalized, suffer from incompetent management, hedge out their gold risk, get hit with strikes or floods, or get tarred by poor equity market sentiment. They also must endure the highest inflation rate of any industry, around 15%-20% a year, which hurts the bottom line.

    Better just to stick with the sparkly stuff.

    The Mad Hedge Fund Trader
    Aug 29 10:35 PM | Likes Like |Link to Comment
  • Implications Of The Olympic Dam Expansion Delay For The Uranium Industry [View article]
    The decision by BHP Billiton, one of the world’s largest producers of copper, to postpone its planned $20 billion expansion of its Olympic Dam mine is sounding alarms about the near term state of the global economy. It is telling us that China is slowing faster than we thought, that demand for base metals is shriveling, and that we are anything but close to exiting out current market malaise. This is not good for risk assets anywhere.

    The news comes on the heels of a company announcement that earnings would fall from $21.7 billion to $17.1 billion this year. The weakest demand from China in a decade was a major factor. So was the Fukushima nuclear disaster, which dropped prices for uranium, another product of the Olympic Dam mine. Piling on the headaches was a strong Australian dollar, which escalated capital costs. BHP CEO, Marius Kloppers, has said that there will be no new expansion of the company’s capacity approved before mid-2013.

    Olympic Dam is the world’s fourth largest copper source and the largest uranium supply. The upgrade was going to involve digging a massive open pit in South Australia that would generate 750,000 tonnes of copper and 19,000 tonnes of uranium a year. Almost the entire output was slated to be shipped to the Middle Kingdom. When Chinese real estate flipped from a “BUY” to a “SELL” last year, the days for this expansion were numbered.

    I have been following BHP for 40 years, and a number of family members have worked there over the years. So I know it well, and can tell you that their pay and benefits are great. I have used it as a de facto leading indicator and call option on the future of the world economy. When the share price delivers a prolonged multiyear downturn as it has recently done, it is a warning to be cautious and limit your risk.

    Mad Hedge Fund Trader -
    Aug 28 06:27 PM | Likes Like |Link to Comment
  • A Look At BHP Billiton's Iron Ore Exposure [View article]
    The decision by BHP Billiton, one of the world’s largest producers of copper, to postpone its planned $20 billion expansion of its Olympic Dam mine is sounding alarms about the near term state of the global economy. It is telling us that China is slowing faster than we thought, that demand for base metals is shriveling, and that we are anything but close to exiting out current market malaise. This is not good for risk assets anywhere.

    The news comes on the heels of a company announcement that earnings would fall from $21.7 billion to $17.1 billion this year. The weakest demand from China in a decade was a major factor. So was the Fukushima nuclear disaster, which dropped prices for uranium, another product of the Olympic Dam mine. Piling on the headaches was a strong Australian dollar, which escalated capital costs. BHP CEO, Marius Kloppers, has said that there will be no new expansion of the company’s capacity approved before mid-2013.

    Olympic Dam is the world’s fourth largest copper source and the largest uranium supply. The upgrade was going to involve digging a massive open pit in South Australia that would generate 750,000 tonnes of copper and 19,000 tonnes of uranium a year. Almost the entire output was slated to be shipped to the Middle Kingdom. When Chinese real estate flipped from a “BUY” to a “SELL” last year, the days for this expansion were numbered.

    I have been following BHP for 40 years, and a number of family members have worked there over the years. So I know it well, and can tell you that their pay and benefits are great. I have used it as a de facto leading indicator and call option on the future of the world economy. When the share price delivers a prolonged multiyear downturn as it has recently done, it is a warning to be cautious and limit your risk.

    - Mad Hedge Fund Trader
    Aug 28 06:27 PM | Likes Like |Link to Comment
  • BHP Billiton: Buy Now For Gains In 2013 And Beyond [View article]
    The decision by BHP Billiton, one of the world’s largest producers of copper, to postpone its planned $20 billion expansion of its Olympic Dam mine is sounding alarms about the near term state of the global economy. It is telling us that China is slowing faster than we thought, that demand for base metals is shriveling, and that we are anything but close to exiting out current market malaise. This is not good for risk assets anywhere.

    The news comes on the heels of a company announcement that earnings would fall from $21.7 billion to $17.1 billion this year. The weakest demand from China in a decade was a major factor. So was the Fukushima nuclear disaster, which dropped prices for uranium, another product of the Olympic Dam mine. Piling on the headaches was a strong Australian dollar, which escalated capital costs. BHP CEO, Marius Kloppers, has said that there will be no new expansion of the company’s capacity approved before mid-2013.

    Olympic Dam is the world’s fourth largest copper source and the largest uranium supply. The upgrade was going to involve digging a massive open pit in South Australia that would generate 750,000 tonnes of copper and 19,000 tonnes of uranium a year. Almost the entire output was slated to be shipped to the Middle Kingdom. When Chinese real estate flipped from a “BUY” to a “SELL” last year, the days for this expansion were numbered.

    I have been following BHP for 40 years, and a number of family members have worked there over the years. So I know it well, and can tell you that their pay and benefits are great. I have used it as a de facto leading indicator and call option on the future of the world economy. When the share price delivers a prolonged multiyear downturn as it has recently done, it is a warning to be cautious and limit your risk.

    Mad Hedge Fund Trader
    Aug 28 06:26 PM | 4 Likes Like |Link to Comment
  • Crop Progress: Slightly Worse Conditions At Harvest [View article]
    I certainly hope you took my advice to load your portfolio with corn and gold and to dump your equities five years ago. What? You didn’t? Then you have almost certainly suffered on the performance front.

    According to data compiled by my former employer, the Financial Times, corn was the top performing asset class since 2007, bringing in a stunning 146% return. Who knew that global warming would be such a winning investment strategy? It was followed by gold (GLD) (144%), US corporate debt (LQD) (44%), US Treasuries (TLT) (38%), and German bunds (BUNL) (26%). This explains why my long gold/short Morgan Stanley (MS) has been going absolutely gangbusters today.

    If you ignored my advice and instead loaded the boat with equities, chances are that you are now pursuing a career at McDonalds (MCD), hoping to upgrade to Taco Bell someday. The worst performing asset classes of the past half-decade have been Greek equities (-87%), European banks (-70%), Chinese stocks (-41%), other European equities (-21%), and UK stocks (-11%). If you were in US equities, you are just about breaking even (1%).

    Corn is, no doubt, getting an assist from what many are now describing as the worst draught since the dust bowl days of the Great Depression. But there is more to the story than the weather. Empowered with long term forecasts from the CIA and the Defense Department, I have been pounding the table for years that food would become the new distressed asset. These agencies have been predicting that food shortages will become a cause of future wars.

    For a start, the world population is expected to increase from 7 billion to 9 billion over the next 40 years. Half of that increase will occur in countries that are net importers of food, largely in the Middle East and Africa. You can also count on the rising emerging nation middle class to increase demand for both the quantity and quality of food. Obesity among children is already starting to become a problem in China.

    Mad Hedge Fund Trader -
    Aug 28 06:25 PM | Likes Like |Link to Comment
  • Today In Commodities: Sidelines Safest For Stock Investors [View article]
    I certainly hope you took my advice to load your portfolio with corn and gold and to dump your equities five years ago. What? You didn’t? Then you have almost certainly suffered on the performance front.

    According to data compiled by my former employer, the Financial Times, corn was the top performing asset class since 2007, bringing in a stunning 146% return. Who knew that global warming would be such a winning investment strategy? It was followed by gold (GLD) (144%), US corporate debt (LQD) (44%), US Treasuries (TLT) (38%), and German bunds (BUNL) (26%). This explains why my long gold/short Morgan Stanley (MS) has been going absolutely gangbusters today.

    If you ignored my advice and instead loaded the boat with equities, chances are that you are now pursuing a career at McDonalds (MCD), hoping to upgrade to Taco Bell someday. The worst performing asset classes of the past half-decade have been Greek equities (-87%), European banks (-70%), Chinese stocks (-41%), other European equities (-21%), and UK stocks (-11%). If you were in US equities, you are just about breaking even (1%).

    Corn is, no doubt, getting an assist from what many are now describing as the worst draught since the dust bowl days of the Great Depression. But there is more to the story than the weather. Empowered with long term forecasts from the CIA and the Defense Department, I have been pounding the table for years that food would become the new distressed asset. These agencies have been predicting that food shortages will become a cause of future wars.

    For a start, the world population is expected to increase from 7 billion to 9 billion over the next 40 years. Half of that increase will occur in countries that are net importers of food, largely in the Middle East and Africa. You can also count on the rising emerging nation middle class to increase demand for both the quantity and quality of food. Obesity among children is already starting to become a problem in China.

    - Mad Hedge Fund Trader
    Aug 28 06:25 PM | Likes Like |Link to Comment
  • Commodity Chart Of The Day: Corn [View article]
    I certainly hope you took my advice to load your portfolio with corn and gold and to dump your equities five years ago. What? You didn’t? Then you have almost certainly suffered on the performance front.

    According to data compiled by my former employer, the Financial Times, corn was the top performing asset class since 2007, bringing in a stunning 146% return. Who knew that global warming would be such a winning investment strategy? It was followed by gold (GLD) (144%), US corporate debt (LQD) (44%), US Treasuries (TLT) (38%), and German bunds (BUNL) (26%). This explains why my long gold/short Morgan Stanley (MS) has been going absolutely gangbusters today.

    If you ignored my advice and instead loaded the boat with equities, chances are that you are now pursuing a career at McDonalds (MCD), hoping to upgrade to Taco Bell someday. The worst performing asset classes of the past half-decade have been Greek equities (-87%), European banks (-70%), Chinese stocks (-41%), other European equities (-21%), and UK stocks (-11%). If you were in US equities, you are just about breaking even (1%).

    Corn is, no doubt, getting an assist from what many are now describing as the worst draught since the dust bowl days of the Great Depression. But there is more to the story than the weather. Empowered with long term forecasts from the CIA and the Defense Department, I have been pounding the table for years that food would become the new distressed asset. These agencies have been predicting that food shortages will become a cause of future wars.

    For a start, the world population is expected to increase from 7 billion to 9 billion over the next 40 years. Half of that increase will occur in countries that are net importers of food, largely in the Middle East and Africa. You can also count on the rising emerging nation middle class to increase demand for both the quantity and quality of food. Obesity among children is already starting to become a problem in China.

    Mad Hedge Fund Trader
    Aug 28 06:25 PM | Likes Like |Link to Comment
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