Friday, March 30, 2007
Photos from the Dominican Republic
Thursday, March 29, 2007
The Enemy of My Enemy Is My Friend ... Oh, CRAP!
Maybe not so much anymore. According to the Washington Post ...
President Bush enjoys hosting formal state dinners about as much as having a root canal. Or proposing tax increases. So his decision to schedule a mid-April White House gala for Saudi Arabia's King Abdullah signified the president's high regard for an Arab monarch who is also a Bush family friend.
Now the White House ponders what Abdullah's sudden and sparsely explained cancellation of the dinner signifies. Nothing good — especially for Condoleezza Rice's most important Middle East initiatives — is the clearest available answer.
So then, who is Abdullah hanging around with?
Abdullah gave a warm welcome to Iranian President Mahmoud Ahmadinejad in Riyadh in early March, not long after the Saudis pressured Palestinian President Mahmoud Abbas into accepting a political accord that entrenches Hamas in an unwieldy coalition government with Abbas's Fatah movement.
Now do you see why I added energy stocks to Red-Hot Canadian Small-Caps and Red-Hot Resources yesterday? I'm not so much concerned about the Iran crisis-du-jour -- it could become something bigger, or it could be resolved overnight. It's the longer-term trends that have me concerned. I think we should play those longer-term trends.
Two other fundamental drivers to consider (ripped from the pages of yesterday's Red-Hot Canadian Small-Caps) ...
* Rising demand. According to an Energy Department report, gasoline demand keeps climbing, up about 2% from a year ago. Meanwhile, oil stockpiles dropped in the most recent report, and gasoline supplies fell for a seventh straight week. You need oil to make gasoline, and this is pressuring oil prices higher. Gasoline demand in the U.S. peaks between Memorial Day in late May and Labor Day in early September. We can expect upward pressure on oil prices during that time frame.
* Is a bad hurricane season brewing? The North Atlantic hurricane season runs from June 1 to Nov. 30. But we’re seeing signs that the La Nina weather system -- which breeds more hurricanes in the Atlantic -- is forming. And Atlantic hurricanes can stomp their way into the Gulf of Mexico, which is packed with oil and natural gas platforms.
Indeed, hurricane activity may be as much as 75% above the historical average this year as warm water feeds storms, forecaster Tropical Storm Risk said on March 21.
An estimated 17 tropical storms may form, of which four will become major hurricanes with winds topping 111 miles per hour (179 kilometers per hour), the forecaster said.
Now, it’s impossible to accurately predict how many hurricanes we’ll have in a season. Last year, only one tropical storm came ashore. But in 2005 -- a La Nina year -- there were a record 27 storms, including Hurricane Katrina, which devastated New Orleans, much of the US Gulf Coast, AND “energy alley” in the Gulf of Mexico.
My latest inteview on Market Matters Radio
Wednesday, March 28, 2007
I Want One!
Speaking of Uranium ...
New York Times Catches a Ride on the Uranium Clue Train
Prices for processed uranium ore, also called U308, or yellowcake, are rising rapidly. Yellowcake is trading at $90 a pound, nearing the record high, adjusted for inflation, of about $120 in the mid-1970s. The price has more than doubled in the last six months alone. As recently as late 2002, it was below $10. [XX Sean's note -- the price of uranium is now trading at $95 and was $91 last week]
A string of natural disasters, notably flooding of large mines in Canada and Australia, has set off the most recent spike. Hedge funds and other institutional investors, who began buying up uranium in late 2004 to exploit the volatility in this relatively small market, have accelerated the price rally.
Three relatively independent factors — dwindling supplies of inventory, low overall production from the handful of uranium miners that survived the 25-year drought and rising concerns about global warming — all have coincided to drive the current uranium price higher by more than 1,000 percent since 2001.”
So far this year, 2,700 new uranium claims have been filed with the Bureau of Land Management in Colorado alone. That is nearly half the claims filed in all of last year, and a big jump from the 104 claims for 2004.
XX My take -- the conventional wisdom is by the time that a trend appears in "the paper of record," that trend is over. However, the bull market in uranium has shown a talent for breaking all the rules. So while I take shorter-term gains on uranium trades in Red-Hot Canadian Small-Caps and Red-Hot Asian Tigers from time to time, if you're holding for the longer-term trend, there should be much further to go.
I do notice that two of the stocks recommended in my first uranium report, Denison and Strathmore, are mentioned in the Times piece. People who bought those stocks on my recommendation should be doing pretty well. But the Times is slow and plodding. It hasn't caught wind -- yet -- of the six rocket stocks in my SECOND uranium report, Small Uranium Wonders.
Those stocks should do at least as well as the stocks in the original uranium report. If you don't have this report yet, you can still get in at good prices. You can find out more by CLICKING HERE.
Tuesday, March 27, 2007
The Tangled Web of Chinese Metal Supply/Demand
Well, 15% would be pretty darned good. Copper demand in China grew a whopping 9% in 2006 -- 15% supply growth would outpace demand growth.
But not so fast. Remember China Daily, as well as some other forecasting from China, says pretty much what the government wants it to say. And the Chinese government would like to talk the price of copper down.
Meanwhile, Codelco Executive President Jose Pablo Arellano, who runs the world's largest copper company, said last week that demand for the metal will continue to rise through next year because of "unimaginable'' new construction in China.
Hmm ... I can imagine a lot. Can't you? Arellano says that copper demand will remain strong for at least the next year and a half.
And here's some news from Bloomberg: China's imports of refined copper and alloys rose 12% in February over the previous month to 152,651 metric tonnes, as the country entered a peak period for copper demand, especially from the power and construction sectors.
I think the "peak" may be a little further off.
Monday, March 26, 2007
Monday Chart Action
It looks like the weekly uptrend is accelerating. Let’s look at the daily chart of gold for confirmation …
The tiff between
Monday News to Watch...
Other stories to watch …
OPEC Dictates Higher Price, Market's Relative Scarcity as Crude Oil Surges
Intel Plans to Invest $2.5 Billion in First Semiconductor Factory in China Intel Corp. said it chose China for its first new computer-chip factory in 15 years, investing $2.5 billion to be closer to customers in a country that assembles about 50 percent of the world's personal computers.
Chavez: China to become a top oil client President Hugo Chavez said China is set to rival the United States as Venezuela's top oil buyer as he announced new plans with the Asian powerhouse to jointly ship oil, build refineries and expand crude production.
Sunday, March 25, 2007
Crisis in the Middle East Continues to Heat Up
And now we have this ...
Iran, embroiled in a nuclear row with Washington, is asking more clients to pay for oil in currencies other than the dollar and 60 per cent or more of its crude income is in other units, an official said yesterday.
Maybe the Iranians were already planning to do that, but it could turn into another front in the "cold war" with Iran -- an economic front.
This news is bullish for oil and gold, but remember, it can change in a moment if (hopefully) the situation resolves peacefully.
Sunday Night at the Movies
First, there's one you can see with your wife/girlfriend, but probably not your mother ...
Film Recommendation #1: Love Actually
This 2003 film follows 8 couples and/or people who are sometimes looking for love, and sometimes on a collision course with it. Some of them are friends, and most are in the same room on one night for a school Christmas play, but that's not what this is about. This is about stories of love -- what drives, it, what it means to lose it, and what you'll do for it (hint: Anything!)
What a cast! Hugh Grant, Liam Neeson, Colin Firth, Emma Thompson, Alan Rickman, Rowan Atkinson, Laura Linney, Keira Knightley, and an incredible performance by Bill Nighy. Actually, it's incredible performances all around. The stories are compelling and one is a real tear-jerker. Emma Thompson should have been nominated for a best supporting actress role for this one.
Warning: This film contains nudity, profanity and sexual situations. It doesn't fit the mold of a generic romantic comedy, which is what I thought I was going to see when my wife roped me into seeing it. I like romantic comedies, but this one "starred" Hugh Grant, and I figured I'd seen this movie (or versions of it) at least twice already, because Hugh is one of those actors who often makes the same film over again. Not this time! While his story is probably the most predictable of the movie, other stories in "Love Actually" have brilliant twists and turns.
My favorite character is the washed-up rock-and-roll idol played by Bill Nighy. He’s obviously seen it all, done it all, ridden the rocket of success on the way up and plumbed the depths of despair on the way down. The resolution of his story is very touching indeed.
Film Recommendation #2: Feast
This 2005 film carries the tagline: "They're Hungry. You're Dinner." This is movie about people trapped in a remote desert bar by hungry creatures who are literally clawing through the walls. Now you're probably thinking: "I've seen that film, too." But this movie is smart enough to know you have. Like "Scary Movie," it plays off your knowledge of the genre's cliches.
For example, when every new character is introduced, they get a tagline including a "name" (Hero. Bozo. Toughman) a fascinating fact and a life expectancy. Jason Mewes, the vocal half of movie comedy duo Jay and Silent Bob, plays himself(!) in the movie, and his life expectancy reads: "Has already far exceeded his life expectancy".
This should tell you a few things:
- This movie has inside jokes (Mewes' own life should be a Lifetime movie, including a drug-abusing mom and his own suicidal drug use)
- The movie has a wicked sense of humor -- and it gets much, MUCH more humorous.
- This movie knows the "rules" of horror.
The people who wrote (Marcus Dunstan and Patrick Melton) and directed (John Gulager) this movie LOVE the horror genre. They know what horror movie fans like. But they're also willing to break the rules to surprise us -- and to make us laugh.
They got the chance to make the movie as part of "Project Greenlight." I saw a few episodes of that TV show, produces by Ben Affleck and Matt Damon, and the word is that Gulager was almost fired by some of the show’s other producers. But he brings some unique vision to this piece. His film angles may seem a bit distracting or too clever at times, but A) he had to hide the fact that he had no budget and B) he has a unique vision that brings it all home.
This movie is NOT for the squeamish. Blood splatters, vomit goes projectile, maggots are crawling … and THEN it gets gross! But if you have the stomach for this sort of film, this is the best horror movie I’ve seen since
Saturday, March 24, 2007
Weekend Must-See -- Bill Maher
This is off-topic, but one of my pet peeves
Friday, March 23, 2007
Friday News Roundup
This sounds pretty bullish, and right on the mark with what I talked about in my recent special report on China ...
BHP Approves $2.2 Billion Iron Ore Expansion to Meet Demand From China BHP Billiton Ltd., the world's biggest mining company, and its partners will spend $2.2 billion on a plant, railways and a port in Australia to raise iron ore sales as demand surges in China for the steelmaking ingredient.
China May Slash 2007 Corn Exports by 44 Percent to Feed Domestic Livestock China, the world's second-biggest corn producer, may slash exports of the grain by almost half as the livestock sector expands to cater for more meat-based diets and industrial use surges in line with economic growth.
And here's some silver news ...
Silver availability drops 49%, consumption goes industrial -India started 2007 with a silver stock which was lower by 49% at 1,221 tonne compared to 2,373 tonne last year.
Impressions of the Project
First of all, the tour was very well run. We were under constant threat of rain, but the organizers were able to move things around (we even flew around one storm in our helicopter). Despite the weather, I was able to see just about everything.
The geology is great. That’s what the tour was about, showing how, millions of years ago, a volcano laid down gold and a vast treasure trove of other minerals. Like some other projects (Endeavour Silver is a good example), when it was first explored by another company years ago, they missed the big enchilada. More than that, the original company missed this gold resource completely. They drilled vertically, because that’s how the gold should have been deposited in the hydrothermal mineralization. But the ground fractured and shifted, tilting the deposit and putting it at an angle.
The company I visited figured that out. They found the cap of the system, where there is no gold. They found the middle zone, where there is enough gold to mine. And they found the “boiling zone” – where the epithermal fluids boiled and deposited bonanza grade gold.
We were in a beautiful part of the Dominican Republic, so some people might say “don’t put a mine there.” You know who would disagree with that outlook? The people who live there. They are desperate for jobs. On one part of the tour, we landed in the field of a farmer who lived with his wife and six kids in a shack that was so ramshackle you could see through the spaces between the boards.
For now, the miners are being very careful not to cut down any tree they don’t have to. The trails are no wider than the drilling machines. Once they start mining, it will be different, but you can bet your bottom dollar the people who live around there will line up for the jobs it creates.
Is That Gold?
Then I got to see the miners take the drill bit apart and remove the rock core. They then have these cores tested to see how much gold is in the rock.
Here is the last video of the series -- "Is That Gold?" We were having a pretty good time.
Thursday, March 22, 2007
Stray Conversations with Dominicans
Before dinner I wandered the streets of Santo Domingo a bit. I asked people about the Pueblo Viejo mine, which I wrote about in Wednesday's Money and Markets. It's a formerly huge past-producing mine, owned by Barrick and Goldcorp, near the mine that I’m visiting today. My unscientific sample expressed disappointment that the mine hadn’t started up again yet. Placer Dome bought it years ago. It has known reserves. Why isn’t it producing gold and silver now? These people want those jobs.Why indeed. I think the simple reason is taxes. Unlike the mine I’m going to go visit, which is enjoying a 20-year tax holiday and is in an economic enterprise zone to boot, when Placer Dome signed the deal for Pueblo Viejo, they agreed to pay taxes out the ying-yang. So why did Placer Dome agree to that kind of deal? Well, you may remember that Placer Dome had a HUGE hedge book in its day. “Hedging” is when a company sells forward its gold production. I don’t have the exact figures in front of me, but Placer Dome’s hedge book was enormous.
But then they were able to pick up Pueblo Viejo for $20 million, and while it has 7.3 million ounces of gold in proven reserves, it has measured and inferred reserves (including proven) of about 20 million ounces. So, basically, Placer Dome picked up gold at a buck an ounce to balance out its hedge book. But because of all the taxes and the spiraling costs of mining, if it mined the gold, it would actually lose money on the deal.
So now we have a new owner in Barrick. I think they’re looking for a new deal. The Dominican Republic has national elections in 2008 – I wouldn’t be surprised to see a smart politician coming up with a deal for thousands of new jobs before then.
So I had dinner last night. It was delayed until 8 pm, as we waited for some guests to straggle in. The last guy arrived at 8:45 (he had been on one plane or another for 24 hours) and this was dinner in the Dominican Republic, which means it comes VE-E-E-E-ERY SLOWLY. I think they must have had two burners back in the Hilton kitchen, that’s it, because they would bring out two or three plates, then we’d wait 10 minutes, then two more plates would come out, then another 10 minutes … It took an hour for all the food to arrive! So we don’t eat until 10:30, and I am STARVING, having stared at my food for 20 minutes without eating it. And I like to be in bed by 10:30. I was falling asleep over my chicken.
All that said, it was an interesting meal. I think we’re going to see very interesting things today. I just hope the weather holds out. I have to go catch a helicopter. I’ll try to write later, but it’s going to be a long day.
I know that positions are lifting off the launch pad in both Red-Hot Canadian Small Caps and Red-Hot Asian Tigers. I’ll cover those next week for sure. It’s all good news.
Wednesday, March 21, 2007
Santo Domingo -- First Impressions
just thought I’d write a quick note to give you my first impressions of Santo Domingo.
We flew in through cloud cover (it’s raining ever-so-lightly now). The clouds broke briefly to show a mountainous country as far as the eye could see – if I didn’t know I was on an island, I wouldn’t have believed it. Then the clouds closed back in on us again and we endured a bumpy flight in to the airport. I don’t mind flying in the mountains, but not when the pilot can’t see.
I worried for naught; we landed safely. After jumping through the usual immigration hoops, I found the car and driver to take me to my hotel. At the exit from the airport, a guard stood lazy watch with a rifle. His rife was on its side so I could see that he didn’t have a clip in it. I think that qualifies as a military presence, but of the friendly, laid-back variety.
My driver spoke no English, which was a shame. He seemed to be in a race, so I didn’t try my fractured Spanglish on him, for fear of distracting him at a critical moment. Of the two semesters of Spanish I took in college, the thing that sticks with me the most is that I actually made my teacher break down and cry because I just did not master the language fast enough. It’s not that way with all languages – I was pretty good with Latin in high school. But Latin had all sorts of colorful history to talk about, whereas with Spanish, we mainly talked about going to the library, ordering omelets, and isn’t Julia wearing a pretty dress.
Anyway, since the driver and I couldn’t speak to each other, we listened to Dominican radio as we bumped across the dry countryside. The first song was something like, “I’m wearing a Speedo, I drive a Camino,” or words to that effect. The countryside is parched. They seem to be suffering the same drought we have in Florida, but they don’t have sprinklers to keep things green. So, everything is dry and dusty.
Santo Domingo dates from the Spanish colonial period, and it’s had a wild and wooly history, including military coups in decades past and a recession in the past five years. So perhaps it’s not surprising that along with brand-new construction and modern hotels and casinos, I also saw hovels, large buildings that looked like they were abandoned halfway through construction, and some structures that must have been de-bugged with grenades (take that, cucaracha!)
With a wild history, security remains a concern. I saw beautiful old iron grates on windows and balconies curved every which way – even into the shape of hearts. But there’s no disguising their function, which is to keep people out. I saw wall with barbed wire, spikes, razor wire, you name it. I get the feeling I don’t want to walk around alone at night.
Some of the colonial buildings are nice, others are half-rubble. See the photo I've included here for an example. That's what you call a "fixer-upper."
One spot I wanted to stop and visit (but couldn’t because I could not communicate with my driver) was what appeared to be an abandoned Spanish colonial villa, surrounded by drought-brown jungle encroaching on all sides. We passed piles of rubble, some of them smoking. Why would you set fire to rubble? That makes no sense.
But these are first impressions. All I’ve seen is the road from the airport. It just looks like this place could use a serious infusion of gringo money. The casinos are probably a good start.
Another good start is free enterprise zones, like the one that the mine I’m going to visit is in. Once you take off the usual taxes and so on, the cost of business can get pretty cheap, which means more jobs for everybody. And did I mention that this particular company I’m visiting has a 20-year tax holiday? Sweet!
Well, I want to get out and walk around before I meet up with some very smart people at 7 pm for an “informal dinner.” What does that mean? I have no idea. I’m wearing a shirt and pants, I hope that’s informal enough.
Tomorrow, I'm climbing aboard a helicopter and flying to the mine site. I'll keep you posted.
I Just Flew In From Miami, and Boy Are My Arms Tired ...
I’m at the Miami International Airport and the Wi-Fi connection here is next to useless, so I’ll jot these notes down as I wait for my plane.
· Bank of America is run by a bunch of greedy cretins. I used a Bank of America ATM here at the airport. Not only did they charge me $2.50 for a withdrawal (usury!) the ATM fulfilled my request for $100 by giving me a $100 bill. Seriously, who needs a $100 bill in the airport? When I’m flying to the Dominican Republic! What cretins!
· Miami Airport Starbucks personnel are very helpful. So after getting a $100 bill from the ATM, I walk to the nearest food stand, which is a Starbucks. I explain my tale of woe. The ladies there changed Ben Franklin into smaller bills for me and don’t even make me buy a coffee. They explain it happens all the time – that particular Bank of America ATM always gives $100 bills.
· I like my new Dell laptop. It’s an Inspiron E1705. I bought it because I needed a full-sized keyboard – the Sony Vaio was nice and light and small, but I kept accidentally erasing what I typed on its munchkin-sized keyboard. The only problem with the Inspiron E1705 is the weight, but it’s a 17-inch screen – you could eat your dinner off this thing.
I hate Microsoft. The operating system that came with the new computer is Windows Vista. They should have named it “Windows Edsel.” What a FREAKING lemon of an operating system. The list of complaints is too long, but I’ll name three – its security protocols stops me from running programs I need, it takes way too long to start up, and buttons I need seem to be purposely made small or are completely hidden. What a crock. My recommendation: Buy Apple stock. This is probably the last Microsoft Windows system I’m ever going to invest in.
Well, this list of likes and dislikes is probably not what you were looking for on my blog. But without internet access, I’m cut off from my regular news sources. The Airport TV is shows CNN which is showing a video of a cop slapping a skateboarder. In 20 minutes, I’ve seen that video 3 times. Sure, it’s funny, but I wonder what’s up with the mortgage market – is Washington going to do anything about the millions of people who are likely to be disposed from their homes? For that matter, is the Fed going to do anything with interest rates today? Did the price of uranium go up this week? I wonder how the Congressional investigation into the Valerie Plame leak is going. I wonder how the investigation into the firing of Federal prosecutors is going. What’s going on with the price of oil today? Is inflation heating up or cooling down? Just give me five minutes on each of these topics, CNN, and the American populace would be much better equipped to take charge of its own destiny.
Have you noticed how our major sources of news and information have become instruments of mass distraction? They don’t report news anymore. They distract you from the real news. I have to think that’s intentional.
Wait, I spoke too soon – they have a clip of President Bush now, talking about Congress potentially subpoenaing Karl Rove. He’s trying to explain, in a round-about way, that of course Karl Rove can’t testify under oath – then he might have to tell the truth! We can’t have that!
Boy, does President Bush look and talk like a desperate, cornered man. Maybe he is.
Well, that was 40 seconds (I timed it) with four different clips of Bush speaking, now they’re on to the CNN talking heads. They add nothing to the knowledge base. Bring back the cop slapping the skateboarder.
Huzzah for Hispaniola
I'm going to go check out a new gold mine that should begin operations later this year (early next year at the latest). They already know they have a good resource, but they may be scratching the surface on a much richer resource.
I'll be on the border of the Dominican Republica and Haiti. I hear that you can see the border because on the Dominican side, it's heavily forested. On the Haitian side, the desperate people living there have cut down all the trees. I've been told by people who have been to the Dominican Republic...
- Bring lots of $1 and $5 bills
- Haggle over the price of everything, or be prepared to be ripped off
- Don't drink the water. Really!
- When people approach you trying to sell you something, say "no" three times. Third time's the charm.
- There are bad parts of town in Santo Domingo. Find out where they are and don't go there ... ever.
Now the DR has quite a progressive government. In 2000, it voted out a guy because his government was tainted by corruption, and the elections were remarkably free and fair. It did the same thing in 2004, so that's pretty good by Latin American standards. The DR is also opening up to business in a big way. In fact, the company I'm going to visit has received some incredible tax incentives to mine there. That's one of the things that makes this comapany such an undiscovered gem.
I love going to check out mines. I spend far too much time behind a computer, and this is the most exciting part of my job. Time for me to go catch a plane. Stay tuned, and I'll update you (if I can find internet access).
Tuesday, March 20, 2007
Cameco Gives Update on Cigar Lake
You'll find a Reuters story HERE: http://tinyurl.com/25pzwz. Or you can read about it on the company website here: http://tinyurl.com/ywa6ul. Some highlights ... Cameco says the Cigar Lake mine would now open in 2010, two years later than originally planned but in line with analysts' recent expectations. Cigar Lake is now expected to reach full production in 2012. You'll remember that before the flood, the mine was expected to start production in early 2008 and contribute 18 million pounds of uranium a year at full capacity. That represents about 17% of world production. The company said its share of building the mine has increased to C$508 million ($431 million) from an earlier projected C$330 million, but that it will still be a low-cost producer.
The salvaging (or "remediation") of the mine is now in Phase One. To date, 13 of the 14 drill holes planned for reinforcing and sealing off the water inflow area are complete. Concrete is required in two locations underground – one near the rockfall to seal off the inflow area and another in a nearby tunnel to provide reinforcement. More than 1,000 cubic metres of concrete have been poured through drill holes into the reinforcement area. The concrete mixture is designed to harden under water and is being poured in successive layers.
Cameco now expects to complete the work necessary to seal off the water inflow in the third quarter of 2007 after spending additional time learning the best way to work with concrete in the water underground. This timeline assumes that the current pace of drilling is maintained, and the concrete solidifies as planned to provide reinforcement and prevent or reduce water inflow sufficiently to enable mine dewatering. The integrity of the plug will not be known until dewatering is under way.Cameco has applied to the regulators for approval to drill an additional four, larger-diameter, holes that would be used to dewater the mine.
|After Phase 1, the next phases are:|
|Phase 2||Dewatering the underground development, verifying the water inflow has been sufficiently sealed, and initiating the installation of surface freezing infrastructure - expected to be completed by the end of the third quarter 2007.|
|Phase 3||Completing any additional remedial work identified in phase two such as determining if additional reinforcement is required in higher risk areas - expected by the end of 2007.|
|Phase 4||Completing underground rehabilitation that includes securing areas to prevent ground fall or water inflow, re-establishing mine ventilation, installing pumping capacity and re-establishing the ore freezing program - expected to be completed by the summer of 2008.|
|Phase 5||Resuming construction activities that will lead to scheduled completion of the mine -targeted for 2010.|
Now for Risk Factors (with my highlights)
Even if everything works out as planned -- and remember, one-third of uranium projects suffer serious delays, and flooding is one of the worst delays I'd want to deal with -- I expect uranium prices to go much higher. If Cigar Lake floods again, the sky's the limit.
Monday, March 19, 2007
More Gold Bullishness
SHANGHAI (Interfax-China) -- China's gold production reached 19.856 tonnes in January this year, up 25.74% from the same period last year, according to statistics released by the China Gold Association Friday.
According to figures from the International Monetary Fund, gold holdings by central banks and other government organizations declined for the eighth straight year in 2006. Bullion holdings were 867.6 million ounces last year, down 1.2% from 2005, the lowest since 1948, according to the World Gold Council.
Of the top 15 government holders,
"Gold is well-placed to rally, particularly with the U.S. economy seeing not only trouble in the housing market but also inflation,'' said James Moore, an analyst at London-based TheBullionDesk.com.
Sunday, March 18, 2007
Interesting Gold Factoids (Sunday Edition)
Adding in the other 5% of companies gives total expenditures for commercial nonferrous metals exploration of $7.5 billion, surpassing the previous high of $5.2 billion in 1997 to set a new pinnacle of global nonferrous exploration.
2) From Reuters -- Worldwide investment demand for gold is forecast to remain at historically high levels in 2007, with investors continuing to buy large volumes of gold in bullion, coin and jewelry. CPM's 2007 Gold Yearbook report predicted investors would likely add another 39.7 million ounces to their gold holdings in 2007, after investing 43.5 million ounces in 2006. What’s more, central bank gold sales fell to 11.4 million ounces in 2006, down from 20.6 million ounces in 2005.
3) The first gold ETF in
There are several advantages of investing in GOLD ETFs:
- No hassles of safety
- No resale concerns
- Quality Assurance
- No making charges
- More tax efficient in absence of wealth tax and long-term capital gains tax
4) The second gold ETF in
Friday, March 16, 2007
I'm busy as a bee finishing up a new report (on
My Money and Markets column from Wednesday ...
Uranium tops $90 a pound! (by Sean Brodrick)
A cyclone is to blame for another flooded uranium mine.
My interview this week on Market Matters Radio ...
And I have a new landing page for my Small Uranium Wonders Report!
Have a great Friday!
Thursday, March 15, 2007
Higher, But Not High Enough
Merrill Lynch has increased its forecast for the annual average price of gold to $675/oz from $650/oz in 2008; to$650/oz from $625/oz in 2009; and to $625/oz from $600/oz in 2010. The price forecast of $675/oz in 2007 remains unchanged, but the long-term price has been upgraded 10% to $550/oz.
"Given industry average cash costs of $350/oz, depreciation andamortization expenses of $100/oz and other costs of $50/oz, we believe that a $500/oz [price] is required (on average) for companies to break even on a profit basis," said Merrill Lynch's North American Precious Metals Quarterly."Our forecast of $550/oz provides a 10% margin to this base and equates to a 15% discount to the current spot price of approximately $650/oz."
The positive drivers for gold include: "heightened geopolitical risk, the Merrill Lynch' foreign exchange team's forecast for a weaker dollar, ongoingdehedging, lower central bank sales, a rebound in fabrication demand andcontinuing growth in investment demand," said Merrill.
"The negative drivers include potentially lower jewelery demand and increased scrap supply in response to high prices. Despite these issues, we believe there will be a200-400 mt demand gap in 2007."
Merrill Lynch has also increased its 2007 silver price forecast from$13.00/oz to $13.75/oz. "Also, we are increasing our 2008, 2009 & 2010 forecasts from $12.00/oz to $13.00/oz, $11.00/oz to $12.00/oz and $10.00/oz to$11.00/oz," respectively, said the report. "We are maintaining our long-term silver price of $10.00/oz."
One hates to calls a group of respected Wall Street researchers a bunch of pussies, but my mother gives less conservative estimates than these.
Wednesday, March 14, 2007
Keeping Your Head Above the Waves
At least not with uranium stocks. The price of uranium keeps going UP, while uranium mining stocks go down. This disconnect will be corrected by the market. And unless a magical uranium leprechaun comes by to hand us a pot of 4 million pounds of uranium to make up for lost production from the flooded Ranger mine in
And I don’t think doom is nigh for gold and silver stocks, either. Look at this chart of silver ...
The uptrend is still intact. In fact, it looks like a great buying opportunity is coming up.
And then there's energy . Why is the price of oil going down? Just look at some recent stats
- The International Energy Agency has warned that global oil and fuel stockpiles are falling unusually fast this year, creating concern about supply over the next few months.
- The IEA's report indicated that stockpiles for the OECD nations are falling by 1.26 million barrels a day this year, which could ultimately amount to the largest Q1 stock reduction in over 10 years. Oil supplies generally fall by about 100,000-400,000 barrels a day during this season.
- OPEC's daily output last month averaged 30.2 million barrels, 400,000 barrels less than the level the IEA claims is needed from the cartel.
- In February, daily oil supply from OPEC members (not including new member Angola) was down a million barrels a day since September.
- A liquidity crunch. Fund managers have losses in other areas (mortgage companies, for one), and so they have to sell other stocks to cover, even if they would rather not sell those stocks.
- A repricing of risk. With mortgages melting down, traders and funds are starting to account for more risk in speculative investments. Small-cap mining stocks are speculative. Therefore, these funds are allocating them a smaller portion in their portfolios.
- The thundering herd. A stock sell-off can gather momentum like an avalanche. Nimble, short-term traders decide to sell now with an eye on buying later at cheaper prices. Traders and investors who shouldn't be in this market anyway just sell because they get scared.
Add it all up and we have great stocks on sale for 5% cheaper than they were yesterday. They'll probably get cheaper yet. But I believe this will be a short-term blip.
Why? Look at this next chart ...
Natural resource stocks are cyclical, and one of the cycles is yearly sell-off starting in late March, early April. It started early this year. Will it go as deep as the sell-off we had last year? I don't know. It might be shorter and shallower, it might be longer and deeper. I have to say the strength we're seeing in the underlying commodities (uranium, silver, oil) argues for a shorter sell-off.
Last year, I tried to get my Red-Hot subs out quickly then back in at the bottom. That didn't work so well. Looking back, we would have been better off just holding on to the best stocks.
So, don't panic. Keep your head. Let this selling wave pass. We'll see how things look on the other side.
Tuesday, March 13, 2007
Price of Uranium Jumps Again!
(Sorry, I don't have a permalink to this yet)
The uranium spot price hit $90/91 per pound today after flooding at Energy Resources' Ranger Mine operation in northern Australia shut down operations and the company declared force majeure on its sales contracts.
According to TradeTech, one of the two companies that set uranium spot price indicators, "Even before this announcement, there were indications that the market price had risen, given responses to bids to purchase at higher prices."
Ux Consulting set the uranium spot price at $91 per pound.
So have you bought Small Uranium Wonders yet? Just asking.
Monday, March 12, 2007
Halliburton Co., the world's second-largest oilfield-services provider, will move Chief Executive Officer David Lesar to a new corporate headquarters in Dubai to help the company expand in the Middle East and Asia.Why would Halliburton do this? Well, one theory goes that if corporate headquarters are in Dubai, certain files currently housed in the US would now be housed in Dubai. It will be much more difficult (nigh impossible) for the FBI or SEC to subpoena those files. What would Halliburton be trying to hide? For starters, The company is currently being investigated by the Securities and Exchange Commission [SEC] and the US justice department over allegations of improper business affairs in Iraq, Kuwait and Nigeria. And then there are those suspicious-looking cost overruns in Iraq.
Let's ask Dick Cheney, maybe he knows.
Tell That to the Ranger Mine
A LEADING Muslim cleric has blamed the devastating drought, climate change and pollution on Australians' lack of faith in Allah.
Radical sheik Mohammed Omran told followers at his Brunswick mosque that out-of-control secular scientific values had caused environmental disaster. "The fear of Allah is not there. So we have now a polluted earth, a polluted water, a wasteland."
Yeah, gotta love how the weird weather brings out the crazies. So I guess by this guy's reckoning, the Force-4 Cyclone that slammed into (and drowned) the Ranger Mine in Australia is God's version of tough-love.
Boy, I wish I could have God smite MY enemies, LOL. I think I'll go make up a list.
Just imagine Richard slapping himself in the face every time the script says *SLAP*!
On Saturday, Richard shot himself (LA Times requires free registration) in the head. It's a shame; both a personal tragedy for his friends and family and a total waste of talent. And it's not like the world could afford to lose that talent. I mean, even Dennis Miller still gets work. Now, the universe is seriously out of balance.
The only thing that mitigates the loss just a little bit is that Richard has left an excellent body of work behind. "A Great Steaming Pile of Me" was his 2005 HBO Special. You can find that and a lot of his other work (though, inexplicably, not his Cable-Ace award winning special, "Platypus Man") on Amazon.com and NetFlix. If you're not familiar with his work, do yourself a favor and check it out.
What Global Slowdown?
China's Trade Surplus Surges Three Times More Than Forecast; Exports Jump China's trade surplus was three times bigger than economists expected in February, giving more ammunition to U.S. lawmakers calling for a stronger yuan.
Japan's Economy Expands at Fastest Pace in Three Years on Capital Spending Japan's economy expanded 5.5 percent in the fourth quarter, the fastest pace in three years, as surging exports prompted companies to increase spending on factories and machinery.
India's Industrial Output Rises at Faster-Than-Expected Pace in January India's industrial production grew more than expected in January, stoked by surging consumer demand.
Copper, Nickel Rise on Speculation Stockpiles Will Fail to Meet Demand Nickel gained to a record in
Rio Tinto Says China's Demand for Metals Will Advance, Underpinning Prices Rio Tinto Group, the world's third- largest mining company, said
Speaking of Chinese demand for metals, here is a nice table of Chinese resource consumption ...
- Steel consumption rose 17.2% to 450 million metric tonnes (992,070 million pounds)
- Aluminum consumption jumped 32.1% to 8.65 million tonnes
- Cement consumption increased 14.5% to 1.2 billion tonnes.
’s official copper consumption dropped by 4%, the numbers are skewed by the fact that the State Reserves Bureau sold off 200,000 tonnes in 2006, according to a report from Beijing Antaike Information Co. This copper was used by industry but not included in the official figures. Taking that into account, China ’s copper consumption jumped 3.26%. China
Sunday, March 11, 2007
Ride the Uranium Rocket
Disaster! Calamity! Madness! That about sums up the tidal wave of events that is engulfing utilities around the world as ANOTHER uranium mine gets kayoed by forces beyond its control. The most recent victim: The Ranger Mine operated by Energy Resources of Australia (ERA). My Red-Hot Australian Tigers subscribers are quite familiar with this one – they owned its shares until last week. When I heard what happened, I told my subscribers to get out quickly, and they should have bagged about 60% gains (before commissions).
I mention it here as an example of why it’s just as important to know when to SELL a uranium mine as it is when to buy. I’ll tell you more about that, as well as three fundamental forces that should drive uranium to $100 per pound a lot quicker than anyone thought. AND I’m going to show you why we’re at one of the best buying opportunities I’ve seen in uranium stocks in a long, long time.That's the most fun I've had writing a lede to a story in a long time. But this is a gripping story -- can you believe that both the Ranger and Cigar Lake mines are flooded now? Holy smokes! If there was ever a time to be invested in uranium miners, now is the time!
Friday, March 09, 2007
My latest interview on HoweStreet.com
Just kidding about the world domination thing. Have a great weekend.
Don't Blink or You'll Miss Me
Will China Buy the World?
Bloomberg says that the fund’s creation “may prompt a flood of Chinese investments in overseas technology companies, mines and oil fields to support an economy that grew 10.7 percent last year. ‘Global investors will be getting nervous,’ said Tim Condon, chief Asia economist at ING Bank NV in Singapore. ‘They'll have to compete with the new boy on the block with billions on his hands. There aren't that many targets when you're looking at deals of that size, so expect political tussles to come as China goes shopping.’ ”
Big targets for that outbound money include resources and infrastructure. Basically, China needs developing nations to have good infrastructure so they can move raw materials to its markets. For China, the primary goal is to have access to iron, oil, copper, gas, etc., to feed its ravenous economy, which is growing at over 9% a year. China is now the largest importer of copper and it also imports large quantities of iron ore and lumber from developing countries – from Asia to Latin America to Africa.
China is making oil and gas deals with one country after another in order to maintain a stable supply of oil and avoid buying all of its oil at higher prices on the open market. These countries include Indonesia, Uzbekistan and other energy rich states in Central Asia, Ecuador and Columbia. China will also make deals with countries that the west shuns (and for good reason) like Sudan. China has also signaled its intentions to invest in exploration and development in other countries that have proven oil reserves.
By the end of 2006, Southeast Asia’s total trade with China probably hit $130 billion, which is close to the $150 billion US-ASEAN trade in 2005.
This pact is a huge success for China on many levels. "We are very happy to have China as our big brother in this region," Philipines President Gloria Macapagal Arroyo said at the opening ceremony of ASEAN summit meeting.
Thursday, March 08, 2007
India's Economy May Grow More than 9% This Year
India's $854 billion economy, the fourth-biggest in Asia, may expand at a record 9.2 percent in the year ending March 31, following a 9 percent gain last year, according to the government's statistics office, making it the world's second- fastest growing major economy after China.
Read the rest by CLICKING HERE.
Is oil demand growth set to double?
World oil demand growth, led by China and the United States, will nearly double in 2007, putting pressure on OPEC producers to boost production later this year, a Reuters poll found on Thursday... Analysts forecast average world oil demand growth this year at 1.39 million barrels per day. That is up from 800,000 bpd last year, according to the International Energy Agency.
You can read the rest by CLICKING HERE. I guess these projections are made assuming no recession this year, which is fine with me. But it's hard to see where the supply will come from with Mexico's production from Cantarell dropping off a cliff and production from Saudi Arabia tanking as well.
Labels: crude oil
Interesting Resource Headlines This Morning
Gold Climbs a Third Day as Dollar's Gain Spurs Investor Demand
``We're all trading the dollar-yen,'' said John Reade, head of metals strategy at UBS Investment Bank in London. ``It shows people are more friendly to riskier assets, and therefore people at the margin are buying a little bit of gold.''
Nickel Climbs to Record on Shortage Outlook; Tin, Copper Gain
Nickel advanced to a record for a second day, leading gains in London, on expectations dwindling stockpiles will create a second year of shortages. Copper and tin rose for a third day.
Increasing demand for industrial metals has left mining companies struggling to fill a supply gap, causing inventories to shrink. Nickel stockpiles monitored by the London Metal Exchange have plunged 90 percent in the past year and those of tin have fallen 34 percent.
Chinese Demand May Boost Iron Prices, Citigroup Says, Reversing Prediction
Iron ore contract prices may rise 7 percent next year, rather than decline as expected, due to stronger-than-expected Chinese demand, said Citigroup Inc. Chinese steelmakers, the world's largest producers, may import 4.3 percent more of the steelmaking ingredient in 2007, and 7.4 percent in 2008, said Alan Heap, an analyst at the world's largest financial firm, in a March 6 report. Heap earlier predicted ore prices could fall 20 percent next year
Bank of China starts gold option trading in Jiangsu
SHANGHAI - The Bank of China will launch gold trading options this month for individual investors in Jiangsu, to aid in the control of losses due to fluctuations in the spot gold market, state-media Xinhua news agency reported on Saturday.
Australia Commodity Sales May Rise to Record on China
Commodity exports from Australia, the world's biggest shipper of coal, iron ore and wool, may rise to a record for a fourth straight year as Chinese demand pushes up prices and volumes, and agriculture recovers from a drought. Sales will reach A$148 billion ($115 billion) in the year ending June 30, 2008, the Australian Bureau of Agricultural and Resource Economics said today. Earnings will be A$138 billion this fiscal year, the Canberra-based forecaster said.
TSX Group Announces Global Mining Index
TSX Group and Standard & Poor’s, the leading global provider of independent research, ratings and indices, today announced plans to create the S&P/TSX* Global Mining Index. Similar to the S&P/TSX Global Gold Index but with a broader scope in terms of the types of miners to be included, the Global Mining Index will track leading international mining issuers. The exposure to this index will help further recognize the value of listing on Toronto Stock Exchange. In addition to bringing additional liquidity to mining listed issuers, it is expected structured products will also be created to serve investors in the markets.
Brakes on uranium price
THE uranium price is expected to peak about $US103 per pound next year as world production starts to catch up with demand. The Australian Bureau of Agricultural and Resource Economics's March quarter Australian Commodities report, released yesterday, said despite a substantial increase in global uranium mine production this year, the spot uranium price was expected to keep appreciating, averaging more than $US94.20 ($A121.69) per pound in 2007, compared with $US85 now.
XX Sean's note -- That last one is odd. All the news is bullish yet they find the most bearish slant they can. Well, we've seen tops called in the uranium market before. And the top they're calling is 21% higher than uranium is now, LOL! Let's see how it goes, shall we?