Natural Resources, Energy and Precious Metals Update
June 24, 2009
Many investors are somewhat dazed and befuddled as they watch what used to be called “The Natural Resources Sector” bounce up and down as the summer season commences. With the dollar up again, commodities including the precious metals and oil were off sharply yesterday. All in all, it was just a broadly negative day. Little was spared, including equities, which also took a serious hit. Even perennial bull James Moore, of TheBullionDesk.com, was forced to write that, “Short-term the metal [gold] could extend lower as a result of the dollar.” John Reade, of UBS in London, concurred, writing that, “We would not be surprised to see further short-term declines, especially in the absence of any material jewelry, physical-investment or ETF demand.” Read more
ASA Limited: A Closed-End Fund Worth More Than Meets the Eye
June 12, 2009
One aspect of my work that I love is interviewing interesting people. On June 4th, 2009 I had the pleasure of speaking with David J. Christensen, the CEO of ASA Limited [ASA: 74.59, -0.48 (-0.64%)], a closed-end, non-diversified investment company registered with the United States Securities and Exchange Commission. The Company was organized in Bermuda and is the successor to a closed-end investment company of the same name organized in the Republic of South Africa in 1958. Read more
Gold and Silver Defy The Selling Season
May 20, 2009
We’ve passed the midpoint in May and gold closed above $930 on Friday May 15th. This could be hugely significant and should give all prudent investors pause for thought.
Allow me to share with you an email message I sent to my family today that focuses in on my concerns on this topic. Although this will not be a long article, it is intended to motivate us to think “outside the box” as we slide into the “Sell in May and go away” time of the year. Here’s what I wrote my family today:
“Realizing it is only the middle of May, it might be too early to say “it’s going to be different this year”
when it comes to gold and silver. Read more
Time for the “Commodities Contrarian Contango” with Precious Metals and Energy
May 18, 2009
Gold and Silver has had an amazing run since last December, and even more impressive have been the mining shares like Agnico-Eagle [AEM: 59.12, -0.95 (-1.58%)], Goldcorp [GG: 40.44, +0.33 (+0.82%)] and Barrick Gold [ABX: 39.54, -0.14 (-0.35%)].
My favorite mid-size gold miner, IAM Gold [IAG: 14.91, -0.32 (-2.10%)] has virtually quadrupled off its low last November and almost doubled in the past 5 months. It’s been a feverish frenzy, an overdue bubble that might be ready to burst.
On March 8th I tried to provoke the gods of Wall Street to create a huge stock market rally by conjuring up the term “Contrarian Contango” as a new term for paradoxically pretending you think the markets are going to keep going down when you sense they are about to go up. It worked beyond my expectations. Read more
Silver: The Everyday Gold
April 16, 2009
With talks about reflation plays being a staple to every portfolio, precious metals and commodities have been all the rage lately. Interestingly, with gold and oil being viewed as traditional safeguards against government spending, which destroys the value of the dollar, it is a wonder that silver has remained hidden for so long. Read more
At the Crack(spread) of A New Dawn: The Rise of the Refiners
April 12, 2009
Besides boring old pipelines, the refiners are the sub-sector of the S&P Energy Composite that I believe is most neglected. While pure-play refiners only make up roughly 3.5% of the entire composite, if you include other companies’ refining operations the number is closer to approximately 20% of the composites revenues depending on the quarter. It seems like the broader market has also ignored the refiners as they have not participated in the Energy rally that started on March 3rd, 2009. The major integrated companies were left out, but this rally included a 20% move by the Energy Spider [XLE: 58.06, 0.00 (0.00%)], a 25% move by the Oil Services ETF [OIH: 125.92, -0.55 (-0.43%)], and moves of between 20% and 50% for many of the exploration and production companies. Read more
Time to Stock Up on Some Gold
March 9, 2009
With Obama’s outrageous stimulus plans where the federal government is going to give out billions of dollars of handouts to the demand side of the economy, its no wonder gold is gaining ground while stocks have been falling. However, the question remains when is it time to buy? The answer is now. Gold has been consistently in a uptrend since October of last year this is shown in the chart of a major gold ETF [GLD: 109.718, -0.162 (-0.15%)] below. As you can see, gold is making a short short term pull back which signals a time to buy. With more talks of spending, including a world wide stimulus package, there is only further pressure on leading countries currencies such as the U.S. Dollar. These inflationary pressures may push gold to break the 2008 highs of around 1056.
Is it Time to Lose Faith?
February 24, 2009
Spending almost every waking portion of my day studying the financial markets, it is almost impossible not to be in a state of complete depression. I honestly can’t remember the last time I saw any positive news reported, even on a local news channel. I can’t even imagine how this looks to a person that isn’t part of the financial community. They must think the entire world is completely out of its mind. My biggest concern is that no one, not even the “experts,” is predicting a turnaround any time soon. Some say that this is the sign of the “true bottom,” but as we become accustomed to hopelessness we could be looking at the exception to the rule. Read more
Exxon’s Boatload of Cash: Who is the Target?
February 18, 2009
Analysts have been buzzing about Exxon’s position for a while, speculating as to whether or when the world’s largest publicly traded corporation will make a bid to acquire a competitor. You could make an argument that Exxon [XOM: 66.78, +0.30 (+0.45%)] is currently in the best shape of any financial company in the history of the world. The company’s net income for the third quarter of 2008 alone was over $14B dollars, and it currently has $38.43B dollars in cash ready to be deployed. On top of this mountain of greenbacks, it also has roughly $165B in repurchased stock. Exxon has been fairly quiet on the M&A front since it bought Mobil last decade, but many feel things could change with the recent collapse of crude oil prices. I would like to take a look at a few potential targets for Exxon as well as some other options that I see very feasible. Read more
Predictions For The Coming “Flation”
January 12, 2009
Flation is not a word, but it is the suffix of both inflation and deflation. Ruling out the middle ground, I’d say it’s very likely that we will see one of the two in a large way during the next few years. Over the last half year, we have seen massive deflationary forces take hold of our economy and the economy of the world. These forces were so strong that they eventually destroyed what many of us thought was a sustainable commodities appreciation, and turned the economies of the world upside down. With no end in sight for the near future, many people are assuming that we will be in this downward deflationary spiral for a Read more
