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Thursday, September 28, 2006

Here's the Scoop on 29 Commodity Funds Recently Listed in London

In recent issues, I've alluded to 29 new exchange traded commodity funds (ETCs) that were listed this week on the London Stock Exchange. If you're interested, you can CLICK HERE for a complete list.

Is this bullish for commodities? I'd say so. While it is true the funds only track the prices of the underlying commodities (rather than buy and physically hold the commodity, like the US gold and silver ETFs), this is more investor dollars pouring into the sector, and that can't help but drive up volatility. That can hurt you on the downside, to be sure, but it can help you on the upside.
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Sounds like a Gap That Junior Miners Could Fill...

Interesting headline late yesterday...

Newmont sees lower gold sales until 2008

Newmont announced today that equity gold sales are expected to decline from previous forecast for 2006 and 2007 largely due to a series of political, economic and physical events which reduced gold production levels.

...(snip) ...

For 2006, Newmont now expects gold sales between 5.6 and 5.8 million ounces with costs of $290 to $310 per ounce. Newmont’s previous July expectations for 2006 were set at 5.9 million to 6.2 million ounces.

Longer-term, Newmont says its outlook is positive. But this sounds to me like Newmont has every reason to snap up a junior miner to fill that gap in its production -- and since gold prices have corrected in recent months, Newmont can get a good junior at a bargain price.

In other words, I'm looking for another round of consolidation to sweep the industry, with Newmont as the tip of the iceberg.
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Now We're Spending Twice as Much to Dig Ourselves Even Deeper in a Hole

It's already been established that attacking Iraq after 9/11 was about as smart as if we had declared war on Mexico after Pearl Harbor. Here's how it's going...

Link--A new congressional analysis shows the Iraq war is now costing taxpayers almost $2 billion a week -- nearly twice as much as in the first year of the conflict three years ago and 20 percent more than last year...

And this...

Reuters--A U.N. report released on Wednesday said the Iraq war provided al Qaeda with a training centre and recruits, reinforcing a U.S. intelligence study blaming the conflict for a surge in Islamic extremism.

This editorial from the Palm Beach Post (my hometown paper) pretty much sums it up...

"It's hard to see how the Republicans can take any comfort in being right.If the Iraq War is as important to the war on terror as they say, President Bush's failure to win the war in Iraq - or even to define "win" - is that much worse."

President Bush says we're engaging in "finger-pointing." Hey, if a drunk driver slams into somebody, is it finger pointing to say he did wrong? Maybe we should take away his keys for awhile. What do you think?
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India to restrict iron ore exports

One of India's biggest exports is iron ore to China. But now, according to Bloomberg, India is going to restrict iron ore exports because it can't even feed growing domestic demand.

I can't find the Bloomberg story on the web (it's only on the premium Bloomberg news feed) but I did find this story from an Indian paper explaining more about the problem. You can give it a read by CLICKING HERE.

Does that sound like a global slowdown to you? It sounds to me like both India and China are barreling ahead full-throttle.
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Wednesday, September 27, 2006

Crude Surges -- Gold and Silver follow

Crude Oil enjoyed its biggest rally in six months today.

Yes, it's still way down from its highs. And the big driver (that I can find) is that a bunch of bears suddenly jumped to the other side, because oil didn't sink on the bearish inventory news. It's something I talked about in my post yesterday -- sentiment had become so extremely bearish that it was actually bullish for oil.

The good news is the move in crude propelled gold, silver, and precious metals stocks higher (gold is used as a hedge against higher oil prices). A position I recommended in Red-Hot Canadian Small Caps last week when I spotted a bottom in gold jumped 13% on the day! Nice!

I can't wait to see what happens in Australia overnight.
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Interview on ... Global Warming

If you want to hear my latest interview on, CLICK HERE.

This one was quite funny. Tom Crone from Howe Street is always great to talk to, and we packed a lot into 30 minutes. My favorite part was when I told Tom about the scientist I interviewed last week.

I asked the egghead: "Is there someplace in North America that will be safe from global warming? Someplace I can move to?"

His reply: "No place is safe from global warming. It's a GLOBAL problem."

My conclusion: "I have to find another scientist -- this one won't give me the answers I want." LOL!

Anyway, I hope you enjoy the interview.
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America's Atomic Future

Here's my latest Money and Markets column...

America's Atomic Future

Once again, I'm starting to think our art director has gone insane. As I chronicled in this post HERE, some of the art choices to go with my stories are just bizarre.

The latest weirdness? This drawing:

While I might use the phrase "addicted to oil" to illustrate a point, I really don't want a picture of crack-junkie Uncle Sam mainlining to feed his jones.


Well, it's a good story anyway. Give it a read.

Oh! And my uranium report comes out next week.

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Tuesday, September 26, 2006

The CRB and Energy

If Blogger is behaving itself today (i.e., not eating my posts), let's see if I can post something I tried to post to you last night. It's especially relevant considering the bounce we're seeing in energy today. Here goes ...

The stock indices are whipsawing to nosebleed levels – while oil and natural gas plunge to stomach-churning depths. We’ve got a good ol’ fashioned market roller coaster on our hands. The trick is to have fun without losing your lunch.

Last week I called for gold to bounce, as it found support at the 50% retracement of its big bull move. And it did … along with silver and some other metals, gold is higher than it was a week ago. But gold’s move higher hasn’t stopped many market talking heads from asking: “Is the commodities boom over?”

Certainly, the uptrend line on the CRB Index is broken, and the CRB Index – a weighted index of 19 commodities – has continued lower even as gold and silver have turned higher. There’s a reason for that: Crude oil accounts for 23% of the CRB, and crude continues to search for support. Including natural gas, the CRB’s energy exposure is 39%! It seems likely that the CRB will bottom when energy finds a bottom.

Indeed, the CRB is very energy-heavy. Using it to gauge a bull or bear market for commodities as a whole becomes problematic.

Take a look at this next chart … you might find it interesting. On this monthly chart, you can see how the CRB Index fell through its uptrend (the green dotted line). And man, it PLUNGED. Now, it has come down to the 38% retracement of its big bull move. This is a common retracement in a bull market … a likely place for a base for the next big move higher.

The next important question becomes, has crude oil found support at $60? Certainly, $60 is the “line in the sand” that some OPEC members (Iran and Venezuela) talk about. Others set their defense line lower at $55.

There are fundamental reasons for oil to go lower …

  • BP is restarting production on the eastern side of Prudhoe Bay, which has been shut down since August
  • The threat of a production cut-off by Iran is easing.
  • The hurricane season has been a bust so far.
  • Importantly, there is plenty of product already refined and sitting in storage. As storage fills up, refiners are willing to pay less for crude

On the bullish side of fundamentals, in the most recent week, gasoline demand advanced 4.6% compared to the same week a year earlier, according to the U.S. Energy Department. So, consumers could be a bullish force that will light a fire under oil prices again. We'll see what the energy numbers are on Wednesday.

Psychologically, the bears are out in force. We’ve heard targets of $50 … $40 … even $25 per barrel. There has been a major psychological shift. Traders openly worry there’s another hedge fund out there like Amaranth – a fund that went from up $1.5 billion to losing $4 billion all because of bad bets on natural gas. This negative psychological view could be a bullish force in the market. If funds and big traders have all turned negative, there’s no one left to sell.

Will the CRB bounce here? We don’t know. And 50% of a move (the next horizontal blue line down on the chart) is ALSO a likely target for a pullback. Certainly this should be a volatile time in the commodity markets.

XX Well, that was what I was going to post last night. Today, the commodity markets and commodity stocks are bouncing. I'll explain more about why I think this is happening in issues to Red-Hot Canadian Small-Caps and Red-Hot Asian Tigers subscribers. So, stay tuned.
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India and Gold Buying

I could not publish to this blog all day yesterday for reasons known only to Blogger. And the danged thing ate some long posts, too! Anyway, let's see if this one makes it. I'll keep it short and sweet: Gold buying seems to be picking up the pace in India, and that is bullish for gold.

Some highlights...

  • India may import 10% more gold this year
  • Softer gold prices are also expected to boost the world appetite for Indian jewellery, exports of which could rise 15% in 2006
  • India is Asia's fourth-largest economy, and has been expanding at an average rate of 8% in the past three years.

Read about it here:
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Monday, September 25, 2006

India and Gold

India seen buying 10% more gold

New Delhi - India may import 10% more gold this year as a fall in world prices just ahead of the marriage and festival seasons has opened up a buying opportunity for its gold-crazy consumers, an industry official said.

Softer gold prices are also expected to boost the world appetite for Indian jewellery, exports of which could rise 15% in 2006, said Bakul Mehta, chairperson of the Gem and Jewellery Export Promotion Council.

More if you follow this link:
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Weiss Research puts its collective heads together (with the loud "clunk" like a bunch of coconuts) every Monday morning to discuss things.

At 8:30 this morning, I showed my co-workers the same chart on gold that I showed you on Friday. You can find it here: That support is holding today (hooray!).

Then I took a look at the dollar...

As of 2:45, the US dollar future is right up against that former uptrend. Tomorrow will be a telling day.

Then I took a look at oil, which I see as a wild card. As of 8:30 this morning, it was not showing the strength of precious metals. I have called for a bounce potentially starting at 60, but also said real support is at 57.70. Here is an updated version of the chart I sent out when oil was at 64…

From this morning's commentary: "Will oil go to 57.70? This is important for gold, because oil and gold are 81% correlated. A further dip in oil could cause gold to retest support at its 50% retracement of its big bull run and then some."

Well, as we all know know, oil bounced today. OPEC is grumbling about maybe cutting production. I doubt they will anytime soon, but it was enough to scare some bears out of positions.

I think tomorrow (Tuesday) could be a telling day.

Also, I sent some Bloomberg headlines (and the first paragraphs to go with them) around to my coworkers...

1) Oil Drop Robs Mutual Funds of $4.5 Billion; Fidelity Falls 12%
Sept. 25 (Bloomberg) -- Mutual fund investors, captivated by
oil's 88 percent appreciation in two years, increased their
energy holdings in 2006 just in time to lose $4.5 billion.

2) Russia, Canada Stock Indexes May Fall, Matching Commodity Crash
Sept. 25 (Bloomberg) -- The plunge in the price of oil, gold
and copper may hurt stock markets in countries such as Russia,
South Africa and Canada, which until now have performed better
than the commodities that underpin their economies.

3) Copper Drops a Second Day; U.S. August Home Purchases May Slow
Sept. 25 (Bloomberg) -- Copper fell for a second session in
London on speculation an industry report will add to evidence
U.S. economic growth is slowing. Nickel declined after Inco
Ltd., the world's second-largest producer, reached an agreement
with unionized workers to end a two-month strike.
Sales of previously owned U.S. homes dropped in August to
the lowest since early 2004, economists expect a report by the
U.S. National Association of Realtors to show today. Copper has
quadrupled in the past five years, partly fueled by demand for
pipes and wires used in U.S. homes.

4) Iron Ore Prices May Rise Next Year on China, Australia Says
Sept. 25 (Bloomberg) -- Iron ore prices may rise next year
as demand from steelmakers in China outpaces supply, the
Australian government's commodity forecaster said.

XX Sean’s note – can copper prices go down when iron prices go up? I think somebody’s making the wrong bet.

5) Gold May Climb as Central Banks Slow Sales of Bullion (Update1)
Sept. 25 (Bloomberg) -- Gold may rise for a second week on
speculation that European central banks will reduce sales.
Eighteen of 27 traders, investors and analysts surveyed by
Bloomberg News from Sydney to Chicago on Sept. 21 and Sept. 22
advised buying gold, which rose 2.1 percent last week to $595.40
an ounce in New York. Six people said to sell, and three were

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Friday, September 22, 2006

Gold -- Meaty, Beaty, Big and Bouncy

Earlier this week, I talked about how gold looked like it was going to bounce higher from the 50% retracement of its big bull move. A 50% retracement isn't uncommon in bull markets -- it can set up the next leg of the advance.

Now, sure, gold could fall out of bed on Monday. But looking at this chart, I'd say 611-612 is the next target.

Is this "the" bottom. We don't know. Is this "A" bottom, one that sets up a playable bounce? Very likely. Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers already received their recommendations. Those RCS stocks bounced nicely after I sent out today's issue. RHAT will have to wait and see what happens on Monday.

Good luck to all.
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Is that a $37 billion infrastructure Guangdong, or are you just glad to see me?

I saw this story on Bloomberg yesterday, but was waiting for it to be published to the web. Finally it is -- but not on Bloomberg, on the Shanghai Daily website. Here's the story...

Guangdong to boost infrastructure
GUANGDONG Province will spend 290 billion yuan (US$37 billion) expanding its roads and ports, as it seeks to win further investment from overseas companies, Bloomberg News reported. The investment in roads, totaling 200 billion yuan, will increase the province's network 22 percent to 140,000 kilometers within five years, the local government said in a statement on its Website. The government will also spend 87 billion yuan adding 140 deepwater berths at its ports over the same period.

Why this is important: Guangdong is the largest economy in China. This one province's gross domestic product grew 13% last year to 2.17 trillion yuan ($276.6 billion), which is larger than Denmark's.

  • Guandong will have 5,000 kilometers of highway by 2010 -- an increase of 61%.
  • There are plans to boost Guangdong's sea port capacity by 450 million metric tonnes a year. This will involve adding 140 deepwater berths. Wow!
Does that sound like an economy that is slowing down to you? Heck no! And China (and other emerging markets) will help drive the commodities demand of the world.
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Wednesday, September 20, 2006

Coast to Coast in Canada

Tom Jeffries (of HoweStreet fame) has picked up a gig doing the "Money Matters" show on the Chorus radio network. It plays coast-to-coast in Canada at 11 am pacific standard time.

Uranium ... gold ... silver ... "tinfoil hat" theories on oil. We've got it all! I used the phrase "people who think the Jack well will solve our problems don't know Jack." I thought it was original, but I've seen it at least twice since then. Rats!
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Here's Some Good News...

Gold Rises in Asia as Price Drops Attract Buying From Jewelers

By Chia-Peck Wong and Debarati Roy

Sept. 20 (Bloomberg) -- Gold rose in Asia amid buying from jewelers, who are increasing their purchases after the precious metal's 8 percent decline this month.

The bullion's drop is attracting jewelers looking to build stocks before next month's Indian wedding season and the year- end holidays. Buying in Thailand isn't related to yesterday's military coup, which appeared orderly, said trader Ng Cheng Thye.

"India, Thailand, Indonesia, the whole region has been buying heavily,'' Ng, head of the precious metals market desk at Standard Bank Asia, said by phone today from Singapore.

Read the rest at:

The lack of buying by the big jewelers has been of real concern. If they're returning to the market, we could see things turn around.

Meanwhile, what's been happening with the leading gold ETF, the GLD? Have people been pulling their money out of that? Well that's an interesting story.

In the last month, the GLD has added 55,407.79 metric tonnes of gold. That looks pretty good, except that up until the day before yesterday, the fund had added 154,683.55 metric TONNES of gold. You can do the math yourself by following this link...

So that dip we saw in gold yesterday? Looks like part of it was panic selling out of the GLD -- 100,000 tonnes worth. Since the GLD consistently added gold all the way through the rest of gold's correction, this could be typical of the kind of panic selling you see at a bottom. See, the vast majority of people buy at the wrong time and sell at the wrong time.

Now, I could be wrong, and eating these words on Friday. Maybe the selling in the GLD will continue, and overwhelm the buying by the big jewelry houses. But I think it's more likely we're near a bottom for gold.

Note that "a bottom" is not necessarily "the bottom." But it's good enough for a rally to 612.
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Gold and Silver -- Putting the Metal to the Pedal!

"Feets don't fail me now!" That seems to be the cry from many traders as they flee precious metals. But as I've shown you, gold has come down to serious support at the 50% retracement of its big bull run. Silver has done the same. Until that breaks, and the longer-term uptrends break, I'm still bullish.

Let's look at those charts now. We'll start with silver...

And then there's gold ...

Meanwhile, the talking heads on CNBC are saying that gold is going back to 550 or even 500 before it bounces. I wish that were true -- I'd back up the truck and buy all the physical gold I could lay my hands on -- but I don't think so. Indian jewelry makers are already stepping up to the plate, buying with both hands. This isn't science, nor do I have a crystal ball. But as with crude, I'd look for the next rally to start by the end of this week.
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Two Energy Charts ... 60 Looms Ahead

For quite some time, I've had $60 as my target for oil. I have an interesting chart to show you about that. First, let's look at how money has flowed out of energy and into consumer staples ...

Boy, that illustrates what's been happening, doesn't it. Will this trend continue? Perhaps for a little while, but my target of $60 on oil looms ahead. We may even hit it this week. What happens then? Let's look at another chart...

That support on the weekly chart is strong, and it should come into play. My bet is that oil will bounce at 60, and perhaps bounce hard.
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Sunday, September 17, 2006

Time for Commodities to Bounce?

Stocks and other investment instruments often retrace a big portion of their bullish or bearish moves to test support/resistance before continuing the trend. A common place for these retests are at Fibonacci levels. You can read more about Fibonacci retracments HERE.

I bring this up because the CRB index, which tracks a basket of commodities, is at its 61.8% Fib retracement right now on a weekly chart, if you're looking at its advance since August 2004. If it were going to bounce, this would be a likely place...
The problem with Fib retracements, of course is picking your starting point. This is only one of several possible Fib retracements I could draw on the CRB. But this, combined with the fact that gold and silver are hitting and holding important support, tells me that we could see a bounce in commodities next week.

This doesn't mean all commodities will bounce next week -- but most of them should, and I expect gold and silver to lead the way. Another timing system that I won't get into predicts a change in trend on or around September 22. Maybe we'll see the real bounce Thursday or Friday, if that bit of hoodoo holds true.

The fact is, commodities are oversold, and it wouldn't be surprising to see them bounce here anyway.
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Friday, September 15, 2006

And Then There's Gold...

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Silver Holds Support!!!

Hot diggity dog! Silver held support at its 50% retracement.

We'll have to see how metals open on Monday -- anything can happen over the weekend -- but we might be seeing the buying opportunity we've been looking for.
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My Latest Web/Radio Interviews

Here's one with from Thursday...

Here's an interview on BizRadio from Tuesday...

And here's a story Marketwatch Reporter Myra Picache has written that has quotes from me AND links to my webcast interview with Ciara Linnane ...
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Silver Seeks Support

You’ll remember in my September 9 blog-post, I told you that silver could pull back to test support around 10.7, and below that there was support at 9.9. Well, that forecast seems to be panning out. Look at the chart …Silver IS pulling back to test weekly support. It will probably test it today. If it breaks below that support, that will be psychologically damaging. The test of 9.9 becomes likely. There is more important support below at 9.4, but let’s stick with 9.9 right now.

Silver may bounce today. If so, that's GREAT! If that happens, I'll likely have recommendations for Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers next week.

But what if it doesn't? A smart trader plans for that, too. Then we have to look for a test of 10.7 ... and beyond that, 9.9 is a 61.8% Fibonacci retracement of silver’s rally since September 2, 2005. If silver breaks support at 9.9, there are many in the markets who will declare silver’s bull run dead.

But even if silver dips beyond 9.9, I don't think the bull market is over. I'll tell you why...

Corrections are part and parcel of any bull market. So it’s not suprising to see silver pull back like this, not at all. I’d be happier if it didn’t. But I know this happens in every bull market, and those who keep their heads make the biggest profits.

If silver doesn't bounce at its 50% fib retracement ... doesn't bounce at 10.7 ... do
we sell if and when silver breaks the weekly uptrend … or if and when it breaks its 61.8% retracement? Do we sell out of positions, take our licks and regroup? Or, do we hold for all the fundamental reasons that are driving silver higher?

I’m leaning toward holding and adding when we see a bottom put in. You know that’s coming. Investor demand for silver is enough to send it back to $15. The global economy is ramping up, and silver is an industrial metal as well as a precious metal. And while there are new silver mines coming online (Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers own some of the best of them), global supply is not enough to keep up with demand in the longer term.

Stay firm, stay focused, and we’ll pick up some potentially incredible bargains when things bottom.

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How Low Can Oil Go?

I see CNBC is giving a soapbox to anyone who’s willing to trot out a crackpot theory. Oil economist Philip Verleger was on CNBC this morning saying that oil was going to $15.

With all due respect to Mr. Verleger, I
believe he’s going to be really, really, wrong. I mean, the basic fact that if you lower the price of something, people will buy more of it. And look at the price of gasoline …

Already, sales of the large-sized SUVs and trucks are picking up again. We know how this story plays out, folks. People drive bigger vehicles and drive more, increasing demand. There is limited refinery capacity in this country, and it's already close to maxxed out. The price of gasoline goes up. That should be simple enough for an economist to grasp.

The good news (from my perspective) is that lower gas prices will really juice up the economy. I’m the odd man out at Weiss in that I do not think we’re heading pell-mell for a severe recession. That may happen some day … I just don't believe it’s not likely in the next 12 months. Why?

  • The economy is growing. And lower gas prices will help it grow faster.
  • The bursting of the housing bubble is squeezing the middle class. But I expect that to take a long time to play out (people will do nearly anything to keep a roof over their heads) and commercial construction is actually RISING around the country – that should keep commodity demand percolating.
  • As I reported September 7, when I told you about my $60 target for crude oil, commodity demand from China should increase. India, too. The lower gas prices are, the more people in those countries will drive. And that will light a fire under demand.

Let’s revisit a chart of oil ...

My target is still $60. I think oil could rally there. Below that, $57.70 lends support, and if we have a panicked rush out of oil, it could go as low as $50. But I think that kind of pullback unlikely, and even if it happens, I don’t think that it would last long. Not with the IMF raising its target for global growth in 2006 to 5.1%. The IMF also predicts that the global economy will grow 4.9% in 2007. Could they be wrong? Sure. But there are plenty of reasons why they should be right – China, India and Russia being three of them.

Anyway, if CNBC’s standard for putting you on the air is that you have to say something whacked, believe me, I can jibber-jabber with the best of them. Put me in coach – I can talk crazy, too!

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Monday, September 11, 2006

The Election Effect on Oil?

We have an election in November and oil prices are sliding fast. Funny thing ... look what happened right before the 2004 elections. What are the odds of that?It's almost as if companies and funds that thought the elections could affect them financially (not to mention potential prison time) do what they can to mollify the voting public so that they perhaps keep voting for the right people.

Following along that logic, this year, because more people are ticked off, the slide in oil prices would start earlier and go deeper ... HEY!

Nah ... must be just a coincidence.

Anyway, enjoy the low oil prices while they last.
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More Pain Ahead for Silver?

OUCH! That's the only word for what happened in the commodities markets today. We could see a short bounce -- after all, commodities are at 10-month lows -- but I expect there's a bit more pain to work through. However, that doesn't change the fact that we are in a long-term bull market for many commodities.

Take silver, for instance -- down over 8% today...
But we can also see there's plenty of support close by. This correction could be painful, but it should also turn into a great buying opportunity.
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Friday, September 08, 2006

Is It the End of the World As We Know It?

Oh, how the squawking has started. In the last two days, silver skidded lower, gold looks even worse, and oil is leading the way down. It didn't take long for the bears to come out growling that the commodity boom is over. "It's the end of the world!" they cry.

Here at Castle Discordia, we take a more sanguine view. The markets were frothy. Some money is coming out. So, we'll bandage our burned fingers and wait for the (very) likely bounce.

Don't believe me? Listen to Owen Hegarty, Managing Director of Oxiana, an Australia-based copper-gold-zinc miner. I have put some select passages in bold...

"We're seeing higher export volumes out of Australia andalso out of our Asian operations. Higher volumes and also higher prices, that's a double impact in terms of revenue," Owen told Bloomberg News.

"China is driving trade and investment for our products in Australia and in Asia. We're expanding our business at operations here in Australia and in Laos.

"We see prices remaining quite firm, quite solid. There's good strong demand around the region and there's subdued supply, so only one thing can happen to prices: they'll stay strong.

"There's good worldwide demand, fueled largely by China. You haven't seen supply being able to catch up.

On the outlook for commodity demand: "We haven't seen any slowing in demand from China, you just can't see the end of the freeways and the power lines and infrastructure that is being built up there, certainly in western China. So the demand for energy, for copper materials, for steel and zinc and all of those commodities that we produce here, looks like being strong and long.

"We are in a period of worldwide economic expansion thatthe Western world hasn't experienced before. It's inevitable that you'll have this continued growth in China, India and other parts of the world.''

Well, I don't know about you, but Owen's outlook sounds bullish to me. If he's right -- and I believe he is, this is just a "hot-money" correction, and we should see excellent buying opportunities on the other side. I won't try to predict exactly when that will be, but probably not too long.
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Thursday, September 07, 2006

China Keeps The Commodities Train Rolling

According to Reuters...

Robust manufacturing in China is keeping global production of raw materials spinning and compensating for a worrying drop in American output, while a surge in U.S. durable goods demand is certain with commercial construction rising, analysts said.

While these factors mainly support a case for better base metal prices, a rebounding U.S. stock market and continuous economic growth projected for the next two quarters -- although slower than the first two -- suggest benefits for other commodities too.
The article explains that while US home building is in trouble, commercial construction is picking up the slack -- which keeps demand going for a whole bunch of materials.

Well, should we break out the party hats, then? Alas, not everyone gets to come to the party...

The only exception could be the energy sector, which may have trouble supporting current prices because of rising inventories, the lack of hurricane strikes on U.S. oil platforms so far this year, and little impact seen from sanctions threatened against leading crude exporter Iran.
I've come to that conclusion, too. Unless there's a major hurricane -- and September is traditionally a busy month for hurricanes -- or some other supply disaster, oil should hit $60 per barrel in the next few months. Unlike Reuters, I also believe there are political forces that could drive oil lower. The oil market is small enough that some of the bigger funds and institutions could push it lower if they wanted to get prices at the pump down before the November elections. And I believe they do.

By the numbers…

#1 Is where crude oil broke its uptrend. Then we had to wait and see if oil was going to go sideways for awhile, find a new bullish trend or turn bearish.

#2 is where oil broke support. It is now headed lower. My price objective on oil is $60.

But don't worry, oil bulls. My downside target is only $60 (I get that using a technical analysis tool called a point-and-figure chart, if you're interested), and it's not that far down. And the long-term trend in the energy complex is up ... way up. So we'll look for bargains in energy when oil gets to new support.
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Interview with HoweStreet on Rads, Rocks and Bears, Oh My!

Here's my latest Interview...

Talking about Labrador -- the Riviera of the Northeast (Ha!),uranium, oil, silver and more.

Always fun talking to Tom. He lets me ramble, unlike Marketwatch, where I felt like I was on a stopwatch. And you KNOW how I like to talk.
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Wednesday, September 06, 2006

Are Commodities Turning Bearish?

Many traders are in a tizzy because the Reuters-Jeffries CRB Index – a broad measure of commodity prices – has broken an uptrend line. A downturn in commodity prices would foreshadow a recession. Let’s see what the fuss is about…

That uptrend IS broken. But remember that while an uptrend line has broken, a new downtrend hasn’t started. The CRB could move sideways as it digests its gains, then take off higher again. Keep your eyes on 316 and 310 – two strong levels of support for the CRB.

When the broad commodity sector is moving sideways, some things go up and some go down, right? Well, gold and silver are both showing tremendous strength. Copper isn't doing badly, either. And uranium isn't slowing down for anything. I've just described 3/4ths of the stocks in the Red-Hot Canadian Small Caps and Red-Hot Asian Tigers portfolios. In other words, friends, you're in fine shape.

Check out my new gold and energy blog at

Tuesday, September 05, 2006

My webcast interview on Marketwatch

During my stopover in New York, I sat down with Ciara Linnane, Co-Bureau Chief of Dow Jones Marketwatch, for a little chat. You can find it at:

Along with being a savvy editor, Ciara is just a really nice person. She made me feel very at-home. Considering how nervous I was walking in there, that was quite a feat.

I also went to the NYBOT/NYMEX, and had a nice chat with some people at Bloomberg. The Bloomberg building looks like a spaceship that landed in Manhattan. Now I know why my Bloomberg subscription is so high -- I have to pitch in to pay for that Taj Mahal (LOL!)
Check out my new gold and energy blog at

Sunday, September 03, 2006

Venezuela and China -- a troubling alliance?

Marketwatch asks if we should worry about THIS...

During a visit to China last week, Venezuelan President Hugo Chavez announced several deals, including plans to export 500,000 barrels of oil per day within five years to China and the creation of joint ventures with two state-owned oil companies to produce and export crude from Venezuela's oil-rich Orinoco River basin, according to China Daily.

My answer: "HELL, YEAH!" Chavez has shown that, if he can, he'll choose to sell oil to China at a lower profit margin rather than sell it to the US. Venezuela currently exports around 1 million barrels per day to the U.S. We NEED Venezuelan oil.

I was one of the sources for the story:

Venezuela's conventional oil reserves are pegged at around 80 billion barrels, but the country believes it has some 235 billion barrels of recoverable deposits in the Orinoco Belt, according to Sean Brodrick, a contributing editor at

The reporter on the story, Myra Saefong, is as sharp as a set of steakknives and works so hard I feel like a loafer every time we touch base.

Meanwhile, I finally got back to New York and stopped by Marketwatch studios for a webcast on commodities. You can bet I talked about uranium. That broadcast will be up on the Marketwatch website next week.
Check out my new gold and energy blog at

Friday, September 01, 2006

Big Question on Silver

The price of silver has increased by a third since June, and RCS and RHAT subs are FINALLY starting to see it in their portfolios as those small-cap stocks pick their sleepy butts off the ground and start running. And check out this news from Mexico overnight...

The price of silver has increased by a third since June, and RCS and RHAT subs are FINALLY starting to see it in their portfolios as those small-cap stocks pick their sleepy butts off the ground and start running. And check out this news from Mexico overnight...

Mexico's silver production fell to 182,282 kilogrammes in June, down 18.3 percent compared with a year ago, the National Statistics Institute said. Mexico is the world's largest producer of the metal.

Read the full story HERE

My question: Is this just a one-month blip? Or are even all the new mines coming online not enough to keep up with faltering production at Mexico’s older silver mines?

We’ll see what next month’s data brings. For now, you know my opinion: Buy silver!
Check out my new gold and energy blog at