Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Wednesday, January 31, 2007

My Latest Money and Markets Column Is Up

It's about Canada, naturally. You might find it interesting. Here are some stats...
  1. Vancouver is a hotbed of Canadian small-caps. That’s because the province of British Columbia is home to 60% of Canada's exploration companies. Mineral exploration in B.C. (as the locals call it) soared to $224 million in 2006. That’s up 20% from 2005 and more than 800% from 2001!

  2. Three mines opened in British Columbia last year. And as many as five more could start production in B.C. this year.

  3. Meanwhile, across Canada, it’s the same story. Mineral exploration expenditures tripled in just four years!
Read the rest by CLICKING HERE.

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Asian Shockwave

Futures are still down this morning in New York, despite a slew of positive economic data. Why? One factor could be the carnage in China's stock market overnight.

SHANGHAI, China (AP) -- Chinese shares tumbled nearly 5 percent in their biggest one-day loss in eight months on Wednesday amid mounting worries over high stock valuations.

Adding fuel to the plunge are fears the government will step in to curb gains in the market over there.

Regulators might enact new capital gains taxes or other administrative measures if they decide the market is out of control, he said.

Here’s a interesting bit from Bloomberg News (not on the web yet) …

lawmaker Cheng Siwei said the nation's shares are overvalued, adding to speculation the government will step up efforts to slow fund inflows.

“There is already a bubble here,'' said Zhang Ling, who oversees about $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing. “Concern is mounting that the government will intervene to pop the bubble."

Will this be a brief pullback, or a change in trend? One thing’s for sure – Australia felt the fallout of China’s sell-off. For the sake of positions in Red-Hot Asian Tigers, we need China to get back on track quickly.

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"An Army of Mechanical Slaves"

Congressman Roscoe Barlett's latest speech on peak oil and our energy future is well worth reading. You can find it by CLICKING HERE. If you have a link to the charts he was using, please email it to me and I'll update this post.

Shale oil ... renewables ... nuclear ... Roscoe has it all covered. Fascinating stuff.

The headline I used for this post, "an army of mechanical slaves," is his description for what fossil fuels has given all of us. I like this quote too: "Three hundred years, the age of oil, it will be but a blip in the history of man."

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With Friends Like These...

Saudi Arabia plans to cut 158,000 barrels of oil production a day starting tomorrow, in line with agreed Organization of Petroleum Exporting Countries cuts, The Wall Street Journal reports. Traders took note because the reinforcement came after Saudi Arabia's ambassador to the U.S. said current prices are acceptable, increasing doubt about further cuts and sending prices lower Monday.

In total, Saudi Arabia has cut one million barrels of production over a six-month period. That's nearly double the total cuts it agreed to make under two output reductions hammered out by OPEC.

According to the Wall Street Journal Saudi oil officials who manage the kingdom's production say more cuts are on the way.

My analysis -- this tells us a couple things and one thing to keep our eye on ...

  1. The rumors we've been hearing that Saudi Arabia might push oil prices down to punish Iran for interfering in Iraq are nothing more than a neocon wet dream.
  2. $55 seems to have become the new lower limit for Saudia Arabia -- one they'll defend.
  3. We'll have to watch to see if Saudi Arabia keeps pouring money into new oil field development. The Saudis have been pumping money into the desert sand (and the fields offshore) but have only been able to maintain production, not increase it. If they really have surplus oil, they'll start cutting back on that expensive investment.

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Tuesday, January 30, 2007

Chart Support for CRB?

Every now and then it’s good to look at broad commodity indices and see if we’re in bull or bear market territory.

There’s no doubt that the energy-heavy CRB Index broke its uptrend months ago. Since then, it’s either in a bear market (if you listen to the bears) or pulling back to support (so sez the bulls).
The lines on this chart are Fibonacci Retracement numbers, i.e., common support levels when a stock or index retraces part of its big move. You can see that the energy-heavy CRB may be finding support on a monthly chart, though it’s too early to tell.

The problem with Fib numbers is choosing the starting point is open to interpretation. For example, here’s a weekly chart of the CRB starting from its breakout of its range in 2003 …
This weekly chart, using the 2003 breakout as a starting point, finds the CRB at make-or-break support. It has already retraced 62% of its big bull weekly move on the chart – any lower and we’d be in definite bear territory.

On the other hand, this level is a GREAT place for a bounce. And on the other hand (three hands –
the Gripping Hand), many people would say the monthly chart over-rules the weekly chart.

One thing is for sure – the CRB is energy-heavy. If you use an equally balanced commodities index, the CCI, commodities are STILL in a straight-line uptrend.


Man, that chart is bullish! I wouldn't want to bet against it.

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Monday, January 29, 2007

Nice photo

So my Saturday MoneyandMarkets.com column was picked up by the Market Oracle, which I think is based in Britain. I like reading the Oracle -- it has plenty of good articles -- but what on Earth possessed them to use this photo with my column? I guess they wanted to show blasting done with open pit mining (of the uranium mines in my new report, none are open pit mines). Or is that a small atomic bomb going off? First my editors crowbar the word "unholy" into my story, now this.

Well, I guess I should just be grateful they reprinted the column. They did manage to spell my name wrong: "Brod-E-rick". LOL!

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I Have Met the Source and He Is Me

I was just going through my usual uranium news links when I found a new one on Canada as a source of uranium. Hooray -- I can use that! But when I clicked on it, I realized that I'M the source.

Source Press: Canada Seen as Major Supplier of Uranium Ore Amidst Rising Prices

TORONTO--(BUSINESS WIRE)--Last week, a U.S.- based research firm in Florida predicted that uranium was poised to rise above $100 per pound this year and according to Weiss Research's Sean Brodrick, Canada is seen as a major supplier of that ore as the demand for nuclear fuel grows amidst an increase in the number of power plants being developed in various countries.

Read the rest by CLICKING HERE.

XX That was actually a pretty odd interview. The reporter was dismissive of Australia as a uranium producer, and I couldn't convince him otherwise. Maybe he just wanted to concentrate on Canada.

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Russian Gold Production

Add this to the news that US, South African, and Australian gold production fell in 2006. Russian gold production also fell year-over-year -- to 152 tons from 159 tons in 2005.

You can read the whole story by CLICKING HERE.
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Monday Is Chart Day

Momentum for gold is bullish, setting up another push higher, perhaps after a brief pullback.

Then again, in a choppy market like we're seeing now, charts are not as reliable as we might hope. However, I point you to forces that are long-term bullish for gold...

First, production is falling. Despite soaring prices, gold mine production in 2006 fell by 2% to 2,467 metric tonnes, according to GFMS. South Africa, Australia and the United States all saw production go down — even though prices are going up!

Second, official sales are tumbling. Selling of gold by central banks dropped by half in 2006 to 330 metric tonnes. Market watchers expect those sales to keep falling.

Third, we have the next wave of gold ETFs. Recently, three companies rushed to launch gold ETFs or funds in India as the laws changed favorably in that country. So a billion people will suddenly have access to gold funds. Sounds bullish to me!

Fourth, producers are de-hedging like crazy. “Hedging” is when miners sell forward gold production to lock in prices. With gold prices strong and getting stronger, miners are buying back those forward sales. Net producer de-hedging in 2006 hit 400 metric tonnes — FOUR TIMES the volume of 2005.

If anyone knows where the price of gold is going, it should be gold miners. And they’re giving a big vote for “UP!” Gold should charge back to $732 this year on its way to $750 per ounce.

These are the points I made this weekend in Saturday's Money and Markets. You can read the whole thing by
CLICKING HERE. One note: My editors inserted the word "unholy" to describe the alliance between environmental groups and major corporations. I haven't received a satifactory explanation as to why that happened.

Now, let's look at oil ...

As I mentioned the last time I posted an oil chart (two weeks ago), crude oil was extremely oversold and set up for a bullish reversal. Simple momentum would likely carry it to 57.50, the 25% Fibonacci retracement of its big sell-off. If you’re more bullish, the 50% retracement (very common) is 64.47, or round off to 64.50.

Below-normal temperatures gripping the East Coast are expected to continue into at least the first week of February. Private forecaster Frontier Weather said temperatures from the Great Lakes to the Atlantic will likely average 12 to 16 degrees below normal through the first week of February, boosting heating-oil demand.

A couple other interesting energy stories (all from the Wall Street Journal)…

  1. President Alexander Lukashenko threatened to slap fresh duties on Russian oil sent through Belarus to Europe unless Moscow sells it oil at a cheaper price -- raising the specter of a repeat of this month's supply cutoff.
  2. India and Russia are in talks about giving Indian companies a greater stake in Russia's oil reserves, in exchange for Russian companies being allowed to do more refining and retailing in India.
  3. Russian President Vladimir Putin offered to build four new nuclear reactors for energy-starved India.

These three stories are emblematic of what I call Russia’s “Empire of Energy” – its bid to build a new empire on the ashes of the old Soviet Empire.

In other oil news …

Suncor Energy plans to expand its Canadian oil-sands operations to double its output to more than half-a-million barrels a day.

Finally, let's look at copper...

Copper is bouncing on news that inventories in Shanghai and London are shrinking. Is the worst over? The worst may not be over for all those hedge funds that have gone short copper. We’ll see how much of a bounce it gets.

Base metals aren’t out of the woods yet, though. China has gone into zinc surplus for the first time in three years. The hottest base metal is nickel (used for stainless steel). It’s in short supply, and the Chinese can’t get enough.

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Friday, January 26, 2007

Meanwhile, Mining Boom in Australia Goes Full Throttle

Boom drives mineral exploration to 30-year high

MINERAL exploration has hit a 30-year high, with miners scrambling to take advantage of a resources boom that is propping up the national economy.

More than $1.2 billion was spent on mineral exploration in 2005-06, double what the industry spent in 2001-02.

Read the rest by CLICKING HERE. Basically, Australian Mining is a boom town. Western Australia is at a fever pitch, raking in fully half of all exploration money spent in Australia. Spending on uranium exploration has increased five-fold from 2001-2002, to $56.1 millionn from $8.7 million.

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Gold – Ready for the Next Leg Up?

Last year, we saw gold soar to $732 per ounce before pulling back. There is a lot telling me that gold prices now are an incredible bargain…
Production is falling. Despite soaring prices, gold mine production in 2006 fell by 2% to 2,467 metric tonnes, according to GFMS. South Africa, Australia and the United States all saw production go down – even though prices are going up!

Official sales are tumbling. Selling of gold by central banks dropped by half in 2006 to 330 metric tones. Market watchers expect those sales to keep falling.

Next wave of gold ETFs. The US-based gold ETFs are a powerful force driving the market. Recently, thre companies rush to launch gold ETFs or funds in India as the laws changed favorably in that country. So a billion people will suddenly have access to gold funds. Sounds bullish to me!

Producers are de-hedging like crazy. “Hedging” is when miners sell forward gold production to lock in prices. With gold prices strong and getting stronger, miners are buying back those forward sales. Net producer de-hedging in 2006 hit 400 metric tones – FOUR TIMES the volume of 2005.

If anyone knows where the price of gold is going, it should be gold miners. And they’re giving a big vote for “UP!” Gold should charge back to $732 this year on its way to $750 per ounce.

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Thursday, January 25, 2007

Time for Diamonds to Shine

The “4 Cs” of diamonds are cut, color, clarity and carat. To this I would add one more “C” – China.

True, the United States, with just 5 percent of the global population, generates 28 percent of global GDP, and consumes about 51 percent of all global diamond jewelry by value. http://www.idexonline.com/portal_FullNews.asp?id=26865

But China is coming on strong. In the latter half of 2006, China's refined diamond imports jumped 194 percent year on year to 147 million U.S. dollars, according to the Shanghai Diamond Exchange. For the full year, China's imports and exports of diamonds hit a record high of 610 million U.S. dollars in 2006, jumping 44.4 percent year on year.
http://english.cri.cn/3130/2007/01/23/481@188023.htm

Rising wealth in Asia is fueling demand for the $70 billion diamond jewelry industry. The global diamond jewelry market will probably expand 6 percent to 7 percent, in line with last year's growth.

Asians are high-end consumers. Mark Aaron, a Tiffany spokesman, said, "Diamonds continue to be Tiffany's strongest category around the world." Jewelry with at least one diamond accounted for 43 percent of its sales last year, he added.
http://www.iht.com/articles/2006/01/02/business/diamond.php

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Breakout Time for Silver

Uranium isn't the only hot metal. Gold and silver are heating up right now. Let's look at a chart of silver.

I don't know what the short-term drivers of this move are, besides a wobbly US dollar and strength in energy. The longer-term factors are certainly in play...

Jewelry demand: A spokesman for the World Jewelry Confederation recently said that China, India, and Russia "are expected to stand at the center of the expected double-digit [growth in] silver consumption in the coming years".

Industrial demand: According the Silver Institute, industrial demand for silver rose 11% in 2005 and represented 47% of total demand, up from 37% in 1995. As emerging-market nations continue to rapidly industrialize, demand for silver will keep pace.

Low stockpiles: According to CPM Group, a commodities-research firm, there are roughly 300 million ounces of silver in above-ground stockpiles, a 50-year low.

Silver ETF: The iShares Silver Trust hold physical silver to back its shares. iShares Silver Trust currently holds 116,112,664.800 (over 116 million ounces and recently filed papers to add 168 million ounces to back the issuance of new shares.

We’ve seen 3 companies rush to launch gold ETFs or funds in India, and it’s likely that a silver fund for India isn’t far behind. Investor demand for the metal could be the driving force for 2007 – a force that pushes silver to $20 per ounce and beyond.

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Mike Larson Continues to Make My Wife Cry...

My colleague Mike Larson correctly called the bursting of the housing bubble. And every time I talk to him, he ladles out big helpings of doom. This is not comforting to my wife -- she's fascinated by real estate, but keeps hoping the housing market will bottom, as we're trying to sell Chez Brodrick.

But Mike says, not today...

The existing home sales figures for December were just released. They showed ...

  1. The Seasonally Adjusted Annual Rate of sales slumped 0.8% on the month to 6.22 million from 6.27 million in November. Single family sales dropped 1.3% while condo/coop sales rose 2.1%. From a year ago, home sales are down 7.9%.
  2. Inventories on a "months supply at current sales pace" basis were 6.8 vs. 7.3 a month earlier. The raw number of homes for sale also declined – 7.9% to 3.51 million units from 3.81 million in November. For-sale inventory was up 23.3% from the previous December, however.
  3. Median prices were up $5,000 from November, or 2.3%. They were flat YOY.

MIKE'S ANALYSIS:
The housing market was like a trauma patient in the summer – suffering from multiple wounds and at death’s doorstep. Since then, a mild decline in interest rates and aggressive price-cutting/incentives from both new and existing home sellers have helped stabilize the patient. But he’s not getting off the gurney and walking out the door, either – not for some time.

Just look at the sales rate – at 6.22 million, it’s barely off the cycle low of 6.21 million in September. Look at median prices – they’ve gone nowhere in a year and a half. Or look at inventory. Yes, it dropped to 3.51 million units in December. But that is nothing unusual – it’s the customary, seasonal pattern we see year in and year out. Sellers who don’t sell during the main spring and summer seasons often pull their listings during the holidays, then re-list in the spring. Just to pick a few recent years, inventories dropped 2.7% between November and December in 2005 … 12.4% in 2004 … 9.6% in 2003 ... and 9.5% in 2002. Lastly, there’s the interest rate picture. The yield on the 10-year Treasury Note has jumped about 40 basis points from its low in December. That is putting upward pressure on mortgage rates and helping stymie a rally in mortgage purchase activity.

Bottom line: The housing market is doing better than it was a few months ago, but it’s certainly not booming. I believe we’re in for a relatively weak spring selling season and a weak year. Expect subdued sales, flat to down home prices, and near-record inventories to keep buyers in the driver’s seat.

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Wednesday, January 24, 2007

Will Kuwait Tell Uncle Sam: "Drop Dead!"

Remember how we saved Kuwait's keester back in Gulf War I? Well, now they're considering abandoning their currency's dollar peg to the US dollar because the greenback keeps slumping lower. That’s according to Bader al-Humaidhi, Kuwait's finance minister, who talked to reporters today at the World Economic Forum in Davos, Switzerland.

Kuwait is one of six Gulf Arab states that pegged their currencies to the US dollar in 2003 in anticipation of joining a common currency in 2010. ALL those Gulf currencies are now undervalued compared to the greenback.

Dorothee Gasser, a Middle East and Africa economist at ING Bank NV in London, told Bloomberg News today that she didn’t think any other Gulf countries would adjust their currency pegs, but added: “What we are likely to see is that they are going to convert some of their reserves into gold. It's bearish for the dollar.''

You can read the Bloomberg story by CLICKING HERE.

Why is this important? Probably the most important pillar supporting the US dollar as the world's reserve currency is that OPEC prices oil in dollars. If they stop doing that -- maybe moving to pricing oil in a basket of currencies -- the dollar is going to get a lot more wobbly in a hurry.

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I'm back from Vancouver

I got on a plane in Vancouver at 10 am local time yesterday. After a stopover and plane switch in Chicago, I stepped off the plane in West Palm Beach at 10:50 pm local (my luggage seemed to have been sent on a later plane -- it didn't show up for another 25 minutes, LOL).

I shelled out an extra $92.50 for the "extra-leg-room economy" section, and it was worth it on the first leg of the trip. On the second leg, someone near me was cutting more cheese than the state of Wisconsin. I started to wonder how much extra for the "non-farting" section of the airplane.

Still, I arrived home safely, and that's what matters. Now, I am toast -- absolute toast. My brain is so fried I actually tried to pour my coffee on a dinner plate this morning.

Martin edited my new uranium report, and that seemed okay (he's an excellent editor). Since it was finished in a feverish flurry of writing -- I pushed the "send" button on my email to send him the story 5 minutes before dashing out of my hotel room to grab a cab to the airport. Then Martin is calling me with editing questions while I'm in the cab and I'm trying to find my notes -- argh! I ended up at the airport with a massive headache, still regretting not polishing this or that in the report. Time is truly the most precious commodity.

My MoneyandMarkets column today is a more polished version of some notes I've put here on the blog this week, as well as my notes from Frank Holmes' presentation on what he calls "Chindia" -- the twin economic engines of China and India, and how they're driving the global commodity supercycle.

But my editors (not Martin) left one story out that I wanted to put somewhere: The story of St. Pirran, the patron saint of miners...

The big buzz for 2007 is mergers and acquisitions, for a couple of reasons. First, there simply aren’t enough people with the technical knowledge necessary to staff all these companies and projects.

The second is the bigger the fish get, the more investor money they attract, as well as a potential buyout by one of the major uranium players. I heard the names SXR Uranium One and Rio Tinto invoked hopefully, like patron saints, more than once. In case you’re wondering, the patron saint of miners is St. Piran. He has something in common with some miners in that his is a great story, if not entirely true.

What’s Piran’s story? Pirates tied a millstone around his neck, and threw him off a cliff into the sea during a storm, but the sea calmed and the millstone bobbed to the surface like a cork. Piran landed in Cornwall, built a small chapel on the beach, and his first converts were a badger, a fox, and a bear. He lived there for years, working miracles for the locals, AND he discovered tin in Cornwall (hence the mining connection).

Great story, eh? I heard wilder ones in Vancouver! The trick in small- and micro-cap resource stocks is to separate the winners from the tall-tale tellers. As Mark Twain famously said: “A gold mine is a hole in the ground with a liar on top.”

Read the rest of my MoneyandMarkets.com column, including Frank Holmes' insights, by CLICKING HERE.


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Monday, January 22, 2007

Hooray, I have Clothes!

Guess what showed up this morning? My luggage! As exciting as the prospect was of wandering the convention hall in my hotel bathrobe, I now have some decent clothes to wear.

So where have my clothes been all this time? I have no idea. Partying with Paris Hilton, snowboarding in Vermont – who can say? But man, if you’ve been without clean clothes for a couple days, what a difference having a suitcase show up at your door makes.

Check out my new gold and energy blog at MoneyAndMarkets.com

The Ol' Prospector

You run into old prospectors around Vancouver and it’s always a treat to talk to them. Yesterday, I did just that, talking to a guy who has knit together a portfolio of uranium/vanadium properties across the American Southwest. Some of these were once “mom and pop” uranium mines, if you can imagine such a thing. “You have to wonder what the kids looked like,” the prospector told me.

Man, he was relishing uranium’s high tide – he’d been through the crash in the uranium sector in the ‘80s (“absolutely no fun”) and now he was enjoying having the shoe on the other foot. He has enough money to keep him going. He’s drilling like mad, working on his NI 41-101 compliant resource status. He scoffed openly at some other players that have already seen their share prices take off when “they have no compliant resource at all.”

His portfolio of properties is changing as he swaps with other companies. Looking at a map of any uranium-prospective territory you can see a patchwork quilt of claims. You could even see some deals coming to mind across the exhibitor booths, as CEOs of various companies finally got a chance to get together and say something like: “hey, you have two working projects in Athabasca, and I’ve only got the one claim there and no time to work it. Meanwhile, you’ve got a stray property near my project in Wyoming. Let’s make a deal!”

The big buzz for 2007 is mergers and acquisitions, for a couple of reasons. First, there simply aren’t enough people with the technical knowledge necessary to staff all these companies and projects. The second is the bigger the fish get, the more investor money they attract, as well as a potential buyout by one of the major uranium players. I heard SXR Uranium One and Rio Tinto invoked like patron saints more than once. In case you’re wondering, the patron saint of miners is St. Piran. Piran shares in common with some miners that his is a great story, if not, perhaps, entirely true.

It should be an exciting year. As for today, I have an 8:30 appointment on Pender Street. I set up 2 more tentative meetings yesterday, and I think I'm being interviewed by both HoweStreet.com and Tom Jeffries for his new radio show. And the day is still very young.

Check out my new gold and energy blog at MoneyAndMarkets.com

Sunday, January 21, 2007

The Greatest Story Never Told

“You know what the most precious thing is in the mining industry today?” asked Mr. X. “It’s people.”

I call him Mr. X because to reveal his name would reveal one of the stocks I’m recommending in my new uranium report, “Small Uranium Wonders.” We got together for a quiet lunch away from the 2007 Vancouver Resource Investment Conference. Mr. X explained how, in the heyday of the first uranium boom, 2,000 people worked in uranium mining in the US. Now, the number has shrunk to just 400 people – even as America’s uranium appetite was waking up again.

“Do we want to import our uranium from Russia? To be dependent on them as suppliers?” Mr. X continued. “How is that any better than being dependent on the Saudis to supply us with oil? No, if we want energy independence, we have to develop America’s own uranium resources.

I’ve often heard about the supply/demand crunch in trained geologists and mining engineers – often from white-haired miners who wonder who is going to replace them.

Mr. X thinks this is a big advantage for his company – because he’s put together a team of the top talent in the industry.

Other companies were lining up to hire Mr. X’s company as consultants or take them on as partners just to get his people’s expertise. In the meantime, Mr. X and his crew are pushing forward with their plan to develop their own mine – with a timetable of bringing it into production in two years.

Our conversation was interrupted as another miner stopped by our table to say hi. After the other guy left, Mr. X smiled and said: “Our companies have comparably sized resources, in the same part of the country, with similar mining costs. And we’re both bringing mines into production in two years. Yet his company is valued way more than mine (I checked later – more than four times as much). Do you know why?”

Mr. X answered his own question: “publicity. He has it. My company doesn’t … yet."

I can't wait to tell the story of Mr. X's stock in my new uranium report, “Small Uranium Wonders."

And you know, that's just one stock of many. This is an exciting time in mining and especially uranium, and there are undervalued gems just there for the taking.

I'll write more tomorrow.

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Dear Delta -- You Unmitigated Swine!

I tried to send Delta an email but I get a "system unavailable" message. So let me post it here...

Dear Delta

Delta Airlines sent my luggage to Ohio last night while I flew to Vancouver. That's the good news. The bad news is my bag was supposed to be forwarded to me today and it has disappeared. Your reps say Delta won't pay for replacement clothes until 24 hours after the incident was first reported, which was 10 pm last night (local time). I'm here on a business trip. Now I should keep going to meetings in clothes I've worn for 3 days? Those CEOs I meet will be SO impressed!

You have already ruined this trip for me. You should at least pay for new clothes. But what Delta should really, really do is NOT LOSE MY DAMNED BAG!!!!!!!!!!

Don't worry -- I'll make sure everyone I meet at the conference knows how Delta treats its "Silver Medallion" customers.
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Et Tu, Delta?

Delta misplaced my luggage last night. For reasons known only to them, they decided to send it to Ohio. I won’t get it back until 4:00 today, probably.

Man, I have to admit this cuts me to the bone. I have purposely been flying Delta because they are very good at NOT losing my luggage (unlike some other airlines I could name).

However, I should reflect on the good things…

1) The luggage hasn’t disappeared – they know where it is.

2) At least the sole remaining clothes on my back didn’t end up smelling like stale urine, unlike that time in August that my luggage was lost flying into JFK.

3) Delta apparently pays for clothes while they get you your luggage. My choices were limited to shops in the Pan Pacific Hotel that were open at 10 pm Vancouver time (1 am by my internal clock). So I am now wearing the ugliest jersey I’ve ever seen. In Florida, I’d be arrested for a fashion violation (excluding the jurisdiction of Boca Raton, where bad taste is an art form). This is more my fault than the hotel’s – I’m big with a belly to match, and this shirt is all they had in my size. Well there’s a bright side for you – even more incentive to lose weight.

But that is not the end of this tale of woe. Apparently, some monkeys escaped from the Vancouver Zoo yesterday. I know this because they are in the room next to me. They were bellowing and howling uproariously and obscenely at 10:30 pm Vancouver time last night (1:30 am by my internal clock – did I mention that I’m a morning person?), then they left abruptly. Then they staggered back in at 4 am, local time, apparently dragging a live hippopotamus with them. At least I THINK it was a hippo, because could a normal human make that much noise? It HAD to be a hippo!

I don’t know that they were drunk. They just were shouting at each other at the tops of their lungs, slamming doors in their room, and TALKING LOUDLY in the hallway about buying pot. I think that last part may have been in jest, but with monkeys, who can say?

Also, the hippo was either singing gangster rap songs off-key, or he just likes chanting about “bitches” and “F****ing”! Ah, the hippo … nature’s misogynistic gangster wanna-be.

Security came to knock on the monkeys’ door – twice. I wasn’t the one who called security for the simple reason that I’m a guest in Canada. It’s my experience that Canadians don’t complain about much, and I wasn’t going to get all “ugly American” on them. My next-door neighbors may be monkeys, but they’re Canadian monkeys.

Still, they must be missed at the zoo. If the monkeys are staying another night, it’s time for me to check out.

Check out my new gold and energy blog at MoneyAndMarkets.com

Saturday, January 20, 2007

Vancouver, Ho!

I'm writing this sitting in the Palm Beach International Airport, about to board my flight for Vancouver (via Atlanta). The bad news is I still hate flying (ha-ha!). The good news is I've been bumped up to first class because I fly Delta so much.

I'll be attending the 2007 Vancouver Resource Investment Conference. However, I just made a list of all the meetings I already have scheduled and I wonder how much time I'll have at the conference.

And I've slotted no time for fun -- again! I'm flying to one of the best cities in the world and it's going to be work-work-work. Argh!

Anyway, it's going to be a very productive trip. And while I might be working the whole time, I do get to meet my friends in the business, who are brilliant, facinating to talk to and gracious with their time. So, really, I shouldn't complain. I'm getting paid to do what I love to do. And that is a wonderful thing indeed.

If you're attending the conference, maybe I'll see you there. Stay tuned for updates.
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Friday, January 19, 2007

Quoted in Marketwatch Today

Marketwatch reporter Myra Picache wrote a story about oil prices today. I gave her a lot of quotes; she used some of them and gave me the last word:
"Most people should realize this is just a temporary decline in oil prices," said Brodrick. "If you liked oil at $55, don't worry -- you'll see it there again, then $60 and higher."

Read the article by CLICKING HERE.

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Uranium Stocks Blast Off

Yesterday, we saw a stock that was recently added to the Red-Hot Canadian Small-Caps portfolio jump 14% in one day...

That was pretty sweet. Then, overnight, the most recent addition to the Red-Hot Asian Tigers portfolio -- also a uranium stock -- jumped 14%!

The stock was recommended in the January 3 issue of Red-Hot Asian Tigers, but I told subs to buy it on a pullback, so it wasn’t filled at our price until January 15th. No sooner did subs get in than this thing started ramping up! So, it racked up 28.5% gains in five days, and 14% in just one day! (Subscribers who bought the US tracking stock on the pink sheets won't see the gain until Monday, because pink sheets always report prices a day behind).

All in all, I think this is a great time for me to be going to Canada to the Vancouver Resource Investment Conference to talk to people from some mining stocks I'm really interested in. At least half of them are uranium stocks. I don't know if they're all winners -- I'll have a better idea after my trip -- but man, I am seeing some HUGE bargains just waiting for you to reach out and grab them.

I'll finish up my next uranium report while I'm up there. You can read about that by CLICKING HERE.

As for Red-Hot Canadian Small-Caps and Red-Hot Asian Tigers subscribers -- you already have uranium stocks in your portfolios (RHAT subs have FOUR of them). And you should have all the uranium stocks from my first report in October. So if you think you have enough, I don't blame you.

But if you want an even bigger piece of what could be the biggest bull market of our lifetimes, call
1-800-400-6916 for your special discount rate on the new report.

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More Good News for Gold

Three different companies have filed applications with the Securities and Exchange Board of India to launch gold ETFs. That sounds pretty bullish. Alternately, we've seen the launch of metal ETFs coincide with short-term market tops. So, maybe this will spark a sell-off.

Meanwhile, the gold-market watchers at GFMS are forecasting a near-term rally in gold. They expect the price of the yellow metal to rally to $670 in the first half of 2007. The main driver for this should be a declining US dollar, according to GFMS. The news came as GFMS released its second update to its Gold Survey 2006.

You can read the highlights of the GFMS gold update by CLICKING HERE.

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Thursday, January 18, 2007

Bullish Gold Chart

Last week's breakdown in gold was a fake-out, but as the old saying goes, if it were that easy, we'd all be billionaires. This chart on gold looks pretty darned bullish.
Forget fundamentals -- gold has been trading on sentiment and the US dollar for some time now. It looks like a "buy."

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Wednesday, January 17, 2007

Cool Interactive Map

Want to know how your town will fare if sea levels rise thanks to melting glaciers? Here's a totally cool interactive map: http://flood.firetree.net/?ll=43.3251,-101.6015&z=13&m=7

Don't be too panicked -- the
big melt we're seeing in Greenland right now adds a mere 1 milimeter per year to sea levels, according to experts. The only real worry will be if the Antarctic ice shelves join the trend. And we've been told that won't happen for hundreds of years, if ever.

Who says that? Why the same scientists whose
models were totally blindsided by the pace of the Greenland Ice Melt.

Historically speaking, the fastest that sea levels have EVER risen is 12 inches over the course of a decade. That happened 14,000 years ago, at the end of the last glaciation. No one is saying we'll see the oceans rise that fast.

Still, it's a cool interactive map:
http://flood.firetree.net/?ll=43.3251,-101.6015&z=13&m=7

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Metal News

This is from Bloomberg News (no web link) ...

Jan. 17 (Bloomberg) -- Copper production exceeded demand by 353,000 metric tons in the 11 months through November as global production surged 5.6 percent from the corresponding period a year ago, outpacing consumption, the World Bureau of Metal Statistics said. Usage rose at a 1.8 percent rate during the period, theWare, England-based bureau said today in an e-mailed report.

Meanwhile, gold is rising because the US dollar is falling because net foreign investment in the US is down. Got all that? See, foreigners bought a net $68.4 billion of US securities in November. That's down from $85.3 billion in October, and less than forecasts of $75 billion.

Still, gold seems trapped in a trading range. We need a real breakout to get bullish again.

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Baby You Can Drive My Car

I haven't been posting about metals lately because metals have been dull, with the exception of uranium. I expect I'll find much more to write about when I go to Vancouver for next week's 2007 Vancouver Resource Investment Conference.

Meanwhile, there is some interesting news on China and cars. China has zipped past Japan to become the world's second-largest car market (the US is still #1).

According to the BBC...

Car sales - excluding people carriers and 4x4s - jumped 37% in 2006, the China Association of Automobile Manufacturers (CAAM) said. Overall, Chinese vehicle sales jumped 25% during 2006 to 7.22m units.

That is part of the reason why Chinese oil exports hit a record in 2006, coming in at 145.18 million tons of crude oil, up 14.5% over the previous year.

Naturally, with Chinese car sales booming, oil imports in China should rise.

Meanwhile, the market still seems to be oversupplied, or at least the hedge funds are piling on short positions in crude. But that's a short-term thing -- don't sweat the short-term.

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Tuesday, January 16, 2007

China Officially Passes $1 Trillion in Reserves

Chinese officials already admitted that China's foreign reserves passed the $1 trillion mark last month, but now we get official confirmation...

China Foreign Currency Reserves Top $1 Trillion for First Time

By Nipa Piboontanasawat

Jan. 15 (Bloomberg) -- China's foreign-exchange reserves, the world's largest, topped $1 trillion for the first time at the end of 2006, adding pressure on the government to let the yuan appreciate faster.

Currency assets excluding gold climbed 30 percent from a year earlier to $1.07 trillion, the People's Bank of China said on its Web site today.

Read the rest by CLICKING HERE.

What do you think they'll do now? Maybe diversify into gold? We already know they're building strategic reserves of oil and base metals.
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Springtime for Greenland

You may think I'm obsessed with global warming, and maybe I am. But hey, I live in Florida, and I'm maybe 3 feet above sea level. So I get very interested when I see stories like this...

Here are a few select paragraphs from a New York Times story ...

A penisula long thought to be part of Greenland's mainland turned out to be an island when a glacier retreated.

“We are already in a new era of geography,” said the Arctic explorer Will Steger. “This phenomenon — of an island all of a sudden appearing out of nowhere and the ice melting around it — is a real common phenomenon now.”

Greenland is covered by 630,000 cubic miles of ice, enough water to raise global sea levels by 23 feet. Carl Egede Boggild, a professor of snow-and-ice physics at the University Center of Svalbard, said Greenland could be losing more than 80 cubic miles of ice per year. “That corresponds to three times the volume of all the glaciers in the Alps,” Dr. Boggild said.

XX -- When I was at the Mineral Roundup in Vancouver last year, Greenland had a booth. With all their ice melting, they're betting dollars to doughnuts that there is a TREMENDOUS amount of mineral wealth that is going to be revealed -- wealth that can be grabbed by small, fast-moving companies.

This may remind Red-Hot Canadian Small-Caps subscribers of the micro-cap copper company in your portfolio, one whose main asset was until recently buried under a Canadian glacier. Now, with glaciers in full retreat, it has become much, much easier for this company to get at that copper.

It's the old story that catastrophe can be both risk and opportunity. How much risk? I'll close with this line from the story...

"...given the acceleration of tidewater-glacier melting, a sea-level rise of a foot or two in the coming decades is entirely possible."
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Monday, January 15, 2007

Such Lovely People, MLK Day Edition

Iran, Venezuela plan anti-US fund

CARACAS: Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad — fiery anti-American leaders whose moves to extend their influence have alarmed Washington — said on Saturday they would help finance investment projects in other countries seeking to thwart US domination.

XX Really, the best thing about our enemies is they manage money even worse than the Good-Time Charlies in Washington, D.C. We can only hope that every tin-pot dictator in the world takes Iran and Venezuela up on their offer and drives them that much closer to insolvency.

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Oil Rising Again

It's a quiet day on global markets without the US to drive it, but the Associated Press tells us...

SINGAPORE (AP) -- Oil prices rose above $53 a barrel Monday amid reports that OPEC may hold an emergency meeting to try to reverse the 13 percent plunge in oil prices this year.

XX My take -- OPEC hasn't even enforced its last cuts. Let's see it do that, then we can talk about new cuts having an effect on the market.

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Science Monday: Quoth the Raven, "Nevermore."

It's Monday and the markets are closed to honor Martin Luther King. It gives me more time to work on my next uranium report, which probably isn't in the spirit of the day. But hey, the wife and kids are joining friends at the South Florida Fair, and I don't think MLK Day has much to do with seeing giant rabbits, eating fried Snickers on a stick and riding whirly-rides until you puke.

It's either work on my new report or go to the gym. My gut is getting so big that it's developing its own gravitational field and I'm being orbited by a small moon (on closer inspection, that might be my four-year-old).

Anyway, my morning surfing brought up some disturbing news -- bird die-offs. Do these happen ALL the time, or are they the canaries in the global coalmine?

Examples...

Bird Deaths Shut Down Downtown Austin

AUSTIN, Texas - Police shut down 10 blocks in downtown Austin for several hours Monday after 63 birds were found dead in the street, but officials said preliminary tests found no threat to people.

Birds fall from sky over town (near Perth, Australia)

THOUSANDS of birds have fallen from the skies over Esperance and no one knows why.

2,000 Ducks Found Dead

BOISE - More than 2,000 dead mallard ducks have been found in the Magic Valley.

XX Maybe it’s because I’ve been watching the X-Files back-to-back recently (I received Season 3 on DVD for Christmas), but I’m not comforted by official assurance that these deaths probably don't signify any threat to humans.

And there is the fact that “scientists calculate that we are losing species at a rate of somewhere between 1,000 and 10,000 times higher than the natural ‘background’ rate of extinction. This means that technically we are going through a period of ‘mass extinction’, the sixth that we know about over the hundreds of millions of years of the fossil record.”

Mass extinction – well, we know what happens to the top of the food chain during those kind of events. The local fieldmice use our skulls for condos, then they evolve into the Next Big Thing. At least, that’s what I learned on the amazing Before The Dinosaurs series on the Discovery Channel. My kids became instant experts, dividing the animals between “good monsters” and “bad monsters.”

Mass extinctions, bird deaths, strange subterranean gas leaks not only in New York, but all over the world – what the heck is going on? Or maybe just a sign that news “travels in packs.” When the media finds that the public is interested in some kind of story (gas leak, bird deaths), they start throwing out every gas leak and bird death story they can find.

But then there’s the fact that the White House is set to do a U-Turn on Climate Change, according to British newspapers. I’m not holding my breath -- we’ll see if that happens.

XX Update: Nope! U.S. denies British rumors on Bush climate change

However, The Washington Post reports that the White House has actually made an about-face on Iraq – it’s rehiring the same competent people that it fired for telling the truth four years ago. I kid you not. Read this…

Desperate for new approaches to stifle the persistent Sunni insurgency and Shiite death squads that are jointly pushing the country toward an all-out civil war, the White House made a striking about-face last week, embracing strategies and people it once opposed or cast aside.

Read the rest HERE. I find this news simply stunning. I mean, the folks in the White House are the same people who sent unqualified kids with no experience over to Iraq to get the economy on its feet by driving around with bags of cash in the trunks of their cars, handing it out – losing AT LEAST $9 BILLION of US taxpayer money in the process. After long years of placing ideology over competence, NOW they decide to change course and get serious?

General Petraeus was another dissenter, too; now they throw the whole mess in his lap. Good luck, General. I really, really hope you succeed. Otherwise, well, maybe those bird deaths, bizarre natural phenomena, and “snowball-in-hell” behavior in Washington are signs of something else.

And in that case … so, what are you wearing to the Apocalypse?

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Friday, January 12, 2007

New Gold Funds?

The World Gold Council says it is ready to launch new gold-backed securities (like the GLD) in Italy, Germany Belgium, the Netherlands, Luxembourg and INDIA.

Hmm ... I wonder how much gold the 1 billion people in India might buy through an exchange-traded fund. We've already seen how much the gold ETFs boosted gold demand here in the US.

And here's an interesting factoid: "Investor purchases of gold through exchange-traded funds stands at 18 million ounces." That's according to exchangetradedgold.com.

Still, no word on exactly when the World Gold Council might launch these funds. While they are "ready," it could take awhile.
Check out my new gold and energy blog at MoneyAndMarkets.com

Thursday, January 11, 2007

The Swoon In Oil Today

Oil prices rallied this morning -- perhpas on the news of US troops raiding an Iranian delegation in Iraq, perhaps on something else -- then sold off hard when bearish natural gas inventory data came out. What does that tell us? It tells me that the market is in a bearish mood right now. In a bull market, that kind of news would send oil prices on a tear (and it did that last summer). But now we’re seeing hedge funds turn all bearish on oil – they’re using news like this as opportunity to sell, not to buy.

If a real shooting war with Iran breaks out, even a short one, the hedge funds that are bearish on oil will have to cover some huge positions in a hurry. What’s your guess for where oil will go then?

Anyway, the bearish trend in oil will continue, and the market will continue to ignore increasingly bullish data and events on the ground, until it changes. For now, I'd want to stick to long-term and core plays in energy.

So why are a lot of oil sector stocks bouncing? Many traders think the recent sell-off is overdone. If we see another dump in oil like we did today, they might change their minds.
Check out my new gold and energy blog at MoneyAndMarkets.com

China's White-Hot Hunger for Australian Uranium

China plans to import 2,500 metric tonnes of Australian uranium per year by 2020. That's the bullish news. The really bullish news is that should only be a third of China's expected annual demand of 7,500 metric tonnes.

Australian uranium stocks have taken a pounding recently. News like this should provide a boost.

Read the rest HERE.

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How Much Effect Will US Housing Have on the Global Economy?

If you've been reading any of the stuff written by my colleague Mike Larson, you know the US housing market is not in good shape. Every now and then I walk into his office with what I think is potentially good news for housing, and he just shakes his head and opens up another can of gloom-and-doom, backed up with stats, facts and figures.

Since I write about commodities, this worries me a lot. So, I found it interesting to read this...

The Associated Press reports on the US dollar and world economy. "An expected dampening of the world economy in 2007 after three years of healthy growth has the weakening U.S. housing market primarily to blame, a U.N. flagship economic report released Wednesday said. The World Economic Situation and Prospects 2007 predicts a reduction of world economic growth to 3.2 percent this year, from the all-time high of 4 percent in 2005 and an estimated 3.8 percent in 2006."

"The waning U.S. housing market is a 'major factor' in the slackening economic prospects, the report said. The end of the housing boom is expected to depress U.S. consumer demand, slowing the growth of the country's economy to 2.2 percent this year, it said. 'The economic recovery in Japan and Europe is not strong enough to replace the U.S. as the engine for growth of the world economy,' the report said."

"A continued widening of the U.S. deficit could erode 'confidence in the dollar as the world's main reserve currency,' the report warned."

"The U.N. report also warned that if the U.S. housing market falls at a dramatic rate, the global economy could become unhinged, 'enhancing the risk of a major upheaval in financial markets.'"

Does the UN have it right? I don't know. But if you've been a reader for awhile, you know that I expect surging economic growth in China, India and other parts of the world to pull the global economy along even if the US starts to sputter. The UN seems to agree with me. I guess that makes them geniuses (LOL!)

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War With Iran?

A forecast for colder weather in the next couple weeks is getting the credit for a rise in oil prices I think there's something else afoot...

From the Associated Press:

Iraqi officials said Thursday that multinational forces detained as many as six Iranians in an overnight raid on Tehran's diplomatic mission in the northern city of Irbil....

The forces stormed the Iranian mission at about 3 a.m., detaining the five staffers and confiscating computers and documents, two senior local Kurdish officials said, speaking on condition of anonymity because of the sensitivity of the information....

A resident living near the mission said the foreign force used stun bombs in the raid and brought down an Iranian flag that was on the roof of the two-story yellow house.

XX My take: President Bush sent US forces to attack a foreign diplomatic mission, the Iranian mission in northern Iraq. I’m not an international lawyer, but isn’t a foreign mission legally the land of a foreign nation? If so, for all intents and purposes, we just invaded Iran.

The Iranians are taking a dim view of it. From the article: Iran's Foreign Ministry spokesman Mohammad Ali Hosseini told state-run radio that the raid was "against a diplomatic mission" since the "presence of Iranian staffers in Irbil was legal."

Can you see how the Iranians might think that we took their diplomats "hostage" when our forces detained them? It's hard to see under international law how this is legal -- it would be best for the US standing in the international community if the Iranians are released soon. And it's truly ironic that we appear to have initiated the very action that we condemned Iran for in Jimmy Carter's presidency - attacking diplomatic missions in violation of international law.

As a side note, President Bush may have just given every country in the world justification for attacking US diplomats, attacking US diplomatic posts and embassies, and "detaining" our diplomats.

So what President Bush is up to? While I can’t read his mind, it appears he is trying to provoke a war with Iran, either by forcing Iran to strike back, or by discovering secret Iranian diplomatic documents that would prove their complicity in helping the insurgents in Iraq. We have three carrier groups either in the Persian Gulf or headed there now. Unfortunately, that small body of water makes them sitting ducks in a bathtub. Their anti-missile weapons are made to shoot down Exocet Missiles, not Iranian Sunburn missiles that fly at mach 2.5. And let's hope our ships have a defense against Iran's new, near-supersonic torpedoes.

You can read a recent article on Iran's "Asymmetrical Naval Warfare" by CLICKING HERE.

Bottom line: I thought oil was going to look for a bottom a little lower, but I can see why it is rebounding today. If this situation worsens – and it seems Bush is determined to use force, not diplomacy, with Iran – oil could go a lot higher in a hurry. And gold, too!

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Wednesday, January 10, 2007

Argh! I've Been Bumped Off (Bloomberg)

I just received this note from my booker ...

Hi Sean-
Bloomberg today @ 1:30 pm EST is bumped due to some CEO, but they are trying to find a time to do the segment yet today because of all the news on oil. I will keep you posted as soon as she can get a time.
Thanks
Pam
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My Latest Money and Markets Column Is Up


I don't get tired of writing about uranium, and that's just what I did in Money and Markets today. I give you three reasons to love uranium for 2007. You can read my column by CLICKING HERE. Oh, and I have a new uranium report coming out. This one focuses on "second wave" uranium stocks, which I think should do remarkably well in 2007. If you want the details on that, plus previews of three potential picks for the report, CLICK HERE.

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Notes for Bloomberg TV Appearance Today

I'm appearing on Bloomberg TV's "Marketline," with Ellen Braitman and Sandra Smith, today at 1:30 to 1:35 (don't blink -- you'll miss me). They want to talk about the forces driving oil. Here are my preliminary notes -- I'll update them after we get the US fuel inventory numbers at 10:30.

Notes for Bloomberg TV appearance

3 biggest drivers in energy right now are …

1) “Weirdly warm” U.S. winter
2) A shift in investment fund money – have you seen the volume in oil lately? All the hedge funds are running to the other side of the boat

3) Draining of the fear premium related to the Middle East.

Also, inventories are shrinking – consumer suppliers are more comfortable with lower inventories. That could come back to bite if there is a problem.

Bottom line: the front month should remain under pressure, with increased volatility, as the shorts have the longs on the run and are crushing them. As cold weather settles in, the oil strip further out will get into steeper contango.

At around $45 per barrel, small E&P producers will start capping marginal production. That is strong support.

Recommendation (if they ask me for one): Oil stocks should go lower, but it takes guts to short them when the events controlling prices include the ever-shifting weather and the Middle East. If I had to pick likely victims, shippers including Teekay or General Maritime are very vulnerable. Their margins should stink going forward. Look to pick up bargains if oil gets to $45.

That said, oil could turn on a dime if we get a Big Chill, or things heat up with Iran.

More urgently, US fuel inventory data comes in today, and most everyone expects a build. If there is an unexpectedly large drawdown, that could inject volatility into the market rather quickly – Update at 10:30

10:30 Update: Inventories of distillates, including heating oil, surged by their biggest gain in about three years. Gasoline stockpiles are up, too. Crude oil had a draw-down, but not nearly enough. Crude is tanking on the news. We'll see where it ends the day, but the bears are still in control (for now).

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Tuesday, January 09, 2007

What's So Bullish About Commodities? I'll Show You

I was having a conversation with a colleague the other day, and he commented on the fact that the widely-tracked CRB index had broken down and seemed headed lower.

"But that's an energy-heavy index," I said. "Don't go by that. Many commodities are doing fine."

He challenged me: "Show me a commodity index that's not breaking down ... that's not uranium!"

Well, you know I like a challenge...

Here is the CRB Index (monthy). Yep, this energy-heavy index , which is weighted down with petroleum and natural gas contracts, doesn't look good.

But now let's look at an EQUALLY-weighted commodity index.
This is the Continuous Commodity Futures Price Index (CCI) is interesting, being an equal-weighted geometric average of commodity price levels relative to the base year average price. This Index is the old CRB Index -- before it became heavily weighted to energy.

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Charts for today

I am swamped today, so here are some charts to look at. Red-Hot Canadian Small-Caps and Red-Hot Asian Tigers subs take note -- I'm showing a stock for each service that you already hold...

First, let's look at crude. Not so bullish.

The bounce today isn't very convincing. On the other hand, look at the volume -- we're seeing big selling by funds, particularly hedge funds. You know they all run to one side of the boat at once. That unbalances any market, but it also helps us find bottoms (and tops).


Now for the next chart. It's interesting to see how the Australian market broke away from the S&P 500 in late December, but has come back to Earth hard. Today was a very bullish day in Australia. We'll see if we have follow-through.


RCS subs should know that Forsys Metals, my latest uranium pick, pulled back and got you filled on Friday, then took off like a rocket. Note the rising triangle -- bullish!
And here is one for RHAT subs. Check out the bullish action in Sino Gold! Your whole portfolio had a very bullish day.


But who knows what tomorrow will bring for either service. Stay tuned!

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Monday, January 08, 2007

Monday is Chart Day

Here are some charts and commentary I sent to my coworkers at 8 am this morning ...

I was as surprised and disappointed by gold’s swoon last week as anyone. Technically, it opens the door to further weakness. If we see that weakness, I’d look for gold to revisit the 571 area in the short-term. Longer-term, the market needs to get past its liquidity concerns.

The liquidity concern is a four-headed monster. India and China both tightened their money supply in the same week. Japan is likely to do the same. And the jobs numbers last week give the Fed cover to not cut rates. Combine these developments with a short-term overbought condition in the market, and we got last week’s sell-off.

POTENTIAL BULLISH FACTORS …

First is that tightening is not severe. Indeed, money is still pretty loose. However, that’s more long-term.

Second -- paradoxically, investors who fear a global recession, may take money that has been in base (industrial) metals and put it to work in gold. Indeed, that may be some of what we have seen with copper/gold in the last 2 months or so. That’s already ongoing.

Third -- the US dollar has had a pretty good bounce, but it's coming up to some serious overhead resistance. On the other hand, the dollar's bounce is being fueled by realization that the Fed is dead-set against cutting rates anytime soon. Is that fully priced in? You tell me. If the greenback goes down, you can bet that gold will go up.

The most bullish factor for gold in the short-term is that crude oil looks ready to bounce. Usually rising oil prices pull gold higher. With that in mind, let’s look at a chart of oil…

Oil hit the skids last week, pushed by the way-too-warm weather across the Northeastern US. The warm weather has slashed demand for heating oil and natural gas, and also cut back on consumer weekend ski vacations, etc..

Still, the sell-off was way overdone. Crude rallied on Friday as OPEC, roused from its coma by the plunge in prices, said it might hold an emergency meeting before its next scheduled meeting. The fear of an emergency meeting, combined with a drastically oversold condition, could push crude back to $60 in a hurry.

Longer-term, the deciding factor for energy could be weather. Heat wave this summer? Lots of hurricanes or no hurricanes at all? It's hard to trade on the ever-shifting weather, but that's what the energy complex may require.

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I'm Back After Having My Eyes Lasered



I'm back in the traces after having my eyes lasered on Friday. It went fairly well. My right eye is fine and my vision is now 20/15 for long distances in that eye. There is a problem with my left eye -- looks like a blood vessel burst, and vision in that eye is still a bit cloudy. I'm seeing the doctor today to get his prognosis. In the meanwhile, RCS, RHAT and RHR subs needn't worry -- you're in safe hands with JR, who is minding the helm.

I'll still have to wear glasses for up-close work, they say, because age does things to eyes that lasers can't undo. However, I won't know what my up-close vision will be for three months -- it takes that long for the eyes to finally settle out, and my short-vision is improving day by day.

Sadly, the doctor refused my request to implant lasers IN my eyes, thus delaying my plans for world domination (ha-ha!). Well, you can't have everything
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Friday, January 05, 2007

Crude Oil and the Slip 'n' Slide of Doom

There was a rumor yesterday that a major player in the oil market got caught in a long-crude-oil futures, short-the-airlines trade. He had to liquidate positions, and this, they say, is part of what keeps pushing down oil prices, which are treading below $55 per barrel as I write this.

I don't know about you, but I think the real thing weighing on it is the weather. I just got off the phone with a trader in New York. It's so warm, he didn't even bother wearing a coat to work. In January! In the Big Apple!

Demand for heating oil is plunging. In the short-term, unless this changes, we should see lower prices. Of course, lower prices boosts consumer demand. All those people who bought the giant SUVs the car makers are practically giving away are going to look like geniuses. People who buy more fuel efficient vehicles (me!) will rue the day.

Well, that's not true. I love my Honda. I wouldn't trade it for the most pimped-out Hummer H2 in the world.

Longer-term, I still think there's a supply squeeze coming right at us. Look at this chart of Venezuelan crude oil production...

You'll see the same picture in Kuwait, Saudi Arabia, Mexico -- you name it. Maybe non-OPEC production will rise enough to make up for these declines ... but I'm more comfortable betting on a long-term supply decline, long-term price-rise.

In the short-term, though, the easiest path for oil prices seems down.

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Wednesday, January 03, 2007

Crude Oil Closes at Lowest Levels In Nearly 2 Years

Crude oil suffered a huge sell-off today, thanks to stubbornly warm weather. I'll get to that in a bit. First, here's a photo of Nigerians scooping up gasoline from a busted pipeline. I found it on this MSNBC photoblog ...
Why are they scooping up gasoline with plastic pails? Because the rising price of fuel has simply put it beyond the reach of desperately poor people like this. So, they punch a nail into a pipeline and grab what they can.

Sadly, a mob of people crouched over gasoline streaming down a gutter inevitably leads to an explosion -- like the one that killed 260 people at the end of December.

Why are are oil and gas prices falling? Because people like the ones in this photo have been priced out of the market all over the third world. Less for them, and more for us. And short-term surpluses give us stories like this one today...

Oil Drops Most Since April 2005 as Mild Weather Curbs U.S. Heating Demand Crude oil in New York plunged the most in 20 months as mild U.S. weather curbed heating demand and traders speculated that fuel supplies increased.

But I believe it's a short-term surplus only. The lower fuel goes, the more the desperate people in the photo will be able to afford it. Huge demand is waiting, priced out of the market ... for now. That is tremendous support for oil prices at lower levels.

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