Tuesday, October 31, 2006
Marketwatch Gives Me the Guru's Corner This Week
Here's what they have on the front page of that section...
Treat yourself to silver
Fundamental forces are lining up that could make silver the bullish surprise of the fourth quarter. The metal spent the past few months consolidating... coiling up like a spring. The next breakout could come soon, and it should be big. For many investors, the easiest way to capitalize on this move will be the Ishares Silver Trust ETF, but the better play may be this Canadian silver producer.
Commodity Roundup for Tuesday
Copper Falls Most in Two Weeks After Inventory Gain
(not available on web)
Oct. 30 (Bloomberg) -- Copper prices fell the most in almost two weeks as rising inventories renewed speculation that mine output may exceed demand this year.
Inventories of copper tracked by exchanges in
XX Sean's note: I'm starting to get concerned. Copper inventories are rising in warehouses around the world. Stockpiles tracked by the LME alone have jumped 18% since Oct. 18 to 129,475 tons. If this is
Uranium Prices Surge After Flood Closes Cameco Mine
Oct. 31 (Bloomberg) -- Uranium prices surged 7 percent to a record after Cameco Corp., the world's largest supplier, said a flood at an unfinished mine in Canada will delay initial shipments of the nuclear fuel by at least a year.
Uranium rose to $60 a pound from $56 in a weekly posting by Roswell, Georgia-based Ux Consulting Co. Ux's price is based on the company's assessment of the uranium market and is widely used within the nuclear industry.
"It is the largest weekly increase on record'' in the 20 years the company has published uranium prices, Ux executive Eric Webb said in an interview today.
Read the rest here: http://tinyurl.com/yjakff
XX Sean's note: I really, really hope you bought my uranium report. As of yesterday, the stocks recommended in it were up an average 18% since October 3. Wow! And I think this big move in uranium is just starting. As the saying goes: "This is not the end ... or the beginning of the end. This is the end of the beginning."
If you haven't bought it yet, Here's a Money and Markets where I wrote more about my nuclear outlook: "America's Atomic Future."
And if you haven't read my uranium report, CLICK HERE to find out more about it.
Oct. 31 (Bloomberg) -- Gold prices may rise by $100 an ounce by the end of this year and breach the $700 level on renewed interest from investors, Paul Walker, chief executive officer of London-based research company GFMS Ltd, said.
The precious metal could trade between $580 and $720 an ounce in the next six months as investors seek to diversify from stocks and bonds,
The price of the metal may reach ``$700-plus'' before the end of the year, and may even rise in 2007 to the 1980 high of $850 an ounce,
Reasons for gold rising included a weak U.S. dollar, inflation concerns, global political tensions and more money being invested in gold, he said.
Read the rest here: http://tinyurl.com/yg5m6u
XX Sean’s note – the euro, the pound and the yen all SEEM poised for a breakout against the greenback. Naturally, that should send precious metals prices higher. But that breakout hasn’t come yet. Stay tuned.
Orange Juice Extends Longest Rally Since 2004 on Crop Concerns
(not available on web)
Oct. 30 (Bloomberg) -- Orange-juice futures rose, extending the longest rally since December 2004, on speculation that citrus production will continue to languish in
XX Sean’s note: I’m posting this because the sun doesn’t rise and set on metals and energy. We are in a big commodity bull market – there are tremendous opportunities in the softs, grains and other agricultural markets.
Monday, October 30, 2006
3 Red-Hot Charts for Monday
Happy Halloween Eve.
We’re going to see a flood of economic data this week which are mostly consumer oriented. Some important numbers…
On Monday, the Department of Commerce will release its personal income and personal spending data for September. In other words, how Americans are spending their money, and how much cash they’re putting in the bank.
On Tuesday, The Conference Board releases its consumer confidence report.
On Wednesday, we get auto and truck sales. Keep your eye on sales of large SUVs and trucks, to see if September’s data (a large jump in sales of larger vehicles) was just a blip or a trend. This has important implications for gasoline prices.
On Thursday, we get initial jobless claims. All in all, it should be an exciting week.
And on Saturday, I hop on a plane for the Sierra Madre mountains in Mexico. Huzzah!
Friday, October 27, 2006
How Will GDP Numbers Affect Commodities?
From Marketwatch: U.S. economic growth slowed sharply in the third quarter, increasing at a real seasonally adjusted annual rate of 1.6% after a 2.6% increase in the second quarter, the Commerce Department said Friday.The gross domestic product was below the 2% growth rate expected by economists polled in the MarketWatch survey. It was the slowest since the first three months of 2003.The economy has grown 2.9% in the past year, the slowest year-over-year growth in three years.
So what does this mean? It probably takes another Fed rate hike off the table in the forseeable future. It also means that rate CUTS in the first quarter are back on the table. This should be very good for gold, which is seen as an inflation hedge.
It could also weigh on copper, zinc, and other metals in the short-term, because these are industrial metals and investors will fear these GDP numbers mean a slowdown. But I have shown you plenty of numbers that indicate the global economy is NOT slowing down -- not yet anyway. So I think a pullback in industrial metals will be shortlived.
Meanwhile, we're already seeing domestic oil and gas consumption creep up. That might have something to do with the fact that short-memoried consumers are buying more large trucks and SUVs now that gasoline prices are cheaper, but that is also contrary to fears of a slowdown.
This line from Marketwatch sums it up pretty well: "Economists said the Fed is watching closely to see whether the slowdown gathers momentum or if the third quarter was the pause that refreshes growth."
Industrial Metal Friday
According to Bloomberg, copper inventories tracked by exchanges in London, New York and Shanghai jumped 187,079 metric tons -- to the highest levels in four weeks.
Eight of the 11 analysts and traders surveyed by Bloomberg expect copper to decline next week. Well, I guess that means it's sure to go up! LOL!
Seriously, I don't know where it's going next week (I'm so glad we took gains on a copper stock in Red-Hot Canadian Small-Caps yesterday, though). I do know...
Goldman Sachs expects supply to fall short fo demand by 52,000 tons this year.
BHP says output fell 19% in the most recent quarter from a year ago as workers at its Escondida Mine in Chile went on strike. And Freeport-McMoran said its third quarter output dropped 11%.
On the bearish side, according to Dailyfutures.com, "On October 17, 2006, the International Copper Study Group (ICSG) said that its preliminary data showed that world copper production exceeded consumption by 10,000 tons in the first seven months of 2006."
But Dailyfutures also adds: "So far in 2006, world mine production is up 1% while world usage is up 2.9%. In 2005, world consumption exceeded production for the third consecutive year, by 102,000 tons. So far in 2006, Japan, India, and the European Union (15) are showing increased demand."
And Ken Keebner of CGM Funds says the earliest we can see incremental new copper production is 2009 or 2010.
According to Reuters, zinc stockpiles monitored by the London Metal Exchange dropped 2.7 percent to 110,800 metric tons. That's the lowest since April of 1991. The 15-year low sent zinc prices to a record high.
Global use will increase 3.9 percent to 11.1 million tons this year and 2.6 percent to 11.4 million tons in 2007, the International Lead and Zinc Study Group said on Oct. 9. China is the world's largest zinc user. The worldwide supply shortfall is forecast at 420,000 tons this year by Societe Generale.
Thursday, October 26, 2006
What's Driving Oil and Gas Prices?
Crude oil jumped over $2 per barrel in
Distillate stocks – including heating oil – dropped by 1.4 million barrels, steeper than the 1.1 million barrel drop that was forecast.
There’s also the demand side. Consumers have short memories, and with prices at the pump going down, sales of large SUVs and trucks are shifting into higher gear. Sales of fuel-hogs like the Ford F-150, Jeep Grand Cherokee, and Chevrolet Suburban are rising, not falling.
Heck, through the end of August, HUMMER global sales grew by 62.6%
These are all good reasons. But let’s talk about the reasons normally relegated to tinfoil hat territory.
- - Bush backed off tough talk against
. This lowered the geopolitical risk premium in oil. Iran
- - Big Oil imported tankers of gasoline from
Europefor fall arrival. On July 23, daily imports peaked at a record 11.324 million barrels. During the previous summer, imports averaged around 9.5 million barrels a day. Why would they do that? Maybe because big oil receives more than $5 billion in tax breaks and other credits. Maybe they don’t want windfall taxes. Maybe they don’t want to have to testify before Congress under oath about their secret meetings with Vice President Cheney, rather than lying bald-faced to legislators.
- - Purchases for the Strategic Petroleum Reserve were postponed until after the election. This is weird, but true. The government released 18 million barrels from the SPR to deal with the aftermath of Katrina. It has dragged its feet on refilling the SPR. I guess the risk of terror attacks on our energy infrastructure must be very low, eh?
These are all obvious ways in which the price of oil could be manipulated lower. Why would anyone bother to manipulate the price of oil lower? According to a recent study, there's a 78% correlation between the direction of gas prices and approval for the GOP.
Maybe this is why 42% of Americans think gas prices have been rigged to influence the election.
And on the flip side, if oil prices can be manipulated lower, that would also mean oil prices can be manipulated higher.
One piece of tinfoil theory I don’t agree with: Some people point to the fact that Goldman Sachs – which provided the new Treasury Secretary --slashed the weighting of gas in its commodities index from 8.45% to 2.30% in July. The theory goes that investors and hedge funds tracking the GSCI dumped long positions in gasoline, sending it lower. But as Econbrowser points out, “between July 12 (when Winter says Goldman Sachs announced the change) and August 7, gasoline futures prices did not fall, but instead rose by 3%.”
And to be fair, Econbrowser does not believe oil and gas prices are being manipulated at all. But I think Econbrowser falls into the all-or-nothing trap. To quote again from this excellent site, “To salvage the theory, you'd have to take the view that both oil and gasoline prices have nothing to do with fundamentals, but instead are entirely determined by the market psychology of speculators.”
That’s not my view at all. My view is that there are strong fundamental drivers in the big trends of oil and oil products, but psychological factors can have a lot to do with short-term trends. I don’t think that’s tinfoil hat territory at all.
Now, maybe it’s all just a big coincidence that imports zoomed at the same time that President Bush backed off on his “let’s bomb Iran” talk, and there were very good reasons not to refill the SPR. We’re still left with the fundamental fact that lower gasoline prices are lighting a fire under the sale of big SUVs and pickup trucks. And that is a very bullish trend indeed.
Is it time to add select oil stocks? They’ve certainly been beaten up enough. I bet you could find some bargains. Just do your due diligence.
After all, which way do you think oil and gas prices will go after the November election?
Wednesday, October 25, 2006
Cameco Pros and Cons
Some people on the Yahoo Message Boards hate my take on Cameco SEE LINK. (This second one made me laugh, but probably for the wrong reasons)For the record, I know
That doesn’t mean the resource is going away. But it will take some time to get
So what would I buy? The stocks in my “Golden Age of Uranium” report. Anyone who got that report when it first came out knows what I’m talking about … The whole portfolio has gained over 17% and some individual issues are up more. Not too shabby. All open gains are pre-commission, your own gains will vary depending on your entry prices, and gains aren’t profits until you bank ‘em. Got it?
And if I’m just half-right about where uranium is going, you ain’t seen nothin’ yet.
So here’s the deal. People call me up or ask me my opinion on natural resources. It’s debatable as to whether my opinion is worth a plug nickel. And you can have your own opinion on that.
But my opinion, for what it is worth, is that that there are some great uranium stocks that will outperform Cameco over the next 12 months. Therefore, I would put my money to work in those companies, not Cameco.
That doesn’t mean you should sell Cameco if you own it. This MIGHT be the bottom. It might not. That uncertainty is also one of the reasons why I don’t want to buy Cameco right now. Whatever you do, do your research, don’t buy or sell on impulse, and do your own thinking. It’s your money, and you are in charge of your own destiny.
Also, I expect a pullback in the second-tier uranium stocks that are soaring right now. I’ll use that as a buying opportunity for Red-Hot Canadian Small-Caps and Red-Hot Asian Tigers.
Confusion Over Copper
Most of today's LME inventory gain was recorded in Singapore, where supplies rose by 7,025 tons. Singapore, Asia's trading hub, is the leading point of export to China, the world's largest user of copper, and southeast Asia.But meanwhile ...
supplies in LME warehouses were equal to less than three days of global demand.... and ...
BHP Billiton Ltd., the world's largest mining company, said today output dropped 19 percent to 249,900 tons in the quarter ended Sept. 30 after workers at the Escondida mine in Chile stopped work for four weeks in August and September. Scheduled maintenance at Olympic Dam in Australia also cut output.
Ah, don't worry about BHP, they'll be fine. The point is, if stockpiles are surging even as production is falling, we are looking at bearish times ahead for copper.
But then, there's that big word, "IF."
You know, don't you, that the Chinese are master manipulators of the commodity markets.
We've seen them do it with oil. They tried to do it with iron (and failed). They've tried it with other commodities from time to time.
See, the Chinese government is an intimate partner with many big Chinese companies. It's in their interest to get lower prices for raw materials. I remember when they were manipulating the price of oil, they held up on purchases of oil to make it look like there was a surplus. Then they locked in some tanker contracts and bought a bunch of oil.
So, when copper stockpiles suddenly jump in Singapore -- one of the gateways to China -- I'm not concerned as I would be if they jumped in London.
And then there's the action in copper mining companies, which are looking very bullish. Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers know what I'm talking about. The copper stocks in your portfolio are strong and looking stronger.
Meanwhile, looking at a chart of copper, we see it constricting in a triangle pattern. I'd be inclined to call it a symmetrical triangle, which is usually a continuation pattern. That is, it would be a continuation of the tremendous run-up last year. Of course, this is a chart pattern, not a crystal ball. A lot of things could happen that will affect the eventual breakout.
TheStreet.com Publishes My Story on Uranium
Anyway, here's the story. It contains picks, etc., that you might find interesting.
Segue to Silver
I know it looks like this blog has turned into a seething hotbed of full-frontal uranium, but I am watching other metals. And one that really has my eye right now is silver.
I strongly believe silver is headed for a breakout, and it could be a big one. Now, just because I was right about uranium does not mean I’m right about silver. But give it a read anyway, and I think you’ll find it interesting.
If you’ve been reading my blog for any length of time, you know my Money and Markets columns are the end product of my constant battle with editors. Par for the course, this column was originally much longer, and I think more interesting, in that I talked about the history of the Aztecs, gave more details on why the Conquistadores were in the
Of course, as one of my editors points out: Many people just want me to get to the part with the money.
So, I think I’ll post excerpts of my original piece that ended up on the editing room floor. You'll find it below...
Part I: Nobody Expects the Spanish Inquisition!
What’s more, mines that the Spanish discovered and worked in the
See, for 800 years, the Spanish had battled the Muslims. This holy war -- the Reconquista, or crusade to reconquer
The Spanish tried substituting other enemies for the Muslims. 1492 was also the year Torquemada, master of the Inquisition, engineered the expulsion of the Jews from
There were lots of pagans in
Part II: A Mysterious, Gold-Rich Land
The Spanish explorers called themselves Conquistadores and styled themselves after the Reconquista. They hoped to achieve the same goals of God and glory … with gold thrown in.
The first islands the Spanish discovered and conquered -- Hispanola, Puerto Rico and
The Conquistador who led the expedition to
Sure enough, in
Part III: The Aztecs: Sun, Blood and Sacrifice
The rise of the Aztec civilization was nothing short of meteoric. They absorbed the skills and accomplishments of their conquered subjects, and built on them. We might thank our lucky stars that we discovered them; another few hundred years and THEY might have discovered US.
The Aztecs terrorized everyone into yielding to their rule with tortures that could make Torquemada wince. They practiced human sacrifice constantly – their pitiless god, Huitzilopochtli, was the god of war and the sun, and he lived on a diet of human blood, usually slurped from still-beating human hearts torn from victims’ bodies.
The Aztecs also had a lot of gold, though their streets were not – much to Cortez’ disappointment – paved with the yellow metal. The Aztecs didn’t value gold except as a metal to make shiny things. They called it the “excrement of the gods” (I’m not making this up!) and traded it for the feathers and stones they prized more highly for their elaborate costumes.
Part IV: The Spanish Get Gold Fever
It sounds like a line out of Monty Python, but the Aztecs were happy to oblige. When the Conquistadores got to the Aztec capital,
And there was more gold to come! The Aztecs gave the new "gods" ensigns of gold and other gifts.
According to a contemporary Aztec account: “When they were given these presents, the Spaniards burst into smiles; their eyes shone with pleasure; they were delighted by them. They picked up the gold and fingered it like monkeys; they seemed to be transported by joy, as if their hearts were illumined and made new.
“The truth is that they longed and lusted for gold. Their bodies swelled with greed, and their hunger was ravenous; they hungered like pigs for that gold. They snatched at the golden ensigns, waved them from side to side and examined every inch of them.”
Remember, the Aztecs put no real value on gold; to them, the Spanish were acting loco.
And the Spanish rewarded their generous hosts by embarking on a campaign of gruesome slaughter that eclipsed the bloodthirsty sun god Huitzilopochtli. Eventually, out of a total population of perhaps 25 million in
It helped that the Conquistadores had a secret WMD – smallpox. It cut through the Aztecs like a scythe through wheat. The only germ warfare the Aztecs had to offer in return was syphilis; Cortez caught it. But that didn’t quench his desire for gold.
If it makes you feel any better, Cortez fell out of favor at court and died a lonely, bitter, broken man.
Part V: An Empire Built on Silver
The gold energized Spanish colonial efforts. Soon, they were pursuing their brutal quest for gold, glory and God by massacring the Mayas, the Incas, you name it.
But as important as gold is to the history of Cortez conquered the Aztecs in 1521. Silver was discovered at
Cortez conquered the Aztecs in 1521. Silver was discovered at
Soon, more silver mines were discovered in the north and west … thick, rich veins of silver that could sometimes be pried out of the rock like boards from a barn.
- How much silver? The yield from
's mines doubled the world supply of silver in less than two centuries. Mexico
- By the 1700s,
’s silver mines were producing 9 million troy ounces of silver each year. Mexico
- If you include production from
Boliviaand , from 1530 to 1800, approximately $6 billion to $8 billion worth of gold and silver were mined in the Spanish American colonies. During this time, the ratio of silver to gold shipped to Peru was about 10 to 1. Spain
The English, French and Dutch, seething with envy, captured Spanish islands and set up their own bases, which also served as ports for every pirate and buccaneer that had his eye on Spain’s treasure fleets. And everywhere silver was discovered in
You probably know that the Apaches and Comanches troubled settlers of our Old West. Well it was much, much worse south of the border -- they terrorized
So why didn’t people just pack up and leave? Because of the silver. It made that ground worth fighting for.
As bad as things were in Mexico, it was trouble in Europe that was Spain’s undoing … its finances were ruined paying for the 30 Years’ War – a good lesson for America and its expensive ($2 billion per week) fiasco in Iraq – and when New World silver production slipped, Spain began suffering perpetual economic depression, its economy ravaged by bouts of inflation and deflation. It could no longer protect its colonies, and
Part VI: Overlooked Silver Just Waiting to Be Scooped Up
Plus many of
But now the price of silver is rising again. And the Mexican government and people alike are eager to work with companies that will reopen and recapitalize the old mines.
And 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 above-ground 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 environmentally conscious European market.
- The silver ETF, the SLV, is a roaring success. Already has 104,208,000 ounces of silver. It recently filed papers to issue another 16,822,727 shares in its silver trust, representing, at 10 ounces per share, another 168 million ounces of silver. That will effectively increase the size of the trust by 150%. This is a huge new demand on the silver market – HUGE!
The supply of silver from mines has not been able to meet demand for years. There are new silver mines coming online, but they’ll probably be playing catch-up for quite some time to come … potentially for years.
Part VII: Three Undervalued Mining Stocks
For real out performance, I look to the small-cap mining stocks themselves. Here are three things I look for in miners:
- 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 to 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.
Now, let’s talk about the kind of bargains you can find South of the Border. Here are three Mexican silver mines that I really like ...
- A company that is sitting on more than 14 million ounces of silver and should increase its resources to over 35 million ounces. Right now, you can buy its resources for about 37 cents on the dollar. What’s more, this mine will be producing over three million ounces of silver next year!
- Another miner with up to 80 million ounces and the potential for more. You can buy this company’s assets for 12 cents on the dollar, and it’s a potential moonshot even if just half its potential resources pan out. Plus, this company expects to have annualized production of four million ounces from two mines starting next year.
- A third miner that has measured and indicated resources well over 100 million ounces. You can buy its resources for just 49 cents on the dollar! Wow!
By the way, these aren’t just silver mines; they also produce other metals like gold and zinc.
Here’s the most interesting part. While the Conquistadors had to travel to
I have no doubt that silver will be breaking out to the upside soon – and these stocks could lead the way.
In two weeks, I’m flying down to
Tuesday, October 24, 2006
HoweStreet Interview: Go, Go, Uranium!
Brent Clanton of BizRadio Interviews Me on Uranium
His podcasts aren't easy for me to download separately (we have stringent security settings here at the office), so the easiest thing to do is point your browser to Brent's podcast page and look for my name if you want to listen in: http://www.bizradio.com/morningpodcasting.asp
Cameco's Implosion and the Next-Wave Uranium Stocks
Yesterday was one of the wildest days I've ever seen in uranium stocks.
FIRST, we had the news from Cameco that there was more flooding -- catastrophic flooding -- at its Cigar Lake Mine. The company can't control it and now has to let the mine shaft fill up. This delays the mine -- which was supposed to start up in 2008 -- until at least 2009. Perhaps longer.
That will take 7 million pounds a year of projected uranium production off the market starting in 2008. And it gets worse. At full capacity, Cigar Lake was expected to produce 18 million pounds of uranium a year.
"Losing Cigar Lake in the uranium world is like the oil market having to deal with the loss of Saudi Arabia," Kevin Brambrough of Sprott Asset Management told Bloomberg.
I have to agree. Anytime you lose a mine that's equal to 10% of global demand, that's going to shake the market.
Cameco had force majeure clauses in most of its contracts so it doesn't have to deliver, but that didn't stop the stock from cratering 10%. But all those utilities that planned to buy uranium from Cigar Lake now have to scramble to find new supplies.
So what do you think the reaction was in other near-term producers? If you think they took off to the moon, you're right.
And here's good news: Those are just the kind of stocks I recommended in my recent uranium report, "The Golden Age of Uranium."
One of my picks jumped 14% in one day. Another jumped 16%. They all jumped -- all of 'em! If you bought that report (or subscribe to Red-Hot Canadian Small-Caps or Red-Hot Asian Tigers and got it for free) and are already in those stocks, yesterday was Christmas come early. Give yourself a big pat on the back.
But you know what? You ain't seen nothin' yet. In fact, I'd expect many of those next-wave uranium stocks to pull back for a bit. That's going to be a golden opportunity to get in, because uranium prices are going much higher, and my recommended stocks -- which are leveraged to the price of uranium and are all near-term producers -- are going ride the crest of the coming surge.
If you haven't read my uranium report, CLICK HERE to find out more about it. Or you can read a Money and Markets where I wrote more about my nuclear outlook: "America's Atomic Future."
The future's so bright, we gotta wear shades. Go, uranium!
Monday, October 23, 2006
Copper Continues to Heat Up
As a result, inventories of copper at the London Metals Exchange have fallen below three days' worth of supply.
Last month, Goldman Sachs projected that copper consumption would outpace supply by 101,000 tons this year.
And if you think that's tight, you should see zinc. It's in a huge supply deficit, one that won't end until at least the 4th quarter of 2007, according to BNP Paribas analyst David Thurtell.
Nickel and tin are also super-tight, and aluminum and lead are trending higher.
Close But No Cigar Lake
Oct. 23 (Bloomberg) -- Cameco Corp., the world's largest uranium supplier, said the construction of a mine at Cigar Lake, Saskatchewan, will be delayed by ``at least a year'' after water flooded part of its underground development yesterday.
The mine was originally scheduled to come online in 2008 ... now it gets pushed back to 2009. Plus, the capital costs of the mine are expected to be "significantly higher." Ouch!
Well, I believe the price of uranium is going to soar during the next year, to well over $70 per pound. So it's not like Cameco will be hurting too much.
Friday, October 20, 2006
Two Small Steps Closer to Star Trek...
Sadly, with the exception of micro-mini skirts, most of that technology is just pie-in-the-sky. But this week, two small (very small) steps were taken forward ... to boldly go where no man has gone before.
The Cloaking Device: Scientists have been able to "cloak" (make invisible) a copper cylinder, a la a "Romulan Cloaking Device" or Harry Potter's cloak, if you prefer that fantasy. The scientists are able to create an artificial mirage so that when you look at the cylinder, it's not there ... it's invisible.
Cloaking used special materials to deflect radar or light or other waves around an object, like water flowing around a smooth rock in a stream. It differs from stealth technology, which does not make an aircraft invisible but reduces the cross-section available to radar, making it hard to track.
I find this part interesting: "We did this work very quickly ... and that led to a cloak that is not optimal," said co-author David R. Smith, also of Duke. "We know how to make a much better one."
In this experiment the scientists used microwaves to try and detect the cylinder. Like light and radar waves, microwaves bounce off objects making them visible and creating a shadow, though it has to be detected with instruments.If you can hide something from microwaves, you can hide it from radar — and the potential of that will fascinate the military.
Teleportation: Okay, it's not really teleportation. But physicists in Denmark have teleported information from light to matter, bringing quantum communication and computing closer to reality.
As the story says: "The experiment involved for the first time a macroscopic atomic object containing thousands of billions of atoms. They also teleported the information a distance of half a meter but believe it can be extended further."
Note, this quantum communication is a long way from transporting the 64,000,000,000,000,000,000,000,000,000 particles in the human body.
And it's not Star-Trek type teleportation anyway. It's more of a cheat. See, normally information is tranmitted from matter to light wave (energy) to light wave to matter. This process just skips one of the steps, going directly from light waves to matter.
It's really a boon for cyptographers -- people who encode information. Any attempt to measure a quantum state destroys it. Therefore, no one will be able to copy your information without ruining it.
It may also solve the "speed limit" of electrons. See, one of the problems that physicists wrestle with is the physical "speed limit" of electrons through a conductor or semi-conductor. Electrons are very fast. Near light speed, but not quite. And passing from one semi-conductor junction to another is an astronomical distance, from a quantum standpoint, for an electron. Nothing is faster than light.
This quantum method shortens distances and brings the transfer of pulses (if you can call speed, distances and pulses that at a quantum level) up to light speed and virtually no quantum distance at all. I think.
On Star Trek, they turn matter (human bodies) into energy, which somehow contains the information of an entire human body, and transmit it, then rebuild a new body on the other end. There's great episode of the New Outer Limits about this, by the way (is that geeky enough for ya?). What this Danish experiment proves is that we can teleport information (which is what the matter would be turned into) from light to matter.
Putting it another way, they have used light to make atoms in one location enter the same quantum state as atoms in another location. These two packages of atoms are then identical. They can keep moving apart, and they will stay identical. And what you do to one will happen to the other. Freaky, eh?
What does it all mean? Somewhere on the outskirts of Copenhagen there now lives a half-man/half fly.
Also, this may be the last link in the chain that SkyNet needs to take over the world (the previous link was Arnold Schwarzenegger being elected the Governator of California). The Terminator Revolution will be televised.
Just kidding there, folks.
The Absolute Horror of Heavy Metal
According to Italian TV, the Israelis are using an experimental weapon in the Gaza strip. It appears to be similar to an American weapon called DIME (“Dense Inert Metal Explosive”).
Palestinian doctors began seeing injuries of a type they had never seen before: The doctors reported an exceptionally large number of completely burned bodies and injuries unaccompanied by metal shrapnel. Some of the doctors also claimed that they removed particles from wounds that could not be seen in an x-ray machine.
The particles are believed to be highly carcinogenic; one of the things that the doctors have been unable to explain is the number of injured patients who appear to get better, then suddenly die after a few days. They have seen numerous cases where patients' internal organs appear coated with a microscopic dust.
For a picture of what kind of damage these weapons do, click on the following link. WARNING: NOT FOR THE SQUEAMISH. Here is the LINK.
And to be sure, we don’t know what particular weapons caused these particular casualties. War is a monstrous business; the outcomes are generally horrific, whether you’re using M-1s or megatons.
So what is a DIME weapon? They consist of carbon-fiber casing filled with explosives and a powder of a heavy metal tungsten alloy – cobalt, nickel or iron. Whatever the tungsten alloy, it’s a metal capable of conducting very high temperatures. In the explosion, tungsten particles spread over a radius of four meters and cause death.
The heavy metals used in DIME weapons are bad enough; now there are rumors that the new DIME weapons being tested in Gaza actually contain uranium. That sounds whacked to me – you wouldn’t want to poison your own city. But then, why the hell would you want to use a weapon like this?
Anyway, wars breed rumors. For their part, the Israelis deny using or even possessing such weapons.
Here’s why I bring this up: I don’t think there’s much as individuals we can do about the weapons that countries use on each other or on their own people. I don’t think you or I can solve the Israeli-Arab problem. If I lived there, I’d do like my next-door neighbors did (they came from Israel) and move far, far away. Florida would be a good choice. I need more Israeli neighbors. They’re very nice and excellent cooks. I have other friends who are Persian (that’s Iranian to most people, but my Persian friend is not a fan of the current regime in Tehran; he insists on being called Persian). We haven’t invited both families over at the same time; maybe we should.
To me, war is one of those bad things I want to avoid if possible. I want to shield my family from it, and protect my portfolio. And that’s where I’m going with this. I think Defense contractors are going to make a bloody fortune (there’s no better phrase for it) going forward. I outlined the reasons why in this Money and Markets column: http://tinyurl.com/ymdxry.
If you want one simple reason, we are now spending more on defense than we did during the Vietnam War (yes, I even adjusted for inflation), and spending is likely to increase if the Democrats take over Congress.
My friend John Burke – a crackerjack market analyst and former Marine Intelligence Specialist – has written a report outlining five companies he thinks will make the most of the coming boom. They should protect your portfolio – the best defense for any portfolio is making a lot of money.
If you haven’t already, you might be wise to check out his report by clicking on the url above to my Money and Markets column. Or you can go read John’s own take on his report here: http://tinyurl.com/ydgdrq
Thursday, October 19, 2006
Scratch James Bond, We Need Austin Powers
You've probably heard the news that Saudi Arabia is finally onboard with OPEC production cuts. They're not only going to cut now, they're also considering cutting again in December. And that's bullish for oil prices.
But don't ignore the big oil news on the other side of the world. Venezuelan President Hugo Chavez -- the Goldmember to Kim Jong Il's Doctor Evil -- is planning to take control of oil production joint ventures run by Exxon Mobil Corp. and ConocoPhillips.
As Bloomberg explains: Chavez said his government would seize four companies owned in part by Exxon, ConocoPhillips, Chevron Corp., France's Total SA and Norway's Statoil ASA. The ventures, set up before Chavez came to power in 1999, pump 22% of the nation's oil.
Well, I don't expect you to weep tears for Exxon or Conoco, two companies most likely to choke on their obscene profits. But like a row of dominoes, this has other implications.
- It could lead to a default on $1.6 billion in bonds.
- It will likely negatively affect the production of the companies that are taken over.
- It will make other oil companies leery of investing in Latin America.
- All this in turn, will put more pressure on the global bond market and oil prices.
The Great Copper Dragon of China
Copper is surging again. Why? Because China's economy continues to grow, and China's economy is devouring copper.
Here are some factoids...
- China is already the world's largest user of copper (it is also the largest consumer of steel and other metals including aluminum and zinc
- Last year, China's copper consumption jumped 9%. This year is anybody's guess because China keeps predicting its economy will slow down below 9% ... and it refuses to slow down!
- Gross domestic product rose 10.4% in the third quarter, after an 11.3% gain in the second quarter. Where's that slowdown that Morgan Stanley keeps predicting?
- Industrial production in China jumped 16.1% in September from a year earlier, after a 15.7% gain in August.
- Stockpiles of copper on the London Metals Exchange hit a 2-month low yesterday. There is now just enough copper on hand to equal three days of domestic production.
- Last month, Goldman Sachs Group forecast a global deficit of 101,000 tons of copper this year.
All in all, it sounds pretty bullish for copper to me. Our copper positions in Red-Hot Canadian Small-Caps are doing great (the ones in Red-Hot Asian Tigers aren't too shabby either) and copper is high on my shopping list.
Wednesday, October 18, 2006
Kim Jong Il Is My Broker, and Kim Jong Says ...
We're seeing what can only be described as "The Kim Jong Il Effect" on the markets. Both gold and the dollar are up at the same time, as money seeks safety.
Wouldn't it be cool if Kim Jong Il looked more like this...
I mean, he's acting like Doctor Evil. Why not look like Doctor Evil. Say what you want about Doctor Evil, but at least he had style.
Kim Jong Ill has no style. Instead, he looks like he flunked out of Antwon's Beauty and Styling School.
And if Kim Jong Il can't look like Doctor Evil -- maybe he's too attached to his hair? -- he could at least look like this (see photo). That's the original Doctor No from James Bond, also known as actor Joseph Wiseman. He's still around, which is pretty good for an 89-year-old guy. But he's from Montreal, so maybe it's all that clean Canadian living.
Of his famous role as Doctor No, Wiseman said: "I had no idea what I was letting myself in for. I had no idea it would achieve the success it did. I know nothing about mysteries. I don't take to them. As far as I was concerned, I thought it might be just another Grade-B Charlie Chan mystery"
So here's my question: Who plays Kim Jong Il in the movie? My favorite Kim Jong Il impersonator is Bobby Lee of Mad TV. Bobby is one of the bright stars of that show, which doing the kind of cutting edge comedy that Saturday Night Live used to be famous for before it petrified.
You can watch a video of Bobby Lee's "Kim Jong Il Show" at YouTube here: http://www.youtube.com/watch?v=k_-Ik98poTg
Not that I would ever recommend you waste time at work doing that (LOL!).
Ah, but what do I know about Hollywood casting. They'll probably give the role to Al Pacino.
Anyway, back to gold and the dollar. For a long time, gold was following oil's ups and downs (becuase higher oil prices are inflationary, and gold is a natural hedge against inflation). Now gold is following the dollar higher as Kim Jong Il threatens to set off a "series" of nukes. He has enough nukes to set off a "series"? What about those intelligence reports that he only had 2 or 3 nukes? How could our intelligence so overestimate Saddam's WMD and so underestimate Kim Jong's nuclear capabilities?
And where's James Bond when you need him?
Good News From the Land of Oz
Ah, who knows, maybe the sugar bears CAN talk down the market. The market is mostly psychology anyway. But here's my nickel's worth of psychological advice: Always use protective stops on futures. The alternative is being skinned alive.
The Sweet and Sour on Sugar
Sugar has bounced handily from recent lows, as I'll show you in a minute. I think one of the forces driving it is that Brazil will likely be converting a LOT more of its sugar into ethanol. As the story says ...
Brazil May Not Meet Domestic Ethanol Demand
Brazil, the world's biggest ethanol producer, may struggle to make enough of the fuel in the crop season ending March to meet domestic use because higher prices elsewhere are encouraging exports, C. Czarnikow Sugar Ltd. said.
Brazil, also the largest producer of sugar used to make ethanol, is expected to export a record 3 billion liters this crop year, from 2.4 billion liters a year earlier, the world's biggest sugar broker said in a report today. Exports to the U.S. will rise to 1.2 billion liters, 130 million liters more than last season, buoyed by tougher environmental legislation.
"As a consequence there is a real risk that Brazilian ethanol production this season could fall short of demand,'' London-based Czarnikow said.
That may mean more of Brazil's sugar crop will be diverted into ethanol production, reducing global supplies of the sweetener, Czarnikow said. Refined sugar prices rose to a record in London in May, partly on speculation Brazil would use more of its crop to make the alternative fuel.
Okay, so that's one bullish force. Brazil operates more than 300 sugar processing plants and most of them can produce ethanol, so it can ramp up ethanol production pretty quickly. What's more, it's building another HUNDRED sugar-ethanol processing plants.
But there have also been a series of dire predictions that global sugar production is going to overwhelm demand. For example...
Sugar Surplus Forecast at 3.3 Million Tons by Cargill
Global sugar supply will exceed demand by 3.3 million tons in the year to September 2007 as Asian output recovers, said Olivier Pairault, chief economist at Cargill Inc., the largest shipper of the raw form of the sweetener from
The outlook for "sugar is not bullish,'' Pairault said at the Sugaronline World Sugar & Ethanol Conference in
today. "There are significant risks over the next 12 months, especially in Geneva Braziland A sia.''
Now when I read that, my first thought was: "How deep in the hole on sugar short positions is Cargill?" Because that looks like a classic example of someone trying to talk down a market after it takes off, like sugar has recently. I'd show you but Blogger is misbhaving. I'll post a chart later.
And now we have this story from Ford that "E85, a fuel that is 85 percent ethanol, needs to be 30 percent lower than gasoline or petrol at the pump than mainstream." That's according to Ford's "director of sustainability and corporate citizenship," Andy Taylor. You know, part of Ford's problem may be that it devotes a whole lot of money to directors with fancypants titles that it could spend on building the cars of the future. Because if Ford won't build ethanol cars, Toyota and Honda will.
Mind you, I'm not changing my view that ethanol from corn is a boondoggle. Since the government is throwing tons of money at it, you can still make a hefty profit, but it's a boondoggle nonetheless. Brazilian ethanol, on the other hand, made from sugar cane, is actually cost effective.
One more thing on sugar, also from Bloomberg: The European Union is reducing sugar exports after Brazil, the world's biggest exporter, last year won a World Trade Organization ruling preventing growers in Europe from exporting all their surplus production. European sugar production is expected to drop about 14 percent this year.
So again, it all comes back to Brazil and its sugar crop. Will it turn more sugar into ethanol? Will it sell that ethanol to the US, which will therefore fill a supply/demand gap in gasoline, potentially driving gasoline prices lower? It seems that's the way the trend is going to go. And that means the trend in sugar prices will likely be higher.
I haven't taken into account the rising sugar production in China and India, true. But those countries are becoming their own best sugar customers -- There should be increased demand for sugar in Asia as well.
Gold Buying Picks Up
I saw a story on Bloomberg this morning ..
Gold Gains in
Oct. 18 (Bloomberg) -- Gold rose in
The four gold refineries in Switzerland that process the metal into bars for manufacturers are booked through next month, a sign of growing demand from jewelers ... Gold has gained in every fourth quarter since 2001.
Manufacturing demand was evident today from
that sounds pretty bullish. So let's look at a chart of gold...
Considering the way December usually goes for gold, I'd consider that a buying opportunity.
Monday, October 16, 2006
Will Uranium Hit AT LEAST $75 by End of Next Year?
You can read all about it here: http://www.miningmx.com/energy/278303.htm
By the way, do you have my uranium report yet? I looked at the stocks I recommended in that report this morning and they're a sea of green! I strongly believe uranium will lead any rebound in commodities. Here's a Money and Markets where I wrote more about my nuclear outlook: "America's Atomic Future."
And if you haven't read my uranium report, CLICK HERE to find out more about it.
Monday Is Chart Day
Gold recently bounced higher off support, but it has two kinds of resistance to get through now…Oil is bouncing on OPEC meeting news, but let’s see if that lasts more than a couple days. The downtrend is still in control.
And then we have the US dollar. Naturally, what happens in the dollar will affect gold and silver. Jack Crooks says it’s unlikely that gold and the dollar can rally together.
Finally, copper, which is a great measure of global industrial activity. It's headed for a breakout, but will that breakout be up or down? We'll see.
It's an excellent day to be trading. Have a great day!