Category: commodities

ONE OF THE LESSONS OF WORLD WAR II was the vulnerability of international trade. The Germans almost starved Britain with submarine attacks on British and Allied shipping. And the U.S. broke the back of the Japanese economy by sinking over 90% of the Japanese merchant fleet.
So during the Cold War, from the 1940s to the 1980s, the U.S. government was pretty worried about keeping the national economy running in case of a war with the Soviet Union. Thus the U.S. government built up what it called a “strategic stockpile.”
This stockpile contained large quantities of metals, minerals, fuel and other critical commodities. Military planners believed these things were essential for national security. So the government just plain hoarded up metals and minerals in warehouses, and open camps out in the desert.
It was like a squirrel stocking up on food for a long winter. The stockpile included all sorts of things. There was helium and indium, chrome and cobalt, germanium and beryllium, diamonds, molybdenum and much more. This constituted the U.S. “war reserve.”
In hindsight, it is fair to say that the planners had their basic facts straight. The items in the stockpile were — and remain — the backbone of a modern industrial economy. Without these metals and minerals, you can hardly keep the lights on, let alone build advanced systems like power plants, or war machines like jet aircraft and submarines.
But the Cold War ended in the early 1990s. So in the post-Cold War euphoria of the 1990s and early 2000s the U.S. government sold off almost all of the strategic stockpile material. (The Russians sold a lot as well, but not all of it — characteristically.) So today, the U.S. strategic stockpile is gone. The warehouses are empty. Heck, the U.S. government even sold off many of the warehouses.
Selling the stockpile did raise a bit of cash for the federal coffers, but it also produced some unintended consequences out in the real world:
• First, it depressed world prices for most of these commodities. This worked against new investment in mines, mills and factories. And few firms were hiring and training new workers.

• Second, the sell-off forced many former producers out of business. Think about it. When you are competing against government sales from a stockpile, how can you afford to keep running a mine, or mill, or processing factory? So the mines closed. The mills closed. The factories shut down. The skilled employees moved on to other jobs.
And guess what? Here in the year 2008, we are now witnessing worldwide shortages of many of these critical metals and minerals. So prices for almost all of these strategic goods are climbing. And as I just noted above, the mines are closed. The mills are shut down. The factories are shuttered. The workforce has moved away. So what happens now?
Well, the very few companies that are still in the business of producing critical and strategic materials will profit handsomely going forward. Beryllium is critical to high tech, aerospace, the nuclear industry, medical imaging and numerous other advanced industries. And demand for this critical medal is growing. Just look at what’s happening in the aviation and aerospace industries, which are both major beryllium consumers.
The order books of Boeing and Airbus are filled through the next decade. (Have you tried to buy a B-787 Dreamliner lately? The line is sold out to 2017.) And governments all over the world are getting into the business of launching rockets and orbiting satellites.
Meanwhile, as the developing world builds out its capital base, one of the things that citizens of other nations demand is better medical treatment. Much of modern medicine is predicated on exotic machines like CT and MRI scanners, and these devices use beryllium metal.
But beryllium is only one of the strategic metals in relatively short supply. There are others, , as well as other companies that produce them. I am on the prowl for companies that mine and process other critical elements on the periodic table as well. Some of these items are truly in shortage.

Question asked on 03/31/2008 at 07:09 AM :: Comments to date: 0

Category: agricluture

Investing Safely in this Bull Market Mega-Trend
Well, fortunately it is much easier to invest in agricultural commodities and agricultural companies than it once was. Here are two ways to do it:
Market Vectors Global Agribusiness ETF (MOO) – If you want to achieve wide global diversification among agriculture-related companies, there is no better way to do it than this ETF, with the appropriately named ticker. MOO tracks the DAXglobal Agribusiness Index and holds positions in 40 companies trading on 13 global exchanges.
These companies run the gamut from equipment makers Komatsu and Deere, to seed and fertilizer companies such as Monsanto and Potash, to firms involved in agricultural chemicals, irrigation, food and livestock operations, ethanol and biodiesel, and food distribution.

Buy on any pullbacks
This ETF began trading in September 2007 and gained 39 percent by the end of December. Considering the long-term fundamentals of the agribusiness sector, this is just the beginning of greater gains ahead. But keep in mind that this ETF is stretched to the upside, so it might be a good idea to accumulate on weakness.
PowerShares DB Agriculture (DBA) – There are few ways to invest directly in agricultural commodities without going into the futures markets. But the PowerShares DB Agriculture ETF is one of the best. This ETF provides equally weighted exposure to the four most widely traded “soft” commodities: corn, soybeans, sugar, and wheat.
DBA gained 34 percent in 2007, and with the supplies of these four commodities under long-term pressure from rapidly rising demand, this upward trend should continue in the years to come.
The Train is Leaving the Station ... Are You on Board?
No matter how strong the fundamentals, bull markets don’t move up in a straight line. This one will be no different. There will be certainly be volatility and corrections along the way. But the fundamentals of the supply and demand equation foretell a long-term uptrend.
Do you expect the price of energy to go down in the long run? Do you believe that governments will stop encouraging biofuels? Do you think that the two billion people in China and India will stop eating anytime soon?
If you answered no to these questions, then it is time to build a long-term position in agribusiness companies and food commodities. This mega-trend is on solid ground and the bull market is just beginning.

Question asked on 01/06/2008 at 06:11 AM :: Comments to date: 0

Category: commodities

Most investors are well aware of the existing bull market in precious metals, raw materials, and energy. But there is another aspect of the natural resources bull market that has just begun ... and has gone virtually unnoticed.
I’m talking about the bull market in food and agriculture. This bull market is being driven by the most fundamental concept of economics: supply and demand. Quite simply, the demand for agricultural products is overwhelming the supply. And this imbalance should continue for years to come, regardless of what happens in the broader economy.
For decades, food prices have been declining as scientists developed high-yield plant varieties and farmers implemented the latest improvements in equipment, pest management, and growth-promoting fertilizers. But the days of declining food prices appear to be over.
According to the International Food Policy Research Institute, the world has consumed more grain than we have harvested in seven of the last eight years. Currently, there is only 12 weeks worth of the world’s consumption of wheat and only eight weeks of corn remaining in stockpiles. And demand for these grains is rising by more than 30 million tons per year!
Predictably, this has had an impact on prices. In the past 12 months, corn and wheat prices are both up more than 50 percent, while soybeans, dairy, meat, and poultry are also on the rise. For the three months ending in October 2007, the price of food rose at roughly three times the rate of overall inflation.
Why Demand is Outstripping Supply
There are several key reasons why the demand for food and agricultural products is soaring.
First, the world’s population is exploding. There are simply more mouths to feed. It is estimated that the world’s daily caloric intake will increase from 17 trillion calories per day today to nearly 25 trillion in the next two decades.
But it is not just the number of people that counts. Even more important is what people are eating. As the economies of developing countries grow, the personal wealth of billions of people is also growing. In China, for example, the middle class is expected to grow from 100 million to 700 million people by 2020.
And as living standards improve, one of the first things to change is diet. With the money to buy more than just a plate of rice and cabbage, the populations in developing countries are putting more eggs, dairy, poultry and meat on the table.
So not only is the demand for protein going up, but so is the demand for grain, because more protein consumption requires more grains to feed the animals. In fact, it takes five to seven pounds of grain to produce just one pound of beef or pork.
The World Bank estimates that global grain production will have to climb by 50 percent and meat production by 85 percent to meet the projected global demand in the next 20 years.
Food vs. Fuel
But the increased demand for agricultural products does not just come from the dinner table. The emergence of biofuels has also caused a significant boom in demand.
In the U.S., there are currently more than 130 ethanol refineries that consume 27 percent of the U.S. corn crop, according to the USDA. An additional 80 plants are currently under construction. When all of these facilities are operating, ethanol will account for half of the U.S. corn harvest!
Now combine that number with the 43 percent of the crop that goes to feed livestock. That leaves just seven percent for food products. Talk about a squeeze play.
To add to the supply and demand imbalance, consider that changes in climate and inclement weather have severely decreased crop yields in crucial places. Drought in Canada, China, Europe, and Australia (suffering the worst drought in 1,000 years!) has also put significant pressure on world food supplies.

So what does this all mean?
Well, it means that over the long term, food prices are going up, up, up. That presents an investment opportunity and inflation hedge in itself. But it also means that any companies that help farmers produce more food, and do so more efficiently, will be very profitable investments in the coming decades.
And that will stand, no matter what happens to the global economy. After all, people may cut back on clothes and cars and gadgets, but they won’t stop eating.
And in most countries, with declines in soil fertility, dropping water tables, and competition from urban development, it is proving difficult to increase the amount of land suitable for farming. That means the best solution to the coming food crisis is for farmers to increase the yield they get from their existing land.
All of this translates into substantial long-term opportunities for the companies that grow, harvest, distribute; and service the global food supply.
Continued Tomorrow

Question asked on 01/05/2008 at 02:08 AM :: Comments to date: 0

Category: commodities

The demand side finishes the bullish picture for uranium. The main catalyst is the move to green energy. Nuclear power plants have no carbon emissions. The growth of nuclear power is just beginning, but planned production is expected to greatly increase the demand for uranium.

Here is a list of the amount of power plants planned for production: U.S., 34; China, 40-plus; Russia, 42; S. Korea, 11; and many others. That is combined with the 448 nuclear power plants currently in production.

The end result of this is an annual rate of consumption currently running at 188 million pounds of U3 O8 per year, compared with an annual mine production of 100 million pounds of U3 O8 per year. The difference is made up in excess ore pilings and old Soviet warheads being converted into nuclear fuel.

For a brief snapshot of the market, last month, active supply (the amount of U3 O8 for sale) was approximately two million pounds. Active demand (buyers currently seeking uranium for shipment) was 4.4 million pounds. These buyers are the reason that the price of yellowcake has been getting bid up at such an extreme pace. And not all of these buyers were able to secure U3 O8 for shipment.

The uranium market is very transparent. This makes the supply and demand fundamentals extremely easy to read and interpret. Supply disruptions have increased the shortages of available uranium for delivery. Junior and intermediate miners are all racing to get production online, but the general public has trouble understanding the time and money it takes into turning these properties into profitable ventures. The use of nuclear energy as an alternative to carbon-based fuel sources has really set into place the emergences of a fantastic bull market.

There is going to be a very innovative way to play this market. In mid August a nuclear energy ETF was released here in the U.S. The ticker is NLR. It follows the DAXglobal Nuclear Energy Index. This is an ETF that invests in the following fields: uranium mining, uranium enrichment, uranium storage, nuclear power plant builders, nuclear fuel transportation, nuclear equipment and generation. This is really exciting stuff and its price will very likely jump, being that it is one of a kind here in the U.S. Given a good buy price, this one is a safe and potentially highly profitable way to play the uranium market.

Question asked on 09/09/2007 at 06:42 AM :: Comments to date: 0

Category: commodities

The theory of commodity supercycles clearly explains why supply has lagged behind demand and will continue to do so over the coming years. But there is another story behind the supply shortage in uranium.
Uranium deposits often occur in geologically fragile areas. In other words, uranium mines are susceptible to disruptions. This is a risk with any mine, but the risk is higher with most uranium mines. Just look within the last eight months — two major mines have been flooded, which caused significant delays in future production.

The two mines are Cameco’s Cigar Lake operation and Energy Resources of Australia’s Ranger mine.

Let’s start with the situation at Cameco. On Oct. 23, 2006, Cameco announced that its Cigar Lake operation had experienced flooding in parts of the underground mine due to a collapse of rock formation.

This mine was planned to come into production in 2008. After the flood, Cameco announced that production would be delayed one year. It looks like the company was a little optimistic, because it recently came out and said that the remediation process was taking longer than expected. It pushed the expected production date back to 2010.

The impact of this flood is very significant on the market. Cigar Lake had the world's largest undeveloped high-grade uranium deposit. The proven and probable reserves are estimated at 226.3 million pounds of U3 O8 , with an average 21% grade. It is very easy to see the significance of delaying this planned production from the market.

The other operation mentioned was the Ranger mine. The incident here was different. The flooding at the Ranger mine was not a result of geological instability, but a result of Mother Nature. Tropical Cyclone George was the cause of the flooding at the Ranger mine:

This is a very significant loss in production. Energy Resources of Australia’s planned production was revised down to 7.5 million pounds of uranium. That’s a four million pound decline, or 4% of total world production. That four million pounds of uranium is estimated to be worth $340 million.

Energy Resources of Australia claimed “force majeure” on its contracts for sales. In other words, because of unforeseen events, it has exited ALL of its contract obligations for delivery of U3 O8 .

Situations like these are unable to predict and carry devastating implications for the supply of U3 O8 . Remember that these two incidents occurred within the past eight months. Although one can’t say when or where, you can bet that we haven’t seen the end of scenarios like the abovementioned ones.

Question asked on 09/08/2007 at 06:36 AM :: Comments to date: 0

Category: commodities

On July 24, Westinghouse Electric signed a deal to build four nuclear reactors in eastern China. The price tag on the deal is $8 billion. This is just one tiny piece of the puzzle. China plans to spend approximately $50 billion to build 30 nuclear reactors by 2020. This will increase its nuclear energy production by 40 gigawatts. That’s basically enough power to supply all of Spain with electricity. The growth in the nuclear market has resulted in a very large increase in the demand for yellowcake.

I’m not talking about the cake your grandmother brings to your birthday party, either. I am talking about refined uranium (U3 O8 ). The price of uranium has seen a kind of growth second to no other commodity, equity index, or virtually any other investment vehicle available. From 2003 to the present, the spot price of uranium went from $7 to $130 per pound without declining once. That’s a 1,700%-plus increase over a five-year span.

I’m here to tell you that this amazing price run is not over yet, not even close. In fact, this market is just barely starting to catch the public eye, but once it becomes mainstream, the uranium market will really take off.

Uranium: Supercycle

Uranium is the perfect case study for discussing the notion of a supercycle. A commodities supercycle refers to the extended periods of time when either supply exceeds demand, followed by demand exceeding supply, or vice versa. This cycle extends of a period of several years. Let me explain its relevance to uranium.

Most of the demand for uranium came from the U.S.’s and the USSR’s amassing nuclear warheads. After the fallout of the Cold War, and the incidents at Three Mile Island and Chernobyl, the demand for uranium plummeted. Nuclear power plants that were planned for production were canceled at a very rapid pace. And to add further downward pressure, much of the demand that was still left was fulfilled by recycling old Soviet warheads, which is a process that goes on today.

For all of these reasons, the spot price of uranium slumped to a low of $6.50 per pound. Being that uranium miners’ revenues directly depend on the spot price of uranium, this drove the majority of them out of the market. This is the lag period when supply greatly overexceeded demand. In this case, it was fueled by a couple of extraneous factors.

Let’s fast-forward to 2003. The green energy movement is starting to take hold of the media, public, and Washington alike. Geopolitical tensions are making it essential that nations secure energy resources and become less dependent on politically unstable regions — especially the Middle East.

So nuclear energy is back, except there’s only one problem. There are very few uranium mines still in production, and exploration efforts are essentially nonexistent. It was around 2003 that we began to transition from excess supply to excess demand.

Time to get the shovels digging, the leach operations running, and the mills churning... That’s easier said than done — these processes take time.

An exploration company needs to be formed, and funds need to be raised. The company then needs to either lease or buy land for exploration. The next step involves using radiometric and magnetic survey equipment to prioritize potential exploratory drilling locations. Before any ground is broken, the company needs to obtain permits. This step might be the most underestimated as far as time consumption and difficulty are concerned. The inability of a company to obtain a permit is essentially the end of that company.

Assuming that the company does get its permits, it has to conduct numerous drilling tests. The test samples need to be treated with chemicals and then assessed for further testing. Again assuming that everything goes well with the drill tests, the company can go ahead and set up a mining operation, whether it be a leach setup or a more conventional mine. Infrastructure needs to be set up, and workers need to be brought in. During this whole process, time is ticking away. Once the ore has been removed from the earth, it needs to be transported to a mill for further processing. The product is eventually refined into the final product, U3 O8 .

Notice my use of the word “assuming.” Those are very big assumptions, and that’s why a very small minority of these companies actually make it to the production phase.

Just look at all of the places where a company could hit a dead end. Operating capital could dry up. There could be a failure to obtain permits. What if there’s no uranium on your property?

The production of these mines takes time and money. Even if everything goes well, you are talking at least six years until a mine becomes operational from initial exploration, and it’s for this reason that there is a long period of time during which demand exceeds supply. This shortage will always show up in price, and that’s exactly what we have and will continue to see. This has directly shown up in the supply and demand for yellowcake.

To be continued

Question asked on 09/07/2007 at 06:21 AM :: Comments to date: 0

Category: Life

Nassim Taleb's new book, The Black Swan is a remarkable work and suggest that any serious student of the market read this book.

A few thoughts on this book follow.

"The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events."

"But we act as though we are able to predict historical events, or, even worse, as if we are able to change the course of history. We produce thirty-year projections of social security deficits and oil prices without realizing that we cannot even predict these for next summer - our cumulative prediction errors for political and economic events are so monstrous that every time I look at the empirical record I have to pinch myself to verify that I am not dreaming. What is surprising is not the magnitude of our forecasts errors, but our absence of awareness of it. This is all the more worrisome when we engage in deadly conflicts: wars are fundamentally unpredictable (and we do not know it). Owing to this misunderstanding of the casual chains between policy and actions, we can easily trigger Black Swans thanks to aggressive ignorance-like a child playing with a chemistry kit.

"...To summarize: in this (personal) essay, I stick my neck out and make a claim, against many of our habits of thought, that our world is dominated by the extreme, the unknown, and the very improbable (improbable according our current knowledge) - and all the while we spend our time engaged in small talk, focusing on the known, and the repeated. This implies the need to use the extreme event as a starting point and not treat it as an exception to be pushed under the rug. I also make the bolder (and more annoying) claim that in spite of our progress and growth, the future will be increasingly less predictable, while both human nature and social "science" seem to conspire to hide the idea from us."

So, the above quotes will help put the later predictions into context. By definition, we cannot know the future. Yet we go through the exercise. And even though we should know that we will probably be wrong, there is a value on the process if done with the proper amount of cautious optimism tempered by reality.

I think about the future not just to look for opportunities to invest but primarily as a thought process to assess wherein lies the risk. The first task of an investor is to manage risk and only then to seek attractive returns. We make predictions about the future so as to think about risk and to seek places for opportunity. And then every so often, we re-assess our predictions in the light of new information and adjust our risk controls and objectives.

So as you read my predictions they are nothing but a gathering of historical data analyzing the data for a best fit scenario for historical repeatability. This is known as experience with knowledge.
Therefore with knowledge you use it for the experience and with experience you gain wisdom about all that you been through. The more you read and learn about other peoples experiences the better you can make judgements about what to do.

My favorite Quote is ;

"That which has been is that which will be. And that which had been done is that which will be done. So there is nothing new under the sun...." Solomon.

Question asked on 08/01/2007 at 06:56 AM :: Comments to date: 0

Category: commodities

The Stock Market has peaked for now, and the tendencyfor the stock market to top in the 6th and 7th years is so strong historically, the 7th year of the decade is called the "Death-Zone."
The first Phase of commodity inflation was right on schedulewith its 30-year cycle counterpart, the 1970's advance with about a 335% average gain in individual commodities.
The 1970's commodity inflationary advance took place in2 phases (1971-1974 and 1977-1980). And the 30 year cycle has been a strong ally in forecasting.
No Commodity Inflationary period since 1730, has everlasted less than 9 years, and the average inflationary advance has been around 20 years. Ours is a mere 6 years old.
Phase 2 appears to be starting with a number of markets demonstrating "bull-market" type strength.
* Soybeans are in the midst of a 2nd leg up in a bull market*
Gold and Silver are correcting now ready to move and break out of their bull market highs*
Platinum is close to new All-Time highs*
Crude Oil has potentially launched a NEW bull market*
The CCI Commodity Index made new all time highs in July*
The Goldman Sachs commodity index has come within 0.4% of an all time record*
Cotton recently broke out to the upside after a 3 year basing pattern*
12 year lows in the Dollar index and all-time lows vs. Euro is good news for rising commodity prices

We appear to be starting a fresh or the 2nd leg of commodity inflation.
Buy physical silver and gold now in your IRA's and long term investment allocations.
GG, GLD, SLV, at least 10% of your investments should be in there now.

Remember this the stock market does not like inflation, that is why the market will trend downward for some time.
The leader of the inflation is oil and it is at an all time high at $76.00 a barrel.
Oil in 2000 was $11.00 a barrel. That is almost a 700% increase in 7 years.
Now if that isn't inflation I don't know what is.

Question asked on 07/30/2007 at 06:46 AM :: Comments to date: 0

Category: commodities

Our fearless leaders here in the United States have perfected the art of passing off old ideas as new and improved solutions to the country’s problems. This holds especially true when it comes to energy policy.

Take ethanol, for instance. It was the choice fuel for some of the first combustion engines. In the 1820s, Samuel Morey used an ethanol blend in his experimental internal combustion engine. Due to the rise of steam power, ethanol remained an obscure fuel until 40 years later, when the internal combustion engine took off thanks to a more efficient design by German inventor Nikolaus Otto.

But also around that time, America discovered a cheap, domestic oil supply, which would compete with ethanol and later become our preferred fuel despite ethanol’s early success. Even Henry Ford thought ethanol would withstand the test of time. He designed his Model T to run on ethanol, going so far as to call it “the fuel of the future.”

Now, 100 years after the first Model T took to the roads, our leaders are spouting the same tired slogans. Our reliance on oil has not been clipped. Instead, we are faced with new debates over ethanol’s true energy output and its overall effectiveness as a cheap, efficient alternative to gasoline.

Another political football was once gas was the method of fuel because it was cheaper than ethanol the oil companies had to add lead to it to help the knocking in the engine. So they charged more for that.
Then lead became a no no and they charged more to take it out until today there is hardly anymore leaded gasoline.
So what will happen next?

Question asked on 07/21/2007 at 07:23 AM :: Comments to date: 0

Category: commodities

Rival Iraqi factions continue jockeying for power in post-Saddam Iraq. This situation has turned out to be far more complicated than most -- especially the Bush administration -- expected.

It explains why “the jihadists did not employ their signature tactic of using suicide bombers to strike the [Sunni’s al-Gailani] shrine. Using a truck bomb allows the jihadists to prevent any potential backlash from the Sunni community, which the jihadists do not want to alienate totally. The bombing also helps fuel the Shiite/Sunni sectarian fire by raising suspicions that Shiite militants potentially bombed the al-Gailani shrine in retaliation for the attacks on Shiite sacred sites.”

As long as rival Iraqi factions think they can establish a lasting democracy with car bombs and gun battles in the street, they have no reason to expect stability in Iraq. New twists on old sectarian grudges will continue to unfold under the current status quo. Violence begets violence. Fresh conflicts over oil revenues should be expected. The conflicting parties all know that U.S. political will to fight this war is waning and are acting to solidify their positions for a future with limited U.S. military presence.

The future of the Middle East is the same as the past, political turmoil, which will escalate and cause oil and gold and silver to keep on in a upward price pattern.

This will put pressure on the market eventually. The market does not like inflation. Oil will cause the next wave of inflation which will cause the price of gold and silver to take off for the second wave up.

Question asked on 06/07/2007 at 07:02 AM :: Comments to date: 0

Category: Stocks

Dr. Bakhtiari continues on a profound pathway.
“In 'Post Peak,’ all of our systems of habits are in mortal danger. Due to the relative cheapness of crude oil (in relation to other, more expensive daily needs), people don't exactly realize the pivotal role played by its products in their daily routines -- as these products have invaded every nook and cranny of our modern life. It is only when the brakes will be pulled (as they inevitably will have to be) that the general public will come to gradually realize the critical importance of 'black gold’ -- which currently provides no less than two-fifths of world energy -- and of ‘energy’ in general in their living habits.

“Thus, at present, the global masses seem totally unprepared for the two shocks which will inevitably occur in 'Post Peak.’ On the one hand, no major institution or medium is willing to inform them seriously on the not-so-palatable consequences of 'Post Peak’; and, on other hand, specialized institutions (such as the International Energy Agency [IEA], the Energy Information Administration [EIA] and OPEC) as well as some major energy consultancies (e.g., the Cambridge Energy Research Associates and the Edinburgh-based Wood Mackenzie research outfit) will go on denying 'Peak Oil’ by issuing rosy future oil output predictions.

“So that the twin shocks are now inevitable on a global scale, as there is no time left to prepare public opinion for 'Post Peak’ sequels. The shocks will first surprise, then jilt, and finally entangle swaths of people worldwide. Those better prepared will be less inclined to react in a disorderly way and panic when the shocking truth will be unveiled.”

Question asked on 04/30/2007 at 04:38 AM :: Comments to date: 0

Category: Stocks

Dr. Bakhtiari delves into the state of preparation of major nations and populations for what is about to ensue and concludes as follows:

“In the large majority of countries, no one has prepared (or wanted to prepare) the general public to the historical 'Peak Oil’ event and to its momentous consequence in their daily lives. Thus, most probably, the popular masses will be directly exposed to two main types of shock:

A material shock;
A psychological shock.
“Due to the benign decline gradient in crude oil production during the early 'Post Peak’ period -- only 3 mb/d over the first transition period spanning 2007-2010 -- the material shock will not pose insoluble problems and accommodation will prove possible with minimal gradual pain. Moreover, sizeable amounts of wastage in most developed societies will provide a welcome cushion for the initial cuts to be made.

“Not so for the psychological shock. This shock, in stark contrast, will be electric and abrupt. Stress, fear, depression, despairs, and nightmares will be the order of the day -- as people come to face the not-so-palatable facets of 'Post Peak.’ When confronted with this series of unknowns, with the trauma of change, people will try to protect themselves by automatically reverting to their past, to the known, to what they believe to be "real and true" -- in a word, to their reassuring 'roots'”

Question asked on 04/29/2007 at 04:34 AM :: Comments to date: 0

Category: commodities

Dr. Bakhtiari has this to say about both the future, as well as the nature of mankind:

“Peak Oil', however, is now in the past, and we are presently left facing the 'Post Peak’ era. There is little doubt that in this brand-new period, massive changes are bound to occur. The usage of relatively cheap crude oil has invaded every nook and cranny of our modern world economy -- sometimes without the wasteful invasion being fully realized. Moreover, the ubiquitous oil products have created addictions (especially in the transport sector) which will be extremely difficult to uproot. And not only is the addiction to motorcars common throughout the developed world, it has also begun making deep inroads in China, Russia, and even India: a very dangerous development, indeed, because as American physician and poet Oliver Wendell Holmes [1809-1894] judiciously remarked:

‘Man's mind, once stretched by a new idea, never regains its original dimensions’”

Question asked on 04/28/2007 at 04:32 AM :: Comments to date: 0

Category: commodities

According to Dr. Bakhtiari, the world has now reached and passed the point of Peak Oil. Bakhtiari has recently published an essay entitled “The Century of Roots.” Bakhtiari has reviewed the available evidence on world oil production and believes that world output peaked absolutely in 2006. Here is what he is saying:

“After some 147 years of almost uninterrupted supply growth to a record output of some 81-82 million barrels/day [mb/d] in the summer of 2006, crude oil production has since entered its irreversible decline. This exceptional reversal alters the energy supply equation upon which life on our planet is based. It will come to place pressure upon the use of all other sources of energy -- be it natural gas, coal, nuclear power, and all types of sundry renewables, especially biofuels. It will eventually come to affect everything else under the sun.”

“Everything else under the sun”? That sounds like quite a lot, but Dr. Bakhtiari has done his background work, to include reviewing numerous models for oil extraction on a worldwide basis. In a paper delivered to an oil conference in Italy in March 2007, he concluded that in 2006, overall depletion subtracted about 3.5 mb/d of oil extraction from the daily global total of oil output (plus or minus 10%), and that a maximum of 2.5 mb/d of “new” oil production came on line, which includes new and expanded oil fields, as well as new projects in the Canadian tar sands areas. Thus, according to Bakhtiari, in 2006, depletion was greater, by more than 1 mb/d, than new discoveries and reserve growth, including oil produced from unconventional sources such as the tar sands.

Dr. Bakhtiari’s conclusion, presented to the Italian conference in March, was that “the peak of global oil production has been reached.” Bakhtiari now sees the world entering a phase of irreversible decline in daily oil output, moving down from the current 82mb/d toward daily oil extraction of only 55 mb/d by the year 2020.

If any of you have seen Al Gores global warming he presented data that showed exponential populatiion growth where all natural resources are now in the midst of being consumed by the populations of the earth. I am not predicting doomsday I am showing what the laws of supply and demand are going to do in the future long term in the markets.
Even oil companies are going to have a hard time because there won't be as much new oil coming on stream to replenish what is beiing consumed.

Question asked on 04/25/2007 at 04:14 AM :: Comments to date: 0

Category: commodities

We have had the first wave of inflation starting in 2003 and to 2006.
The markets have settled back for about a year depending on which market you are in but the government data is finally showing the results of the trickle down effect inflation has on the economy with the latest CPI #'s.
Now all we have to have is a shortage of gasoline which is coming this summer. Then inflation will raise it's ugly head big time because the corporations are tired of taking it on the chin. They are being squezzed from both ends so prices will pop this time because their long term contracts are now market related.
The general results are metals will go higher, stock market will go lower.
Buy puts on the dow or S&P to protect your portfolio.

Question asked on 03/20/2007 at 05:33 AM :: Comments to date: 0

Category: commodities

NOAA predicts that La Nina, evil sister to El Nino, will produce weather patterns in the Gulf Coast that could ramp up the number of hurricanes that hit the region this year. Any direct hit in the Gulf can always have a devastating impact. The losses are massive, not only in terms of the individual people whose lives are destroyed, which is the most tragic, but also to the energy and agriculture industries.

Drilling platforms, refineries, shipping terminals, pipelines, etc. are all impacted when a direct storm hits and refining and production grinds to a halt.

This is already driving prices higher in anticipation of more demand and possibly less supply. It’s still a little early to be worrying about hurricanes, but the reality is they will be here sooner than we think.

With the snow storm and cold weather on the east coast this past weekend the refineriies will stay with the winter production schedule so the inventory build up for gasoline for the summer driving season is going to tight.
The futures market usually play on the anticipation of the worst scenerio which drives the market up. But what can really move the prices is a true demand causing a shortage and everyone who needs it will pay anything for it.

Thus plan for higher prices at the gas pump.

Question asked on 03/19/2007 at 07:26 AM :: Comments to date: 0

Category: commodities

The Peak Oil Paradigm
(This is for long term Investing)
Mankind has generally located, if not discovered, most of the conventional crude oil that there is to find in the crust of the Earth, and has produced and consumed something near half of it. That is, out of a conventional, worldwide resource base of conventional oil that is estimated by some knowledgeable commentators at about 2.2 trillion barrels, about 90% has been discovered and about 1 trillion barrels have been extracted and consumed over the past 150 years or so. At the present time the global oil industry is pumping the world’s known oil reserves at a rate of about 1,000 barrels per second, or 85 million barrels per day (mbd), or about 31 billion barrels per year. And the global economy is, as frequent readers of this column know, consuming or otherwise burning up almost every drop of that oil. And not to get too preachy, but watch what happens if just a couple of hundred thousand barrels per day of production (near a rounding error from a production base of 85 mbd) go off line, such as occurred last August when BP closed the Alaska pipeline.

So do the math, dear readers. Follow the facts. Watch the trends. Mankind is at the top (or “peak”) of the conventional oil production curve. The world’s major oil provinces and largest oil fields are barely holding steady in production (Saudi’s Ghawar Field, for example), or are in irreversible decline (U.S. Lower 48 and Alaska, North Sea, Mexico’s Cantarell, Kuwait’s Burgan, China’s Daqing, Russia’s Samotlor and Romashkino, and many others). The world is pumping and burning oil that was discovered decades ago. And despite massive and costly efforts at exploration, overall, the global oil industry is pumping conventional oil reserves out of the ground at a far faster rate than it is discovering new reserves. So in the past few years, “new” oil production has barely kept up with depletion and decline in volumes produced from older areas.
Continued.

Question asked on 02/25/2007 at 06:51 AM :: Comments to date: 0

Category: Stocks

Can Uranium Prices Come Down Temporarily? Sure Can!
In fact, I’m hoping we get a pullback. That would be a golden buying opportunity.

Here are a few factors that could drive uranium lower in the short-term…

1. Russian imports. Right now, Russia has two choices. It can sell uranium to the U.S. market through the United States Enrichment Corp. (USEC) or it can pay a 116% tariff. But Russian-owned Techsnabexport is working on a new civilian nuclear power deal between Russia and the U.S. You can bet that U.S. utilities, desperate for lower-cost uranium, are pushing hard for this deal, which could come as soon as the first quarter of 2007.

2. Cigar Lake update. Last week, Cameco announced it expects to seal off water flow to its Cigar Lake uranium mine by the second quarter. But it has delayed preliminary cost estimates and timelines, which were supposed to come out in February, until late March.
Does that sound to you like Cameco’s going to get that mine back online anytime soon? It sure doesn’t sound like it to me. So Cameco is STILL having trouble stopping water from flooding the mine. One engineer in Vancouver joked that so much water is pouring in, Cameco should stop trying to mine uranium at Cigar Lake and turn it into a hydroelectric project.
Nonetheless, it would be surprising if the March report isn’t upbeat. Corporations have a way of putting even the worst news in the best light…and maybe Cameco will surprise everybody by reporting actual good news.
On the other hand, if Cameco pushes its timeline for Cigar Lake back by years, uranium could lift off the launch pad.

3. Overspeculation. I like speculation as much as the next guy, but according to a recent update from TradeTech’s Nuclear Market Review, “Speculators are holding about 24 million pounds of U3O8 equivalent.” That is about 22% of global uranium production in 2005.

So if Cameco announces good news on Cigar Lake, or if Russia’s Techsnabexport hammers out a trade deal, speculators could decide to sell, temporarily exaggerating any short-term decline. The Uranium Participation Corp. is holding a bunch of uranium with the intention of selling to utilities at a higher price at a later date. If prices start to go down, the fund could decide to start unloading.

SUMMARY: I expect a pullback in uranium prices this year, but it will be a short-term correction in a big bull market. What I recommend is you put HALF your money to work NOW, then put the rest to work if and when we get a sizeable pullback.
If uranium doesn’t pull back, at least you’re in the game. If uranium does pull back, you’ll average in for a better price.

Question asked on 02/22/2007 at 04:50 AM :: Comments to date: 0

Category: Stocks

Force #7: The Feeding Frenzy Could Get Even MORE Intense Next Year

Most uranium is sold under long-term contracts. But the utilities that contracted for uranium in the future are finding they’re coming up short, and for good reason: When a nuclear reactor is first fired up, it can use TRIPLE its normal amount of uranium oxide.

While the price of uranium is rising, suppliers can still scrape together enough to meet demand. But come 2008, we may reach a tipping point. A lot of uranium users don’t seem to have enough contracts to cover their needs. And many of the contracts they do have are ending -- which means suppliers can negotiate at MUCH higher prices.

So if you think uranium prices have been on a tear so far, just wait…2008 could be an even more intense feeding frenzy.

And when you come down to it, we should see prices move well in advance of that. That, in turn, should take the stocks of small, well-managed companies sitting on big resources and potentially send them ballistic!

Question asked on 02/21/2007 at 04:47 AM :: Comments to date: 0

Category: Stocks

Force #6: Nuclear power looks cheaper all the time.

Standard & Poor’s recently published a study showing that the next wave of nuclear power plants should be able to produce electricity at $55 per megawatt hour, versus the average rate of $50 per megawatt hour at a coal plant.

Even the $55 figure may prove conservative, because the second wave of nuclear plants could benefit from standardization. All told, the cost of a megawatt hour could potentially drop to about $44!

That’s right: Nuclear power could end up being cheaper than coal, and without the tons of greenhouse gases and poisonous ashes that coal plants spew into the atmosphere.

The cost of uranium is only 6% of the cost to run a nuclear power plant. There fore an increase in uranium rods to doouble what they are today only increases the cost to generate electricity at 6% increase.

But double the price of natural gas and oil and coal the utility factor is 3 fold.

Question asked on 02/20/2007 at 04:41 AM :: Comments to date: 0

Category: Stocks

Force #5: Peak Oil and Peak Natural Gas .

In 2006, global oil demand grew 0.9%, thanks to steady growth in China and the Middle East. The world used 84.5 million barrels of oil per day last year, according to the International Energy Agency. That’s nearly 31 billion barrels, and the most oil used in a year...EVER. What’s more, world demand is forecast to rise 1.6% this year to 85.77 million barrels a day.

Worldwide oil and gas reserves are becoming depleted at an ever increasing rate, with many analysts convinced that we are fast approaching Peak Oil and Peak Natural Gas.

In fact, the former Soviet Republic Belarus, which was hardest hit by the Chernobyl nuclear accident, is pulling out all the stops to accelerate its nuclear energy program. Reason: President Alexander Lukashenko is desperate for an alternative to Russian natural gas that is fast rising in price.

If Belarus is embracing nukes, I believe even the most die-hard holdouts won’t be far behind.

Question asked on 02/19/2007 at 04:34 AM :: Comments to date: 0

Category: Stocks

Force #4: Global Warming Trumps Everything

Fact: The 11 hottest global temperature years (since records began in 1861) have been since 1990.
The ice caps are melting at an alarming pace. And whether it’s hurricanes in the Atlantic or typhoons in the Pacific, storms are whipping up with an intense fury. Unless your name is “ExxonMobil,” there is very little argument about why this is happening. A normal global warming cycle is being worsened by man-made pollution -- greenhouse gasses that trap heat. Or the earth is just getting warmer due to natures way. People make the market and if they believe the earth is global warming due to hydrocarbons then the politicians will pass laws to save the earth and mankind. That means nuculear will win out eventually.
And though people rant and rave about gas-sucking SUVs, the biggest source of greenhouse gasses (apart from methane-farting cows and other livestock) is coal-fired power plants. People point to the fact that China is building a new coal-fired plant every week and shake their heads. Well, here in the U.S., we have about 150 new coal plants planned or already being built. Many of these are using “old-coal” technology for cost savings.

It’s almost as if China and the U.S. are engaged in some kind of suicide pact. And I doubt it’s going to have a happy Hollywood ending.

There is hope, though. Awareness of the crisis of global warming is becoming so acute that major corporations are joining forces with environmental groups in an unprecedented alliance to push for quicker action on global warming. The alliance of greens and Corporate America is called the U.S. Climate Action Partnership, and we’re talking some really BIG names here: Alcoa, BP America, DuPont, General Electric, FP&L Group, and more. One of the solutions to global warming is nuclear power.

Here’s why: An operating nuclear power plant produces zero greenhouse gases. Compare that with your average coal plant, which can spew 3.7 million tons of carbon dioxide (a greenhouse gas) into the air every year, along with hundreds of tons of heavy metal-laden ash.

I expect public awareness on this issue to grow over the next few years and the public to start demanding utilities make the switch. This boosts nuclear power in two ways -- increasing demand for uranium at power plants and lifting bans and overregulation on mining.

Question asked on 02/18/2007 at 04:29 AM :: Comments to date: 0

Category: Stocks

Force #3: China, the Uranium-Devouring Monster

China deserves mention as a force all its own. How hungry is China for uranium? The Chinese are hot-footing it through the Australian outback with bags of cash, investing in the best small companies sitting on large quantities of uranium. And no wonder! China plans to import 2,500 metric tonnes of Australian uranium per year by 2020, as it builds 24-30 new atomic power plants.

The really bullish news is that China’s total expected annual uranium demand is three times as much -- 7,500 metric tonnes. And it will use every pound of it, as China plans to construct two new 1,000-megawatt nuclear reactors every year, including two coming online this year.
Continued tomorrow.

Question asked on 02/16/2007 at 06:26 AM :: Comments to date: 0

Category: Stocks

I have recomended USU in the past and it has moved up nicely. It has a considerable way to move yet, buy it on dips for accumulation for the next few years. You should double your money in 3 years on this pick.

Force #2: Crisis at Cigar Lake

Uranium prices were already climbing steadily when the nuclear power industry was rocked in October by disastrous news out of Cameco’s Cigar Lake Mine.

Cameco planned to bring Cigar Lake online in 2008, with 7 million pounds of uranium in the first year and full-scale production of 18 million pounds annually thereafter. Keep in mind, 18 million pounds is more than a tenth of last year's total global demand of 171 million pounds. That’s like the global oil market losing Saudi Arabia’s production!

In 2008, uranium demand was already expected to exceed supply by 25 million pounds. With Cigar Lake seriously delayed, that gap will be 32 million pounds. Put another way -- the shortfall in uranium is going to soar by 30% just in 2008.

Sure, Cigar Lake will be brought into production eventually. But meanwhile, demand keeps building up. Uranium consumers around the world can see this squeeze coming, so the race is on. That explains why spot uranium prices basically doubled in the course of a year, and the stocks of near-term uranium producers vaulted higher.

Cigar Lake could be a force driving uranium prices this year both UP and down.

Question asked on 02/15/2007 at 04:01 AM :: Comments to date: 0

Category: commodities

Why I’m Convinced the Second Wave of Uranium’s Bull Market Is About to Begin!

Uranium is the “white-hot metal,” and not only because it glows in the dark. During the course of 2006, the uranium spot market price continually climbed by 99%, from $36.25 to $72 per pound of U3O8. At $75 per pound, the price is now more than 10 times its record low of $7 per pound that it hit in 2000.
The first big move in uranium is over -- the next one is about to begin. And if uranium prices DOUBLE from here -- which I think could easily happen -- some of these small-cap wonders I’m looking at could go to the moon.

I believe we’re poised to enter the “Second Wave” of uranium’s big bull market…probably the biggest bull market the world has ever seen.
Despite the big bull rally in uranium over the past couple years, on a historical basis, it’s still dirt-cheap! Uranium hasn’t come anywhere near its old peak in inflation-adjusted terms. In 1978, uranium topped out at $43.40 per pound -- but adjusted for inflation, that’s around $145 per pound in today’s dollars. It’s now trading at $75 per pound. That means uranium could nearly DOUBLE and still not surpass its old inflation-adjusted highs.

That’s why I think we’re looking at $100 uranium by the end of this year -- a 39% move from recent levels. Pretty sweet -- and even then, uranium will still have plenty of room to run! How high? Let me show you…

Continued:

The answer to: "Uranium Part II (2/14/07)"

Question asked on 02/14/2007 at 03:53 AM :: Comments to date: 0

Category: commodities

7 Forces That Will Drive Uranium to $100 Per Pound in 2007.
A six-week long stalemate on the spot price of uranium has finally broken, with the price of the metal ticking up $3 to $75 per pound, according to Ux Consulting. Uranium investors have been holding their collective breath, waiting to see if uranium’s recent plateau was a peak. The answer seems to be, “not yet.” Indeed, my target for the metal is $100 per pound by the end of this year.
It could be a bumpy ride, though. I’ll tell you about forces that should drive uranium higher, as well as a few that could drive it lower in the short term.

2007 Could Bring an M&A Feeding Frenzy in the Uranium Mining Industry

Three weeks ago, there was the 2007 Vancouver Resource Investment Conference. There were way more exhibitors than last year, and the hall was jampacked with investors looking for Canada’s natural resource bargains, gold, silver, lead, zinc, nickel, diamonds and many other things. Uranium, was so hot that the exhibitors set up a special “Uranium Alley” so investors could find these companies more easily.
Continued:

The answer to: "Uranium (2/13/07)"

Question asked on 02/13/2007 at 06:02 AM :: Comments to date: 0

Category: commodities

Sugar Rises in London as Prices at 13-Month Low May Spur Demand

“Jan. 15 (Bloomberg) -- Refined sugar in London rose on speculation last week's drop to a 13-month low will spur demand.

“The 14-day relative strength index for sugar in London declined to 30.5 on Jan. 12, a signal that prices are poised to climb. Indonesia purchased 158,000 metric tons of refined sugar for delivery this month, C. Czarnikow Sugar Ltd. said in a monthly report today.

“‘There is business going on, bread-and-butter small business,’ said David Sadler, head of sugar trading at Sucden (U.K.) Ltd. in London.

“White, or refined, sugar for March delivery advanced $1, or 0.3%, to $326 a metric ton on Euronext.liffe. Prices ended last week at $325, the lowest since December 2005.

“Tunisia bought 14,000 tons of refined sugar for April delivery and is seeking another 14,000 tons for May, Czarnikow said. Ethiopia recently bought 20,000 tons from London-based Tate & Lyle Plc, Sadler said. Tate & Lyle spokeswoman Ferne Hudson declined to comment.”
Continued

The answer to: "Sugar starting 2nd leg (1/22/07)"

Question asked on 01/22/2007 at 07:27 AM :: Comments to date: 0

Category: commodities

Art Samberg is quoted in a debate by Barron's Roundtable:

“I'm recommending cotton -- the December ’07 contract. This is the other side of the growth story in agriculture. You're a farmer and you want to plant cotton? You've got to be crazy. You want to plant corn or wheat. Cotton consumption in the U.S. has fallen from 12 million to 5 million bales a year because of the growth of polyester and other stuff. But the real story is China, as it is with most things. In China, there is a booming fixed-asset investment across the textile industry. Spending in China was up 27% in ’06, after rising 36% in ’05. Chinese consumption of cotton had been growing by 4-6% a year. Now it's growing by 15% a year. China's consumption of cotton has gone from 25% to 39-40% of world cotton consumption. They are a large importer.

“The decline in U.S. cotton consumption had masked some of these trends. U.S. farmers are going to withdraw acreage. There have been only four times since 1913 when cotton was this cheap relative to grains like corn and wheat. The last time was in 1974, and farmers planted 16% less cotton acreage the next year. From the end of ’74 to mid-’76, the cotton price tripled.”
Continue.

The answer to: "Cotton has bottomed. (1/21/07)"

Question asked on 01/21/2007 at 07:12 AM :: Comments to date: 0

Category: commodities

Coffee Market Deficit May Hit 11 Million Bags in 2008

“Jan. 15 (Bloomberg) -- The global coffee market may be in deficit of 11 million bags, or 1.45 billion pounds, next season as producing countries fail to compensate for output cuts from Brazil, the world's biggest producer, the International Coffee Organization said.

“In December, Brazil's forecasting agency Conab estimated a cut of as much as 27% in output for the country's 2007-2008 season as its coffee trees enter the low-production year of a two-year growth cycle. The ICO said today in a report that it expects global production to be 109-112 million bags, of which Brazil will account for 29%. Demand is forecast to be 118-120 million bags.

“‘Even if production in other countries were to increase during the crop year 2007-2008, it would not be sufficient to offset the shortfall in Brazilian production,’ the London-based ICO said. ‘The current supply and demand structure has reinforced the firmness in prices recorded in December and early 2007, which gives me reason to state that the recovery in prices should be maintained,’ Nestor Osorio, the ICO's executive director, said in the report.”
Continued.

The answer to: "Coffee Will Percolate (1/19/07)"

Question asked on 01/19/2007 at 07:07 AM :: Comments to date: 0

Category: commodities

If the economy is still good why are metals falling apart?
They were overbought.
China is overbought and the suppliers have been expanding production.
Copper in particular. The precious metals will take a breather for awhile.
Accumulate on the way down infrastructure stocks because they are still building infrastructure for new technology which is alot more efficient than before. This is going to be very profitable for the future for companies.
Wait for a bottom in the metals and then start to accumulate again.

Question asked on 01/11/2007 at 06:44 AM :: Comments to date: 0

Category: commodities

Commodities started out the new year on a rather aggressive note, with investors sinking prices for gold and oil in a move that actually makes sense, given all the issues the market will be forced to contemplate this year.

It was almost impossible to find a commodity that actually went higher today, as sellers were out in force. Gold got absolutely slammed, dropping as much as $21 at one point. Things weren’t much better over in the oil patch, with crude getting down to the mid-$50 range, which we haven’t seen in several years. Crude futures have been in a free fall, with the February contract losing a combined Wednesday and Thursday total loss of more than 9%. Ouch!

Then, on top of it all, the government announced job growth in the U.S. unexpectedly accelerated in December, with nonfarm payrolls rising by 167,000 and the jobless rate remaining at a very low 4.5%. Only 100,000 jobs were expected, so now hope is pretty much lost that the Federal Reserve will cut interest rates soon. Average hourly earnings in December jumped by 8 cents, or 0.5%, far ahead of the 0.3% rise expected.

Question asked on 01/05/2007 at 05:27 PM :: Comments to date: 0

Category: commodities

Interest rates, 10-year T-bond yield (4.59%): I give bond sellers (those
looking for rising rates) the edge in 2007. It is utter madness for the
overnight risk to pay substantially more than the long-term risk (inverted
yield curve). Support for falling rates is at 4.43-4.50 and 3.70-4.00.
Resistance to rising rates is at 4.75-4.80 and 5.25.

Question asked on 12/22/2006 at 03:58 AM :: Comments to date: 0

Category: commodities

Crude oil ($63): Buyers have the edge. Support is at $55-$60 and
$45-$50. Resistance is at $65-$70 and $78-$80.

A mild winter will put pressure on the price.
OPEC will try to keep prices up at $60.
So it will be a wide trading range.

Question asked on 12/20/2006 at 05:47 AM :: Comments to date: 0

Category: commodities

There are numerous proposals within the U.S. for developing a CTL industry. There has been some discussion of CTL at the federal level, but much of the impetus for CTL efforts has originated at the state level. Among others,
U.S. Approach
Gov. Brian Schweitzer of Montana has advocated a program of coal gasification, and Gov. Ed Rendell of Pennsylvania has also supported efforts for CTL.

At the level of private industry, Sasol of South Africa, of course, remains among the world leaders in CTL technology. But in North America, Sasol focuses on the production and marketing of chemicals at its advanced plants in Baltimore, Md., and Lake Charles, La., that produce olefins and surfactants, as well as solvents. Sasol has no plant in the U.S. comparable to its South African facility that produces gasoline, diesel fuel, and jet fuel.

There are also smaller, publicly traded companies, such as Rentech, in partnership with Peabody Energy (BTU:NYSE), that are constructing CTL facilities on a modest basis. And there are numerous private equity efforts in the CTL arena. But even if this article were to be utterly exhaustive on the U.S. effort in the realm of CTL, it is clear that there is no large-scale CTL effort going on in the U.S. comparable to what is occurring in China.

For the foreseeable future, and for lack of a comprehensive policy that focuses on exploiting domestic energy resources with available technology, the U.S. will just have to keep on trading U.S. dollars for oil from our friends in places like Saudi Arabia and Venezuela. The U.S. is simply living in, and making policy based upon, the fading memories of its storied past. Meanwhile, the world advances and at least some nations, like China, are inventing their own futures.
After seeing what the people of the world are doing for fuel alternatives the fundamentals are in place for chemical construction plants across the world to refine and produce more alternative fuels.
This is a positive growth basis for the the recreation of the next industrial revelution sparked by the higher fuel costs due to the industrialization of the world and the billions of people that will benefit and consume far more into the future than ever in the history of the world. (Exponential)
This is why I believe in the macro demand side of price inflation.

Question asked on 12/05/2006 at 06:55 AM :: Comments to date: 0

Category: commodities

This immediate Chinese goal of obtaining 10% of that nation’s liquid fuels from methanol within five years, and more thereafter, far outpaces U.S. targets for producing ethanol from corn and other agricultural products. According to recent studies from numerous scholars, such as David Pimentel of Cornell University, the U.S. energy infrastructure may have problems ever getting much beyond 10% or so of its needs from synthetic fuels derived from agricultural products. In a recent discussion, professor Pimental noted his calculation that if the entire U.S. corn crop of 2005 were transformed into ethanol, and not a single ear of corn diverted to other uses, the resulting quantities of fuel would substitute for less than 15% of total U.S. liquid fuel demand.

In addition to what the scientific community is saying about the problems of using corn to manufacture ethanol on a vast scale in the U.S., no less an authority than the chief executive of Tyson Foods Inc. recently warned that ethanol-driven corn prices are already increasing the cost of beef and chicken, among other foodstuffs, for U.S. consumers. So the U.S. approach to substituting agricultural-based alternative fuels for imported oil is going to create direct competition in the corn pits between its food supply and its transportation fuel requirements. By default, the population of the U.S. will begin to find itself on the Mediterranean Diet.

Policy Drives Investment

By way of comparison, for the U.S. to have a program equivalent to what is already on track and official policy in China, U.S. production of synthetic fuels would have to exceed 2 mbd of oil equivalent within about five years. But even a casual glance at current trends in U.S. energy investment reveals that nothing comparable to the Chinese goal is going to happen in the world’s most prolific oil-burning nation.

There is, of course, much investment going on in the U.S. grain belt. According to a recent report in The Wall Street Journal, something over 125 ethanol facilities have been completed or are under construction in the U.S. And as no less a Peak Oil scholar than Rep. Roscoe Bartlett, member of Congress from Maryland, has noted, “We already pay farmers in this country not to grow food, so if we are going to have a lot of ethanol, we may as well put those farmers to work.” But, notes Rep. Bartlett, “It takes a lot of fossil fuel and energy just to grow the grain. Most fertilizer is derived from natural gas, and most agricultural chemicals come from oil. Add in the energy required for transport and processing, and ethanol is barely a break-even substance, from an energy standpoint. I worry about eventual depletion of soil fertility.”

Production of ethanol is soaring in China as well, partly driven by the high prices available for ethanol exports on the world market. So China both imports oil and exports ethanol. But Chinese critics of ethanol appear to be gaining an upper hand. There is a powerful strain of recognition within Chinese governing circles, based on that nation’s long history, that pays great respect to what the Chinese refer to as “food security” for the country. Many Chinese commentators argue that it is inappropriate to use corn and other agricultural products to convert to liquid fuel at a time when China is struggling to keep its precious agricultural land in production.
Continued 12/5/06

Question asked on 12/04/2006 at 06:49 AM :: Comments to date: 0

Category: commodities

30 Plants Under Construction

According to a report by Credit Suisse, there are at least 30 large-scale CTL projects in the detailed planning, permitting, or feasibility stage. The Credit Suisse report notes that the expensive, capital-intensive CTL plants are generally considered financially viable when oil prices are above $35-40 a barrel, which is a safe bet in a world that is catching on to the concept of Peak Oil. Coal is China’s “real strategic (energy) reserve,” states the Credit Suisse report, because it can be obtained locally, although China is also a major coal importer.

China possesses, of course, vast coal reserves. China also possesses one of the world’s most extensive coal mining industries, although working the coal pits of China happens to be one of the most dangerous and lethal occupations in that ancient land. According to the Los Angeles Times, well over 5,000 people per year perish in Chinese coal mines, a mortality of over 100 deaths per week. But despite the lethality of the effort involved, the Chinese coal industry is experiencing skyrocketing demand amid generally rising oil and energy prices.

Raw Strategic Calculus

In the raw strategic calculus of planning and developing its future energy infrastructure, CTL makes great economic and political sense for China. China has abundant coal resources, but rapidly declining domestic oil reserves. With anticipated future growth in its energy demand, China will become ever more reliant on oil imports, which now account for about 40% of Chinese oil consumption. The Chinese economy currently consumes about 7 mbd of oil, which means that China is the world’s second largest user of oil after the U.S., which uses about 21 mbd of oil (over 60% of it imported).

One major oil supplier to China is Angola, which is now China’s largest single source of petroleum. (And by the process of elimination, Angola is thus a problematic future supplier of oil to the U.S.) Other oil suppliers to China include Saudi Arabia and Iran, which are, of course, places with attendant political risk, even to the Chinese. On the other hand, much of China’s imported coal comes from Australia and Canada, places well known for long-term political stability.

In addition to the operations and logistics of assuring their own energy supplies for the future, the Chinese are apparently well aware of the concept and implications of Peak Oil. For example, a number of computer servers located in and around Beijing are among the busiest sites on the planet when it comes to accessing Western Peak Oil sites on the Internet. The Chinese are downloading Peak Oil-related information as fast as it is published. (Hi, guys.) So both in terms of gathering knowledge and securing future energy sources, the Chinese are, characteristically, thinking long term.

World’s Largest Synthetic Fuels Program

Despite meriting only an article on Page 5 of the Financial Times (below the fold, as well), the Chinese adoption of a policy that supports methanol production via CTL is one of the most important stories in the energy-using world.

It is now official. China is embarking on the world’s largest synthetic fuels program. This has immediate implications for energy planners everywhere, for worldwide finance and capital expenditure, for the global coal markets, for the ecological footprint of Chinese development, for emissions of greenhouse gases, and so much more.

No, you did not read about China’s new national standard on the front page of The New York Times, or listen to Katie Couric breathlessly describe the details on the CBS Evening News. These journalistic worthies had other priorities, apparently. And things like future energy trends in China, let alone the future energy trends of mankind, are just not on their collective radar screen. But really, dear readers, this methanol gig is serious stuff.

Continued 12/4/06

Question asked on 12/03/2006 at 06:42 AM :: Comments to date: 0

Category: commodities

A New Kind of Energy for China

Methanol will become, for China, “a major alternative fuel which does not exist in any other country in the world," said James Brock, a Beijing-based energy consultant. Another commentator, a senior Chinese regional official who is deeply involved in China’s methanol industry, has stated that China’s coal industry “is doing the best job in China in promoting the use of methanol as fuel.” The Chinese official added, “Our aim is to solve the problem of China’s oil shortage. We are creating a new kind of energy.”

The man must mean “a new kind of energy for China.” The technology to turn coal into gas and oil was invented in the 1910s and 1920s in Germany. CTL processes were used extensively to manufacture motor fuel for the German armed forces during the Second World War. Of more recent vintage, CTL technology was greatly advanced by the South African company Sasol over the past three decades. Initially, the Sasol technology was used as a means for South Africa to avoid apartheid-era sanctions, and more recently, Sasol’s technology has been highly competitive in world markets on its own merits.

Large Foreign Investment, Advanced U.S. Technology

Within the past few years, China has been experiencing an investment surge into CTL plants. One recent announcement, for example, stated that Royal Dutch/Shell and a Chinese partner have committed to a three-year study of a CTL plant, which, if it proceeds, will cost between $5-6 billion and be one of China’s largest single foreign investments. The proposed Shell project, to be located in the western province of Ningxia, would produce the equivalent of about 70,000 barrels of oil a day, equal to about 1% of Chinese oil demand, now just over 7 million barrels per day (mpd).

Shell, which is a leader in liquefaction technology, has already licensed its technology to 15 projects in China. Shell has one plant with Sinopec, one of China’s leading petrochemical companies, under construction. According to Lim Haw Kuang, executive chairman of Shell in China, “We have proven technology that converts coal to gas and then gas to liquids. We believe this technology is important to China.”

The Shell process uses oxygenated gasification, a technology pioneered in the U.S., under the sponsorship of quite a bit of U.S. government funding over the years. Oxygenated gasification permits isolating carbon dioxide (CO2) during the manufacturing process, and thus is more compatible with carbon sequestration than other leading fossil fuel technologies. If the Chinese actually sequester the CO2, or use it for purposes such as enhancing oil production from older oil fields, this will be a big step forward for China’s environmental protection, as well as for controlling emissions of greenhouse gases.

What Do the Chinese Know?

The reports out of China present a national goal for that country’s economy to obtain 10% of its liquid fuel by 2011-2013 using methanol produced from its own coal resources. And China’s 10% of liquid fuel from CTL is just the beginning. Within a decade, that number could approach 20%. Moreover, China is also embarking on major, national-scale programs to generate electricity from wind power, as well as from solar photovoltaic systems. It is almost as if the Chinese know something.
Continued 12/3/06

Question asked on 12/02/2006 at 06:36 AM :: Comments to date: 0

Category: commodities

“Beijing Sets National Standard for Methanol as Automotive Fuel,” stated the well- regarded Financial Times newspaper. Methanol? Yes, good old “wood alcohol.” This is the stuff that if you drink it, will make you blind. But this particular label of Chinese methanol is not and will not be somebody’s moonshine. Instead, this Chinese methanol will be derived from coal in the so-called “Fischer-Tropsch” chemical process, which leads to an industrial method described as “coal-to-liquid” (CTL). Added to gasoline, coal-derived methanol creates a cleaner-burning type of fuel. And at oil prices above about $35 per barrel, methanol is very much a cost-competitive option for automotive fuel. Very clever, those Chinese. Here are a few of the key paragraphs from the Financial Times report:

“Beijing has settled on a national standard for methanol as an automotive fuel, a decision which will legitimize and bolster a market that has been growing rapidly without central government approval. The standard, which has yet to be officially announced, was reported in a trade magazine and confirmed yesterday by an official attached to the National Development and Reform Commission (NDRC), the economic planning body responsible for the standards.

“Local companies have under construction, or are awaiting approval to build, plants to produce methanol equivalent to about 20% of China's present oil consumption…By the time the plants, which convert coal to liquids, start producing in 2011-2013, China's oil demand will have doubled, allowing methanol to supply about 10% of the market.”

Continued on 12/2/06

Question asked on 11/30/2006 at 07:30 AM :: Comments to date: 0

Category: commodities

You can buy silver, silver stocks or SLV the silver price equivalent.
Long term silver will out perform gold.
Today there is $3 trillion in gold accounted for versus $12 Billion in silver.
Yet the gold silver ratio on price is roughly 50 to one.
If silver is an industrial commodity and gold is not what happens when industry runs out of silver?
The price goes up. When the Hunt brothers tried to corner the market the ratio was 16 to one.
There was $2.2 trillion in gold then to $80 billion then in silver.
Why is silver still undervalued?
If 16 to 1 happened today Silver would be $36 per oz.
Look at the supply side it is down. Look at the demand side it is up.
What does that tell you in the long run - silver is under valued.
Keep thinking silver.

Question asked on 11/21/2006 at 07:07 AM :: Comments to date: 0

Category: commodities

You can own silver by buying physical silver bars and pre 1965 bags of coins. This way you won't worry whether the market is going up or down and you are not leveraged.
Another way is to own SLV. This is an instrument that trades at the price of silve and it has to own 10 ounces of silver for every share. So buy some and put it in your IRA or 401K if it is able to be done. The leverage isn't there that is in the minig stocks but the political risk isn't either. Keep accumulating. In 4 years I see silver in the $50 range.
a triple in 4 years, try to do that in stocks.

Question asked on 11/08/2006 at 05:59 AM :: Comments to date: 0

Category: commodities

I look to the small-cap mining stocks themselves. Here are three things I look for in miners:

I recomended CDE last week, now for my favorite small cap summary.

Large resources: The companies must have millions of ounces or be working on defining large resources in historically rich districts. This makes it more likely that the big boys will target them for takeovers.
Near-term production: Exploration is nice, but the biggest gains will likely come from miners going into production in 12-18 months. Amazingly, you can even buy producing Mexican silver mines for pennies on the dollar.
Great management: To me, this makes all the difference between a grand slam and a near miss.
You can find a bunch of incredible bargains south of the border, including silver mines. Interestingly, many of them are mines owned by Canadian companies, because that’s where a lot of the mining industry’s talent and entrepreneurial spirit is. Continued.

The answer to: "Silver Recommendation (11/7/06)"

Question asked on 11/07/2006 at 05:53 AM :: Comments to date: 0

Category: commodities

I believe this is a great time to buy silver. The metal is well off the highs it hit earlier this year, but its bull market is still intact. It has gone through a consolidation that is a normal and necessary part of any bull market. If you look at a chart of silver, you can see that it is coiling up like a spring. A big breakout should come next. I believe there are many forces driving silver higher. Here are some examples:

According to research consultancy CPM, in 1990, there were around 2.2 billion ounces of silver held in aboveground stocks. As recently as 1995, there were 1.4 billion ounces of bullion in stockpiles. Today, there are probably only about 300 million ounces. That's a 50-year low
In 2005, there was a gap of 35.5 million ounces between fabrication demand for silver and the conventional supply from mine production and scrap. Industrial demand for silver is hot and getting hotter. Silver is the metal that is the best conductor of electricity. Uses for it are growing. Silver is substituted for lead by companies making electronics for the environmentally conscious European market. Continued.

The answer to: "Silver Again? (11/6/06)"

Question asked on 11/06/2006 at 05:49 AM :: Comments to date: 0

Category: commodities

The Chinese Communist leadership is not sitting around debating the timing of Peak Oil. They are being proactive, recognizing that the cost of acting early matters far less than the consequences of doing nothing. This is evident in their aggressive push to secure future energy supplies that their nascent consumer economy will need in order to mature into a more balanced, self-sustaining one. While the Chinese must continue recycling a fair amount of their export earnings into the Treasury market, they clearly have higher long-term priorities than financing a spendthrift U.S. federal government.

Interesting comparisons can be made between the incentives and strategies of private exploration and production (E&P) companies and E&P companies that are majority-owned by a government. PetroChina (PTR) and Petrobras (PBR) are two prominent companies from the latter category that are aggressively growing their reserve bases.

These companies must strike a delicate balance between free market incentives and government-mandated initiatives. So they present investors with unique opportunities and risks. Since the governments of China and Brazil are the majority owners of these companies, will they be strong-armed into profitless overexpansion or be subject to “windfall profits” taxes?

The answer to: "Oil (10/12/06) Part 2"

Question asked on 10/12/2006 at 06:23 AM :: Comments to date: 0

Category: commodities

If the demand side of the oil market can be artificially inflated by fiat currency, the supply side can certainly be impacted by the recognition that the intrinsic value of fiat currency is little more than zero (since it only retains its value as long as it is perceived as scarce). Place yourself in the shoes of a Saudi or Russian oil minister. Why trade your increasingly scarce oil for a limitless future stream of paper money? This paper money only has value to the extent that it can buy scarce goods and services.

If the global paper money supply is mathematically guaranteed to grow faster than the supply of goods and services, it sure seems like a bad idea to keep adding to one of the world’s largest U.S. Treasury bond portfolios. Perhaps the Saudis will continue recycling petrodollars back into Treasury bonds, but with the precaution of diversifying into gold as a portfolio hedge. Yet this may not be practical, since diversifying even the smallest fraction of a trillion-dollar Treasury bond portfolio into the tiny gold market is enough to send bullion to stratospheric prices.

The answer to: "Oil where to now? (10/11/06) Part 1"

Question asked on 10/11/2006 at 05:13 AM :: Comments to date: 0

Category: Politics and the Economy

We are long-term commodity bulls for the most part, but it has been time to take a breather, especially in the face of what we believe will be a U.S. recession and worldwide slowdown that is likely to further cool commodity prices. For now, Short term traders are out of commodities or short and long term traders are still waiting on the sidelines for adding totheir positions in gold, silver and platinum.
Net capital flows into the United States fell to $32.9 billion in July, from $75.1 billion in June. This amounted to the lowest for monthly capital inflows since May 2005.
Let's see why there is going to be a slowdown in the economy
A decline will be led due to the decline of private foreign investors, who bought $31.8 billion in Treasury bonds and notes, down from $82.4 billion in June. This was also the lowest amount of purchases since May 2005.

Treasury bonds and notes saw the greatest month-to-month weakness. Private investors sold $1.7 billion of Treasury bonds in July after having purchased $31.4 billion in June.

By contrast, foreign central banks increased their holdings in July, buying $22.7 billion of U.S. long-term financial assets, up from $2.3 billion in June.
Another reason for a downturn in the economy.
Compared to a year earlier, August housing starts were down 19.8%, from the August 2005 pace of 2.075 million units. Continued.

The answer to: "Commodities (9/25/06)"

Question asked on 09/25/2006 at 06:50 AM :: Comments to date: 0

Category: Stocks

Geologic and Tectonic Setting

The Gulf of Mexico basin, south of the U.S. coastline along Texas and Louisiana, offers a challenging geologic and tectonic setting to the best of geoscientists and engineers. Far beneath the surface of the coastal areas, and extending far offshore, the underlying basement crust is part of the ancient Precambrian “continental” mass that is part of the North American tectonic plate. Farther to the south offshore, at the edge of the continental slope where the seafloor of the Gulf of Mexico begins to descend precipitously to depth, the underlying crust is composed of “oceanic” material, primarily basalt. These rock types are the foundation of the Earth’s crust in the region, upon which all else rests.

Chevron’s deep-water success began with its ability to capitalize on many decades of fundamental research into oceanography, bathymetry, and geophysics that has allowed researchers to gain some semblance of understanding of what lies beneath the waves, let alone the seafloor, of the Gulf of Mexico. Immense sums have been spent by both government and industry to map the ocean floor, to measure the force of gravity and chart gravitational anomalies, to measure the magnetic fields in the area, and to gauge myriad other physical parameters. This is just some of the cultural, social, and scientific foundation for Jack #2. Continued.

The answer to: "Oil and Chevron Part II (9/18/06)"

Question asked on 09/18/2006 at 05:49 AM :: Comments to date: 0

Category: Stocks

Chevron has achieved a significant goal, and its success in the deep-water Gulf of Mexico is a very impressive accomplishment. Chevron’s effort is illustrative of the future of the petroleum industry over the next decades, and I think that the effort is worth dissecting some more. I am going to discuss geology, because I believe that it is important to understand what is going on down there, far beneath the waves.

The Most Eagerly Watched Prospect in the Gulf

The Chevron well is quite a hole in the bottom of the sea. According to a Dow Jones news account, reposted prominently on the Web site of no less than the highly respected oil field service company Schlumberger, the Jack #2 development was the “most eagerly watched oil prospect in the deep-water U.S. Gulf of Mexico.” The Chevron success with its test means, according to Dow Jones, that the Jack field “has passed a production test with flying colors, paving the way for development of an emerging geological play that could contain billions of barrels of hydrocarbon reserves.”

And to where in the Earth, exactly, does Chevron’s hole lead? Chevron’s Jack #2 well penetrates into what geologists call the "lower Tertiary," an ancient rock layer that extends over many thousands of square miles beneath the rocks at the bottom of the deep waters of the Gulf of Mexico. The successful Chevron test well has elevated the profile of the lower Tertiary in the eyes of oil industry observers, and holds out the tantalizing prospect that these deep rock formations could significantly augment U.S. oil and gas production.

Oil and gas companies have exploited the hydrocarbon resources of the Gulf of Mexico for many decades. And the lower Tertiary formations of the deep-water Gulf are, in many respects, extensions of oil-bearing strata from onshore Texas and Louisiana. But it is only within the past five years that exploration efforts have managed to discover commercial amounts of oil and gas in lower Tertiary rocks under deep-water areas.

Question asked on 09/17/2006 at 05:43 AM :: Comments to date: 0

Category: Stocks

Oil stocks and gasoline have started to come down.
All kind of factors are weighing on this new trend.
Or is it a pause in the mega trend.
I say it is a pause in the mega trend.
Continued.

The answer to: "Oils (9/13/06)"

Question asked on 09/13/2006 at 06:33 AM :: Comments to date: 0

Category: commodities

Sugar has retreated.
Sugar is coming back.
Time to start buying Sugar in the options.
Continued.

The answer to: "Sugar? (9/12/06)"

Question asked on 09/12/2006 at 06:23 AM :: Comments to date: 0

Category: commodities

It is starting to be harvest time.
Seasonly it is time to watch for a bottom in corn through November.
It has broken to new lows and bounced back.
Dec still has a premium.
Ethanol plants are buying future production.
Continued.

The answer to: "Corn (9/10/06)"

Question asked on 09/10/2006 at 06:13 AM :: Comments to date: 0

Category: precious metals

Silver within the next 3 years will be above $20.00 or greater.
Within 4 years it should be above $30.00.
Within 5 years it should be above $40.00
Currently it is trading at $12.00 and falling.
Now I am making bold statements of predictions. But what else will increase 333% in 5 years as an investment?
Oil at $70 would be $220 per barrel. Alternative energies would keep this from happening.
We could go on for every commodity in the field but for the long term Silver is the bet.
Silver is used more and more in the computer and electronic industry which is getting larger every year.
Can you imagine doing without your cell phone? There is probably $.02 worth of silver in your cell phone.
How many cell phones do people go through? Every 2 years I have had a new one. Is $.02 worth the recovery cost? The cell phone industry uses more and more every year so does the computer industry. In fact the world is consuming more than it mines for the past couple of years. Now think about this man has been mining and using silver for thousands of years. The easy stuff has been mined now it will become harder to find. The world is consuming more than ever at a supply side deficit. The most basic law of economics is the law of supply and demand. In the old days silver was used in recovery processes like plating, jewelry, photography soldering etc.
So when the prices rose like in the late 70's everyone brought it in for melt down. Today people do not have as much for melt down if the prices rise as much. THere are many reasons for the demand side which is greater today than ever in history. (continued)

The answer to: "Silver Buy on Dips (8/20/06)"

Question asked on 08/20/2006 at 03:45 AM :: Comments to date: 0

Category: commodities

Get up off your butt, and go out and buy gold.
Silver and oil. Gold, silver, and oil. Accumulate as much as you can. Get rid of those no-good, Federal Reserve Notes, greenbacks, dollars. Buy gold, silver, and oil.
Numerous central banks, such as those of Russia, China, and most of the oil-producing nations in the Middle East, are lightening up on U.S. dollars (buying with dollars) and adding gold positions to the state vaults. Therefore this is the market saying currencies of the world are headed toward adopting a de facto “gold standard” for global trade, albeit with no overt cooperation from the central bankers of the planet.

The central bankers are facilitating the demise of the world’s key fiat currencies by rapidly expanding what they call the “money supply.” Excess creation of credit causes inflation in the prices of goods and services. This erodes the long-term value of the underlying currency, destroying the value of both saved and invested capital that is denominated in fiat currency. So the future of the world economy is one of monetary inflation and capital destruction.

Thus by permitting varying degrees of inflation to erode the long-term value of their respective currencies, the central bankers are cooperating, after a fashion, in the world economy moving back to a gold standard. Whereas gold is not just the oldest form of money known to mankind (excepting seashells and bear hides, perhaps), gold is downright pretty. Got gold? ( Continued )

The answer to: "Buy gold. Long Term Buy on dips. (8/17/06)"

Question asked on 08/17/2006 at 06:51 AM :: Comments to date: 0

Category: commodities

Cumberland Resources Ltd. (CLG:AMEX), market capitalization $244 million, is a
highly speculative gold exploration company based in Canada’s Nunavut Territory.
It has 2.89 million ounces of proven and probable gold reserves in its 100%-owned
Meadowbank gold project.

If all goes as planned, Meadowbank will become Canada’s largest new gold mine by
late 2008 or early 2009. It will be one of Canada’s lowest-cost gold miners (with
an average cost of just $201 per ounce). And it will immediately become an
attractive takeover candidate for someone like Newmont Mining -- the world’s
second largest gold producer.

Of course, the key words in that last paragraph are “if all goes as planned.”

Although Cumberland is sitting on a literal gold mine, it can’t start production
just yet. It needs approval from the Nunavut Impact Review Board (NIRB), the
region’s governing body, with responsibilities for the environmental assessment of
projects in the Nunavut area. Until the NIRB grants Cumberland approval to proceed
with production, the company is forbidden by law to mine a single ounce in
Nunavut.

Ultimately, the NIRB holds Cumberland’s future in its hands.

If Cumberland is permitted to move ahead with production at Meadowbank, the
company is one of the best bargains in the gold sector at its current price of
$4.37 a share. Based on my calculations, the company is trading for 129% less than
its true value. And it could easily rise more than that if a larger company (like
Newmont) swoops in to buy it outright.

Cumberland is currently in final stages of the NIRB approval process right now. It
submitted the last of its environmental impact statements to Nunavut’s governing
body in November 2005. And despite the NIRB coming back to the company in April
with a few more follow-up questions, Cumberland expects to receive a final verdict
by Q3 06. In other words, sometime by this September.

The answer to: "Cumberland Gold (8/16/06)"

Question asked on 08/16/2006 at 07:47 AM :: Comments to date: 0

Category: Quote of the Day

“A MAN may buy gold too dear,” wrote the English playwright John Heywood (1497-1580) in his collection of proverbs published in 1546.
Heywood was born and raised near London, and educated at Oxford. In his day, Heywood was well known for his plays, poems, and collections of proverbs. His skill in music and his inexhaustible wit made him a favorite with King Henry VIII and Queen Mary. Heywood is important in the history of English drama because he was among the first writers to turn the abstract characters of morality plays into real persons. There is quite a bit of Heywood’s influence in the writings of William Shakespeare (1564-1616). Under the reign of Queen Elizabeth I (1533-1603), Heywood fled to the European mainland to avoid religious persecution for his Catholic faith. Heywood died in Belgium. Heywood’s legacy to the English language is immense.

Even today some of these sayings have been modernized from his time period style of English.

Some of his more famous sayings, from an anthology published in 1546, are as follows:
(Continued)

The answer to: "Historical Quotes, Gold & Currencies. (8/15/06)"

Question asked on 08/15/2006 at 05:37 AM :: Comments to date: 0

Category: Stocks

The Fed announced a pause in its rate-hiking campaign on Tuesday, but it turned out to be a nonevent for the market. The S&P 500 attempted to gap above resistance on Wednesday morning, but by midday, it was clear the attempt was doomed to failure. As of the close of Thursday, the S&P remains within the flag pattern which is bearish. This was a clear case of the news being fully priced into the market, and stocks are already looking beyond the Fed.

The answer to: "Stocks and Markets (8/14/06)"

Question asked on 08/14/2006 at 06:56 AM :: Comments to date: 0

Category: precious metals

As far as I am concerned, Goldcorp remains the number one buy in the gold sector. The company is well run, it has no debt and no hedges. It has low costs and is set to expand its production and reserves during the years ahead. If I could only own one gold stock – it would be Goldcorp.

But to diversify your holdings I would buy some other companies also that give different types of metals exposure.

IAG is a growth company. It has no debt or hedges. That will give it leverage in the next up leg of the gold bull cycle.

NXG is a growth company. As long as the price of copper remains in a bull market, NXG should do quite well.

Royal Gold (RGLD) is a low cost royalty company. It has a lot of leverage to gold – without too much risk.

The answer to: "More on Gold! (8/12/06)"

Question asked on 08/12/2006 at 04:02 AM :: Comments to date: 0

Category: commodities

The Financial Establishment is now very bullish on energy commodities. Experience shows, when too many people and institutions believe that a trend is cemented in place-and can’t be loosened or changed-risk levels are too high. Some of the same attitudes were displayed by the tech bulls back in 1999 and 2000. These days, the energy bulls seem to believe that crude oil has no choice but to stay above $70.00 per barrel. We dare say that many sector bulls privately believe that oil is headed for $100 per barrel in the relatively near future. (continued)

The answer to: "Energy Stocks? (8/10/06)"

Question asked on 08/10/2006 at 03:55 AM :: Comments to date: 0

Category: precious metals

Silver itself fell from a recent high near $15.00 an ounce to a recent correction low near $9.75 an ounce. I have bought shares of Coeur d’ Alene.
Silver fundamentals are increasing due to the demand from computer chips, nano sterlization and medical benifits which will put a strong push on the value for Silver. Soon a shortage of silver is coming which will make the price of silver not correlated to gold anymore. That means the % increase of silver will be far greater than that of gold.
If you have not bought any yet buy some CDE - Coeur d’ Alene Mines. I want to be adding Coeur d’ Alene Mines because it is the largest publicly traded primary silver producer in the world. The stock has traded in a 52-week range of $3.30 to $7.37. Last year, CDE produced nearly 14 million ounces of silver and 130,000 ounces of gold. Coeur d’ Alene Mines has working mines in Nevada, Chile, Argentina and Australia. It also has some important development projects in Bolivia and Alaska. (Continued)

The answer to: "Silver is the best investment for this decade! (8/9/06)"

Question asked on 08/09/2006 at 03:37 AM :: Comments to date: 0

Category: precious metals

The bull market in gold remains alive and well. Gold had become overextended on the upside. Its recent high up near the $730 an ounce mark could only be sustained if some kind of surprise event came along and impacted the markets. That did not happen and short sellers and other bears sharpened their knives and got to work.

The entire way down from $730.00 an ounce to the low near $545.00, the sellers believed that they were in control and helping to kill off the multi year bull market. (Continued)

The answer to: "Gold still a Bull! (8/8/06)"

Question asked on 08/08/2006 at 03:33 AM :: Comments to date: 0

Category: Stocks

"Remember this: The house doesn't beat the player. It just gives him the
opportunity to beat himself."
-- Nick "the Greek" Dandalos, legendary high-stakes gambler

If you don't have a game plan and learn from your mistakes you are bound to repeat your mistakes which is how you will beat yourself.

Question asked on 07/21/2006 at 05:31 AM :: Comments to date: 0 :: TrackBacks to date: 0

Category: Stocks

It is well known that Syria and Iran have for years been ardent financial and political supporters of the terrorist organization Hezbollah. These countries recently signed a mutual defense pact, so if Israel targets Syria in its retaliation, there is a risk that Iranian leaders could take actions that destabilize the entire region.

While Iran’s military may not yet have the capability to project force on Israel, the mullahs could foment a Shiite uprising that would destabilize the fledgling democracy in Iraq. Or they could use missile batteries to disrupt the flow of Iraqi, Kuwaiti, and Saudi oil to world markets. This involves threats of the shutting down of the Strait of Hormuz, one of the most critical chokepoints in the crude oil supply chain.

The answer to: "Oil and the Middle East (7/19/06)"

Question asked on 07/19/2006 at 05:12 AM :: Comments to date: 0 :: TrackBacks to date: 0

Category: precious metals

Platinum

Buy October platinum on any pull backs, maintain the protective sell stop just below the June correction low on the all-session chart at 1103.20. The market closed at 1243.70. Consider adding to long positions if October platinum breaks out above the contract high of 1340.00. Platinum has now made higher highs and higher lows on the weekly chart for three consecutive weeks. Platinum is the strongest metal based on comparative strength. In percentage terms, platinum's decline off of the contract high was less than that of gold, silver, and copper and it has retraced a greater percentage of the decline than gold, silver, and copper.

The answer to: "Platinum the Strongest of the Metals (7/11/06)"

Question asked on 07/11/2006 at 05:40 AM :: Comments to date: 0 :: TrackBacks to date: 0