Red-Hot Resources

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

Wednesday, April 30, 2008

Electric Cars

I could buy an electric car if I wanted to now. A new electric car dealership opened in my home town last week ...

ZAP Electric Car, Truck Arrive in Florida
Xebra, an electric four-door compact car or two-seat pickup that transforms into a flat-bed or a dump truck. The vehicle was designed for gas-free, city driving up to 40 MPH and plugs into any normal household outlet. The vehicles are priced a little over $11,000 and are estimated to cost between one and three cents per mile.

However, that speed limit is likely to get me killed on South Florida's busy roads. Alternately, I could buy a Prius and convert it to plug-in electric. However, the conversion kit costs $9,999. That's too much coin for me.

So my choices now are between "not enough oomph" and "too expensive." I think I'll be better off waiting until next year ... when the real bargains arrive. I'm talking about low-cost, factory-line-produced electric runabouts that you plug into your house socket at night and drive all day. It's called the TH!NK City.

The manufacturer says the "City" reaches a top speed of 100 km (65 miles) per hour and can drive up to 180 km (110 miles) on a single charge.

At current prices, you should be able to run that car for about 3 cents a mile, and no expensive tune-ups, either.

And new battery technology (and here's another one) that is coming next year could really extend the City's range, though naturally it would raise the price of the car.

For now, maybe I'll just buy an electric bicycle. That sounds cool, too. But not cheap -- Electric bikes range in price from $2,100 to $2,900 and have a top speed of about 20 miles per hour -- maybe less when hauling my big American ass around.

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

Oil Analysis and More

A monthly Energy Department report said demand for finished petroleum products dropped 8.5% in February from January -- to 573,677 million barrels from 623,545 million barrels -- and demand for gasoline fell by 6.2%, to 256,422 million barrels from 273,235 million barrels in January.

News articles have said (and I'm quoting from one): "Though some of that drop
can be attributed to February's being a shorter month, it still suggests high prices are cutting American's appetite for fuel."

Let's do the math ...

January -- 273,235 divided by 31 days = 8.81 million barrels per day

February -- 256,422 divided by 29 days = 8.84 million barrels per day*.

Indeed, it seems that per-day gasoline usage increased (slightly) from January to February. With the margin of error, demand was basically unchanged.

You wouldn't believe how many media people I've talked to in the last two days who have been bamboozled by this.

On the other hand, traders fell for the government's BS too, so they shouldn't feel bad.

Here's a chart for you...
*29 days this past February, which was a Leap Year.

In other news ...

CURRENCIES

Dollar Heads for Monthly Gain Versus Euro on View Federal Reserve to Pause The dollar is set for its first monthly advance against the euro this year on speculation a cut in interest rates by the Federal Reserve today will be followed by comments signalling policy makers are about done with easing.

AGRICULTURE

K+S Shows How Widening Food Shortage Means Potash Shares Can't Find Peak Two days after Barron's magazine sent shares of potash makers lower with a March 18 article predicting a sell-off, India's largest importer agreed to more than double the price it pays for the fertilizer.

Corn Futures Rise in Chicago, Head for Eighth Monthly Advance; Soybeans Up Corn prices in Chicago rose, heading for an eighth straight monthly gain on speculation U.S. farmers will plant less in favor of other more profitable crops. Soybeans advanced for the first time in six days and wheat was also higher.

GOLD

Gold Falls to Three-Month Low in London Trading as Investors Sell Metal Gold fell to a three-month low in London on signs that investors are selling metal held through exchange-traded funds. Platinum and silver also dropped.

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Tuesday, April 29, 2008

$200 a Barrel Oil and More

OPEC warns Oil Could Reach $200
Chakib Khelil, president of the Organization of Petroleum Exporting Countries, blamed the falling value of the US dollar, which makes other assets, including oil, more attractive for foreign investors.

Of course, this is old news to you, if you read my Money and Markets column: Oil Tops $119! What's Next ...

In that column, I wrote: "In fact, I think we need to come to grips with the unthinkable — oil prices running much higher, say to $200 a barrel."

In other news ...

COMMODITIES

Crude Oil Declines as BP Prepares to Restart Forties Pipeline in the U.K. Crude oil fell as BP Plc's Forties pipeline prepared to start after a two-day shutdown and as the U.S. dollar strengthened, limiting the appeal of commodities as an inflation hedge.

Gold Declines for First Time in Three Days as Dollar Gains on Rate Outlook Gold fell for the first time in three days in London as the dollar strengthened against the euro, diminishing the metal's appeal as a hedge against further drops in the U.S. currency. Silver and platinum also declined.

Corn Futures Advance to Record in Chicago as Weather Delays U.S. Planting Corn futures in Chicago climbed to a record on supply concerns after a government report showed farmers in the U.S., the world's biggest producer, had planted only half as much as a year ago because of cold, wet weather.


CURRENCIES

China May Revalue Yuan by 10% to 15% to Curb Prices, Says JPMorgan's Gong China may revalue the yuan by 10 to 15 percent in the coming months as policy makers seek to temper inflation close to an 11-year high, according to Frank Gong, head of China research at JPMorgan Chase & Co.

US ECONOMY

Record Bond Sales, Stocks Show Bernanke Progress Fixing Financial System Federal Reserve Chairman Ben S. Bernanke is persuading investors that the financial markets are working again.

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Monday, April 28, 2008

News You Can Use for Monday

CURRENCY

Dollar Slide Drives Burgeoning U.S. Deficit as Japanese Desert Treasuries Add another ailment to the U.S. misery index of soaring gasoline and wheat costs and falling home values: a federal deficit that is burgeoning as foreign investors led by the Japanese recoil from the slumping dollar.

ENERGY

OPEC Won't Boost Oil Output, Supplies `More Than Sufficient,' Khelil Says OPEC won't consider increasing crude output before September, even amid investor concern that record oil prices may cause a global economic recession, according to the group's president, Chakib Khelil.

Nigeria Says Oil Production Halved on Exxon Strike, Shell Pipeline Attacks Nigeria is losing about 50 percent of its current oil production because of a strike at Exxon Mobil Corp.'s operations in the country and militant attacks on a Royal Dutch Shell Plc pipeline, the country's oil minister said.

Brazil Oil Trapped by 500-Degree Heat, Metal-Crushing Pressure, Salt Bed Brazil's plan to become one of the world's biggest oil exporters hinges on exploiting crude six miles below the ocean surface in deposits so hot they can melt the metal used to carry uranium to nuclear plants.

Drivers Empty Scottish Gas Pumps as Oil Refinery Strike Prompts Shortages Tony Walden squeezes his green mobile crane on to the forecourt of a Shell gasoline station on the outskirts of Edinburgh and waits. It's the fourth set of pumps he's tried, and all are out of diesel.

AGRICULTURE

Corn Jumps on Speculation U.S. Planting Pace Slower; Wheat, Soybeans Gain Corn futures in Chicago gained on speculation a government report will show slower progress in U.S. crop planting than last year after cold, wet weather. Soybeans, wheat and rice also advanced.

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The Melting Arctic Ice Cap in Pictures

we could actually see open water over the North Pole this summer.

http://abcnews.go.com/Technology/story?id=4728737&page=1

But maybe we'll get lucky and open water up north will hold off until 2009 or 2010. Fingers crossed.

Now, the melting of the Polar Ice caps won't directly affect us. That ice sits on water, so when it melts, it won't raise ocean levels. We'll only be directly affected when one of the big land-locked sheets of ice in Greenland or the Antarctic slides into the sea.

And if a picture is worth a thousand words, here's a low-resolution reproduction of a sequence of satellite images of Arctic ice. http://www.homerdixon.com/download/arctic_flushing.html

You can see a stream of multi-year ice flowing out of the Arctic basin down the east coast of Greenland. As of the middle of March, most of the basin, including the pole itself, appears to be covered only by seasonal ice.

The good news is the melting of the Arctic unlocks untold riches in the far North. The bad news is we may be on a the cusp of a natural disaster of Biblical proportions.
Check out my new gold and energy blog at MoneyAndMarkets.com

Best Craigslist Listings Ever


This one made me laugh.

But my friends like the one about pink plastic lawn flamingos better. I guess it's the redneck angle.

And I know that this one is going to make some of you laugh. Bad! Bad!
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Friday, April 25, 2008

Friday Chart Fiesta

Looking at this daily chart of the euro, gold and the US dollar, we can see …

Gold, which often moves in sync with the euro, is going lower.

The euro has broken its uptrend and seems to be going lower.

The dollar has broken its downtrend and seems to be going higher.

These trends could come to a head on April 30, when the Fed’s FOMC meets and rate cuts are announced and rate cut intentions are augered.

Here is a chart of the dollar itself …


And after Friday's wild action, let's take a look at oil ...

Yes, we’re all waiting for oil to pull back. But what if it doesn’t until after it racks up another $10 or $20 gain?

You can see how gasoline is very bullish and moving very closely with oil.

But the one to watch is natural gas. Take a look …

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Persian Gulf Incident Drives Oil Up $3 per Barrel

From the wires ...

NEW YORK (AP) -- Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two Iranian boats. Retail gas prices as expected rose further into record territory, nearing $3.60 a gallon.

XX UPDATE: I was confused earlier by a confusing CNN story written perhaps by confused reporters. Anyway, warning shots, not flares were actually fired. Still, this just shows how nervous everyone is, and how news can send oil soaring by $3.

It's probably going to go away quickly ... and I expect lower oil prices in the short-term. But that will just be a buying opportunity.

On the other hand, the shutdown of a North Sea pipeline that carries about 40% of Britain's oil output and more violence in Nigeria's oil-rich delta could see us at $120 sooner rather than later.
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Thursday, April 24, 2008

News You Can Use for Thursday -- Silver, Gold, Oil and More

Potentially HUGE news for platinum (and not good news) ...

New Mitsui Mining Autocatalyst Uses Silver, Not Platinum

Mitsui Mining and Smelting Co Ltd said on Wednesday it has developed a new catalyst for diesel engine cars that replaces the use of platinum with silver, a less conventional but much cheaper metal.

By substituting platinum with silver, the cost of precious metals in the production of autocatalysts, which clean car exhaust fumes, would be cut by more than 90 percent, the company said.

Bloomberg has MORE. However, the company won't start selling these new autocatalysts until 2012.

Rice Climbs Above $25 For First Time as Wal-Mart's Unit Limits Purchases Rice advanced above $25 for the first time as Wal-Mart Stores Inc.'s Sam's Club warehouse unit restricted purchases of some types of rice in the U.S.

XX a friend of mine with connections at Costco (!!) tells me that the price of Basmati rice at that retailer is going up on April 28th.

Soybeans Rally on Concern of Reduced Supply in Argentina as Strike Resumes
Farmers went on strike last month for three weeks leading to food shortages across the South American nation. Argentina is the world's third largest soybean supplier and leader in the sale of animal feed and vegetable oil made from soybeans.

Farmers need dry weather or food costs could go even higher
Experts said prices could rise more if a wet spring continues across the nation's midsection and further delays farmers from planting crops in muddy fields. Supplies already are tight and worldwide demand for grain shows no sign of letting up.


Gold Falls for a Sixth Day in London as Dollar Strengthens Against Euro Gold declined for a sixth trading session in London as the dollar strengthened against the euro, eroding demand for the precious metal as a hedge against further drops in the U.S. currency.

Brazil Oil Finds May End Reliance on Middle East, Forecaster Zeihan Says Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said.

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It's Take Your Child to Work Day

And I'm taking one of my children to work. I think it's best that my offspring start at the the bottom ... literally, scraping the bottom of the laser-equipped shark tank.Well, okay, that's a picture of Dr. Evil and Mini Me, not me and my daughter, who is joining me at work today. And we don't have laser-equipped sharks at Weiss HQ ...darn it!. But long-time readers know of my goal of becoming a James Bond villain.

I guess my daughter will be my first henchman (henchling?). I've got plenty of henching that needs doing around the office. Bwah-ha-ha-ha!
Check out my new gold and energy blog at MoneyAndMarkets.com

Wednesday, April 23, 2008

Gold, the Euro and the US Dollar

Following up on a question from the Red-Hot Commodity ETFs webinar yesterday -- the question about the relationship between gold, the US dollar and the euro -- take a look at this weekly chart ...You can see that gold was moving WITH the euro right up until last month, when the two suddenly started to diverge. You can see the gold-euro divergence a bit better on a daily chart ...Why is this happening? I've asked two currency traders this morning and neither of them knew. Now THAT'S scary. One of them told me: "I hope gold is leading the euro lower, because I have euro puts."

So to recap -- for quite some time, gold has been moving closely aligned with the euro and against the dollar. In the last month, there has been a disconnect -- the euro is going up but gold isn't joining in the rally. Why is this happening and what does it mean for the longer term? This is the question we must ponder now.

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Money and Markets -- Thinking the Unthinkable

"Thinking the Unthinkable" was my title for this Money and Markets piece about how oil could go to $200 a barrel. My editors changed the title -- I guess it required readers to think too much, LOL.

They also took out the line "Make Osama bin Laden cry like the girly man he is." Sigh.

Anyway, there are nifty charts and plenty of scary stats ...

Oil Tops $119! What's Next ...
by Sean Brodrick
Wednesday, April 23, 2008 7:30 AM
Since trading as low as $50.53 early in 2007, oil prices have exploded higher, stunning the world. Just yesterday, crude jumped to a new all-time high above $119 a barrel! Consumers would probably ... [More...]

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Wednesday News Bump -- Gold, Foreclosures and More

The World Gold Council has released its Gold Investment Digest for Q1 2008. It's a mix of bullish and bearish news. Jewelry demand dropped off in the fourth quarter, investment demand is becoming a bigger and bigger force in the market, and mine supply is falling off.

Here's a chart I found interesting.You can read the full report by CLICKING HERE (registration required).

Gold is down $16 as I write this. We could see a pullback today.

Metal Inventories Scraping bottom

Krugman's Take: As far as I can see, this creates real problems for any claim that high metal prices are speculatively driven.

'Low-Price' Electric Cars Coming in 2009

Norwegian automaker Think Global said Monday it planned to sell low-priced electric cars to the masses and will introduce its first models in the U.S. by the end of next year.
The battery-powered Think City will be able to travel up to 110 miles on a single charge, with a top speed of about 65 mph, the company said. It will be priced below $25,000.

XX Here's a very interesting chart and story I found on
Calculated Risk:

California Foreclosure Activity Up Sharply in Q1

From DataQuick: The number of mortgage default notices (NODs) filed against California homeowners in Q1 2008 increased by 39% over Q4 2007, to the highest level on record. This graph shows the annual NODs filed in California since 1992. For Q1 2008, a record 113,676 NODs were filed in California, compared to 254,824 total NODs in 2007. This is more than double the 46,670 NODs filed in Q1 2007.

XX Sean's note -- I believe the technical term for that chart is "EEKS!"

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Tuesday, April 22, 2008

SDS Chart

During my webinar today, a subscriber asked about the SDS -- the ultrashort S&P 500 ETF.

Here's my take ...
I'd really want the SDS to close above that recent overhead resistance (1) before going long the SDS ... which in turn would mean going double short the S&P 500.
Check out my new gold and energy blog at MoneyAndMarkets.com

Higher Oil and Hot Air!

I talked to Phil at HoweStreet.com yesterday on a range of topics. You can listen to that interview here: http://tinyurl.com/6oy3m8

Oil production is taking a cliff dive in Mexico. The state-run oil company, PEMEX, announced that its production fell 7.8% to 2.91 million barrels a day in the first quarter and exports dropped even more, by 12.5%. Yowch!

And then there's the news from our friends in Saudi Arabia. The world's biggest oil exporter says it has no plans to beef up its oil production capacity beyond what it had already targeted for 2009.

I have to say this is making me feel more secure about my energy investments. How about you?

Finally, Red-Hot Commodity ETFs subscribers, remember the members-only free Webinar today: Click here to register now! If this works out well, I plan to do webinars for the other services as well.

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Monday, April 21, 2008

Monday Is Chart Day -- Oil, Gasoline, Silver & More

So glad to be long oil stocks and natural gas today, with oil over $117 and natural gas climbing. Oil Rises to Record Above $117 After OPEC Says No Need to Boost Production Crude oil rose above $117 a barrel for the first time after OPEC said it will maintain production, rejecting calls from the U.K. and Japan to boost output.


Gold and silver underperformed energy last week – we could see some weakness in the short-term. That could be a set-up for a big move higher.

Codelco Opens One of Three Strikebound Copper Mines as Workers Defy Picket Codelco, the world's largest copper producer, reopened its El Teniente mine after night-shift employees crossed barricades of striking contract workers. Two other Chilean copper mines remained closed as the strike, which propelled copper prices to a record high, continued a fifth day.

More News You Can Use ...
Dollar Decline Decelerates With G-7 Blessing as Weakening Shows No Endgame Traders betting on intervention by the Group of Seven nations to stem the dollar's 7.7 percent decline against the euro this year may be disappointed.

Gold Erases Gain in London; Dennis Gartman `Abandoning Ship' From Outlook Gold erased gains in London after Dennis Gartman said he is ``abandoning ship'' on his outlook for higher gold prices.

Asia May Risk `Silent Famine' as Poor Can't Afford Food, UN Agency Warns A ``silent famine'' risks emerging in some Asian countries where food prices including rice are escalating beyond the reach of the poorest people, the World Food Program warned.

And Uranium Drops a Bit More
Long term prospects and short term supply-demand characteristics in the uranium market continue to clash with market watchers and researchers clinging on to a continuously bullish outlook for the commodity, only to see the spot price move into the opposite direction.

South Australian Grain Regions May Get Best Rain in Five Months
Grain farmers in Australia, the world's sixth-largest wheat exporter, rely on rain at this time of year to plant winter crops including canola, barley and wheat. The nation's wheat output is forecast to almost double to 26 million metric tons this year as farmers seek to benefit from prices that reached a record.

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Sunday, April 20, 2008

Is the Dollar Doomed?

Max Keiser thinks so, and writes about it in an entertaining piece for Huffington Post. Anyone who comes up with the well-turned phrase, "Alan Greenspan, the Ayn Rand loving currency assassin" is worth reading in my book.

You can read his thoughts HERE.

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Sunday Reading

Is the US Going to Collapse Like the Soviet Union? From what I've seen and read, it seems that there is a fair chance that the U.S. economy will collapse sometime within the foreseeable future. It also would seem that we won't be particularly well-prepared for it. As things stand, the U.S. economy is poised to perform something like a disappearing act. And so I am eager to put my observations of the Soviet collapse to good use.

Last week's EIA conference It would be nice if the world were really like the EIA oil supply models! Also: If you expect that plug-in cars will save the day, you may want to check out what the electricity people are saying about the current state of electrical supply.

U.S. Home Sales May Decline as Orders From Overseas Help Stabilize Output The collapse in U.S. home sales showed no sign of ending in March, while orders from overseas helped manufacturing stabilize, economists said before reports this week.

Asia's Optimism Misplaced as Oil Heads for $200 The decoupling story has come full circle. A year ago, Asia had outgrown the West. Then, as Asian shares fell, those arguing the region could stand alone became very quiet. Now the talk is that even with the U.S. teetering on recession, Asia's rapid growth will allow its markets to rise. Call it Decoupling Theory 2.0. There are problems with this thesis, not least of which is the surging price of oil and food, and risks of wage-related inflation.

Report: Iran's president says oil prices too low TEHRAN, Iran - Iran's hard-line president declared that crude oil prices, now above $115 a barrel, are too low, state media reported Saturday. President Mahmoud Ahmadinejad told an oil and gas exhibition in Tehran on Friday that he thought the commodity still had to "discover its real value," according to the Web site of Iran's state-run television.

OPEC Has No Need to Raise Oil Production, President Khelil, Ministers Say The Organization of Petroleum Exporting Countries doesn't need to raise oil production and any increase will not affect prices, officials including the group's president, Chakib Khelil, said.

XX Americans will cut back on a lot just so they can keep buying gasoline. And why not? How else are you going to get around? The train doesn't run by my house.

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Saturday, April 19, 2008

Food Tsunami

The Economist discovers the global food crisis.

And as I mentioned in Wednesday's Money and Markets, China's grain reserves may not be all they're cracked up to be.

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Friday, April 18, 2008

More Good News on Natural Gas

Commodities took a swan dive this morning as the U.S. dollar rallied hard. Now, the reason being touted on CNBC for the rally borders on laughable -- the "worst may be over" for the banks. But, you can't argue with the rip-roaring rally the dollar enjoyed this morning.

But after selling off, commodities have started to come back -- led by natural gas. Red-Hot Commodity ETF subscribers are long natural gas through the United States Natural Gas fund, of course. Oil and oil stocks (like the XLE) followed shortly afterward. Gold is still trying to walk it off, but don't give up on the metal just yet.

Apparently (so I hear) the spark for the rally in natural gas was this story in the Wall Street Journal ...

Global Trade Boosts Natural-Gas Price
Natural-gas prices in the U.S. have risen 93% since August as power-hungry nations compete in a global market that scarcely existed five years ago. The trend has profound implications for the troubled U.S. economy.

Don't let one day swings in anything -- natural gas, oil, gold, you name it -- change or even make up your mind. Isntead, watch those weekly trends and the fundamentals; that's about the only place we can find honesty on the Street today.

Oh, and as for the dollar's rally? Well, the greenback is still up, but it has given back a lot of those gains ...We'll see what Monday brings.


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TGIF -- News and Charts

Natural gas may pull back today with oil prices. Just keep the long-term trend in mind ...

And let's keep the long-term trend in oil in mind as well. This is a chart from my upcoming webinar next Tuesday ...
And energy stocks look like a good place to be in this volatile market ...
AGRICULTURE

Rice Advances to Record as Export Curbs Stoke Concern of Food Shortages Rice futures rose for a fifth day, recording the biggest weekly advance in at least seven years, on concern export curbs imposed by China and Vietnam will spread as importing nations struggle to meet their needs. A global food crisis has reached "emergency proportions," United Nations Secretary-General Ban Ki-Moon said.

Global Wheat Harvest Will Advance 6% as Farmers Plant More, Rabobank Says Global wheat production will advance 6 percent to an all-time high this year, as record prices spur farmers to grow more, Rabobank Group said.

CURRENCIES

Yen Heads for Biggest Weekly Loss Since September as Carry Trades Revived The yen headed for its biggest weekly loss against the euro in seven months on speculation financial firms will weather credit-market turmoil, encouraging investors to buy higher-yielding assets funded in Japan.

Crude Oil Declines in New York, Retreating From Record, as Dollar Recovers Crude oil fell in New York, retreating from a record yesterday, as the dollar recovered from an all-time low against the euro, reducing the appeal of commodities.

XX and yet, as my friend and crackerjack currency trader Boris Schlossberg points out, "with economic data continuing to favor the euro – German Producer Prices reached a 15 month high on rising energy costs – it may be just a matter of time before the euro bursts through 1.60."

METALS

Power Generation Shortages Underpin Global Commodities Gains, Goldman Says A shortage of electricity generation that shows no sign of abating is underpinning gains in global commodity prices, according to analysts at Goldman Sachs Inc.

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Thursday, April 17, 2008

News For Thursday -- Agriculture, Energy and More

AGRICULTURE

Philippine Rice Tender Attracts Two-Thirds of Grain Sought as Prices Soar The Philippines, the world's biggest rice importer, received offers for just two-thirds of the grain it sought at a government tender today, stoking concern about a food shortage amid record prices.

Egypt Plans to Reduce Rice Plantings to Save Water, Increase Corn Acreage Egypt, Africa's largest rice exporter last year, will reduce the land allocated for planting the grain to save water and encourage farmers to grow more corn, Agriculture Minister Amin Abaza said.

India Buys 7% More Wheat From Farmers, Boosting Reserves to Curb Inflation India, the world's second-biggest wheat grower behind China, has bought 7 percent more wheat from farmers this year to bolster state reserves that may be used to curb inflation running near a three-year high.
Chicago Rice Futures Advance to Record, Leading Gains in Wheat, Soybeans Rice futures in Chicago soared for a fourth day, reaching a record as Turkey and the Philippines seek to buy the grain amid dwindling global supplies. Wheat, corn and soybeans gained.

White Sugar Trades at Six-Week High as Record Oil Spurs Demand for Ethanol White, or refined, sugar traded at a six-week high in London as crude oil rose to a record, spurring demand for alternative fuel additives such as ethanol. Cocoa and coffee also gained.

METALS

Platinum Gains to Five-Week High on South Africa Power Shortage; Gold Up Platinum climbed to the highest in almost five weeks and gold rose in London on speculation power shortages in South Africa will curb growth in supply as demand for the precious metals increases.

ENERGY

Crude Oil Rises to Record on Unexpected Decline in Supplies, Weaker Dollar Oil rose to a record after the U.S. Energy Department reported an unexpected decline in the country's crude and gasoline inventories and the dollar traded at an all- time low against the euro, boosting investment in commodities.

CURRENCIES

China's Yuan Advances to Post-Peg High as Wen Says Curbing Prices Priority The yuan rose to the strongest since a link to the dollar was scrapped in 2005 after Premier Wen Jiabao reiterated the government's priorities are to prevent economic overheating and temper inflation.

Dollar Rises Versus Euro as Reuters Reports Juncker Says G-7 Misunderstood The dollar rose from a record low against the euro as Reuters reported Luxembourg Finance Minister Jean-Claude Juncker said financial markets have misunderstood the Group of Seven's position on currency volatility.

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That's STILL over 1,000 Barrels Per Second!

I noted last week that with the IMF lowering its forecast for US economic growth -- to 0.5% from a previous estimate of 1.5% -- the International Energy Agency is lowering its forecast for global oil demand.

The Paris-based energy agency now expects the world to use 87.2 million barrels per day.

But that's 3.63 million barrels per hour ... 60,555 barrels per minute ... and 1,009.25 barrels per second.

So even with an economic slowdown, we're still going to use 1,000 barrrels per second of a finite resource.

That, my friends, is how you get to $200 per barrel oil.

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Bullish Uranium News?

Uranium has had so many stakes stuck in its heart it could give Bela Lugosi a run for the money, and the spot price is down AGAIN in the most recent week. But here's some interesting news from Platts ...

Deutsche Bank may form uranium fund

Platts has learned that Deutsche Bank AG through a subsidiary called DB Commodity Services is working to create a fund that will buy physical uranium through New York Nuclear Corp. and hold the uranium in storage accounts that Nynco has at uranium conversion facilities in North America and Europe. DB has been making presentation to investors about the fund.

And utility demand may be more than some have anticipated later this year, an analyst said, given that utility long-term uranium contracts no longer contain the delivery flexibilities those contracts once had. This means that utilities may need to come to the spot market to buy lots of 25,000 to 100,000 pounds to meet actual nuclear fuel reload requirements, the analyst said.

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Wednesday, April 16, 2008

Bullish Silver Factoid and Chart

The iShares Silver Trust (SLV) now holds 184.7 million ounces of silver. That is more than 20% of the world’s TOTAL demand for silver in 2006, the last year for which The Silver Institute has published records and MORE than the total amount of silver produced by mines that year -- 161.4 million ounces.

In other words, silver ETFs around the globe are becoming a real force in the market.

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Profit Taking in Commodities

No sooner do I fire off a Red-Hot Commodity ETFs issue talking about how commodities are soaring than the darned market turns around as jittery traders book gains.

Damn it! I hate it when my issues are out-of-date after five minutes! Well, at least gold is holding up well. And that, I think, is one piece of evidence that what we're seeing is just profit-taking in energy and grains.

UPDATE: Now commodities have reversed AGAIN and are higher! Holy smokes!

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Food Wars

So yesterday, I wrapped up my MoneyandMarkets for today, with a title that I thought was great: "Food Wars." Now, true, I have a 5-year-old who wants to be Anakin Skywalker and we build Legos Star Wars playsets together, so maybe I'm a bit biased. But I think the title "Food Wars" conveys excitement, even if only in some kind of turbocharged, John Belushi in "Animal House" kind of way.

So what did the editors title it?

Food Crisis May Threaten Your Portfolio
by Sean Brodrick
Wednesday, April 16, 2008 7:30 AM
The United Nations' Food and Agriculture Organization (FAO) said that world cereal production may jump a record 2.6% this year as farmers boost plantings. In other words, supply is fine. Except ... [More...]

Sigh. It's a good read anyway, so you might want to click through.

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Tuesday, April 15, 2008

HoweStreet -- Oil, G-7 and Uranium

Here is a link to my latest interview with HoweStreet.com: http://tinyurl.com/6a32kn

Phil and I cover a whole range of topics.

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News You Can Use for Tuesday

AGRICULTURE

Kazakhs Ban Wheat Exports to `Ensure Food Security' (sorry, no web link)

(Bloomberg) -- Kazakhstan, the world's sixth-largest wheat exporter, banned exports of the grain in a bid to control domestic prices for bread and other food. The government decided today to halt exports until at least Sept. 1 to ``to ensure food security,'' Prime Minister Karim Masimov's press service said in an e-mailed statement. Masimov told the Cabinet on April 7 that the global rise in food prices was ``quite alarming.''

Agriculture ETFs Could Offset Food-Price Growth, Wall Street Journal Says Specialized exchange-traded funds are snapping up agricultural products, attracted by global demand for food and alternative fuels such as ethanol, the Wall Street Journal said in its ``Fund Track'' column.

Chicago Corn Futures Gain, Rice Reaches Record After U.S. Planting Report Corn futures in Chicago rose for a second day and rice prices reached a record after a government report showed plantings of the two U.S. crops were delayed following excessive rain. Soybeans and wheat also advanced.

India Urges States to Take Action Against Food Hoarding to Tame Inflation India's Trade Minister Kamal Nath asked state governments to crack down on hoarding of essential commodities after rising food prices pushed inflation to more than a three-year high in Asia's third-biggest economy.

XX Look for my MoneyandMarkets.com column tomorrow on this subject – the working title is “Food Wars”

ENERGY

Crude Oil Rises to a Record on Mexico Terminal Closures, China Fuel Demand Crude oil rose to a record in New York on supply disruptions in Nigeria and Mexico and rising fuel demand in China.

METALS

Gold Advances in Asia Trade on Dollar Outlook, Rising Crude Oil Prices Gold climbed in Asia on speculation the dollar may weaken after the Group of Seven nations failed to stem its decline, and record crude oil prices boosted the appeal of the precious metal as a hedge against inflation.

XX I’m liking gold here!

Copper Gains as Freeport's Indonesia Mine May Reduce Output; Tin at Record Copper rose in London on speculation lower production from the Grasberg mine in Indonesia will compound a supply squeeze. Tin climbed to a record.

CURRENCIES

Canada's Dollar to Gain as Economy 'Sits Out' U.S. Recession, CIBC Says Canada's dollar will rise to a one- year high by December as surging commodity prices shield the nation's economy from the economic slowdown in the U.S., according to CIBC World Markets.

XX we’ll put this in the “decoupling” camp, as economists argue if the global economy can decouple from a recession in the US.

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Monday, April 14, 2008

More News You Can Use

ECONOMY & STOCKS

Retail Sales in U.S. Unexpectedly Rose in March on Jump in Gasoline Sales Retail sales in the U.S. rose in March, reflecting increases in receipts at service stations as gasoline prices jumped.

XX A few points here …

Spending on gasoline essentially accounted for the whole increase of 0.2%. In fact, excluding autos and gas, sales were up just 0.1%.

Receipts at gasoline stations rose 1.1% in March following a 0.5% decline the prior month. Over the past year, gasoline sales are up 18.9%. In short, in both the short-term and the long-term, gasoline sales are following prices.

I think this shows that people will cut back on many other things before they cut back on driving -- America's suburban lifestyle isn't set up to accommodate anything else.

And that means American consumers can endure $5 and $6 a gallon gasoline … and higher … without crying uncle (cutting back on purchases). However, they will cut back on other purchases just to be able to keep driving around.

And I’d like to point out that gasoline is STILL cheap. A cup’s worth of gasoline (one-sixteenth of a gallon) will get me and my Honda CR-V to the store and back with a load of groceries. It sure beats pushing a wheelbarrow.

Goldman Strategist Says U.S. Earnings Are `Awful,' Will Pull Down S&P 500 The U.S. corporate earnings season got off to an ``awful'' start and stocks will continue to fall, according to Goldman Sachs Group Inc.

INFLATION

U.K. Producer Prices Surge to Fastest Pace Since 1991 on Raw-Material Cost U.K. producer prices rose in March at the highest annual rate since 1991 because of record increases in raw material costs, adding to the danger that faster inflation will become entrenched in the economy.

AGRICULTURE

Philippines Presses China, Japan to Convene Asian Summit on Food Crisis The Philippines, the world's largest rice importer, is urging China, Japan and other Asian nations to attend an emergency meeting on the region's food crisis to try and reverse export curbs that have driven prices to a record.

Soybean Futures Climb in Chicago on China Demand Prospect; Wheat Advances Soybean futures in Chicago rose on speculation demand from China, the world's largest importer of the oilseed, will increase. Corn gained for the first time in three days and wheat also advanced.

URANIUM
Uranium Drops to 16-Month Low on Supply Exceeding Demand, TradeTech Says Uranium fell to a 16-month low, or half the record price reached in June, after new supplies became available and exceeded demand.

CRUDE OIL

Shell Crews Work to Restore Oil Flow Through Pipeline Royal Dutch Shell Plc crews in Tennessee are working to repair a pipeline crack that cut the flow of more than a million barrels of oil a day from the Gulf of Mexico to the Midwest at a time of near-record prices.

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

Monday Charts -- The Dollar, Gold and Oil

It’s earnings week, and big names making “true confessions” include IBM, Intel, Coke Caterpillar, City and more. GE’s abysmal earnings report and forecast last week really took the wind out of bulls’ sails, and there’s no reason things should change this week. Wachovia just missed its earnings forecast big-time this morning.

And then there’s the dollar. The Group of Seven nations met over the weekend, and the G-7 surprised investors by expressing concern about sharp swings in major currencies. This was seen as supportive of the US dollar.

"Since there was an expression of concern against sharp fluctuations, there is a chance in the near term that the dollar will be bought back, especially against the euro," said Haruhisa Takagi, head of foreign exchange spot trading at Sumitomo Mitsui Banking Corp.

The greenback gained on the news, then gave most of it back as traders realized the G-7 was just blowing hot air.

"The dollar's weak trend doesn't change just because a G7 communique expressed concern about the currency's weakness, as it is based on fundamentals," said Tohru Sasaki, chief forex strategist at JPMorgan Chase Bank.

The dollar had a lot riding on the G-7, and unless there is currency intervention soon, we could see the dollar head lower. Look at a weekly chart of the greenback ...

The dollar is oversold on a weekly chart, so a bounce is possible. Then again, it can remain oversold for a long, long time.

The short-term direction in the dollar should push gold around …

And let’s look at oil …

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Saturday, April 12, 2008

Talk Is Cheap ... and so is the Dollar

The Wall Street Journal tells us ...

G-7 Sets Aggressive Tone On the Sagging Dollar

WASHINGTON -- The world's major economic powers issued a warning to financial markets Friday that they won't sit by and watch the dollar continue to slide against other big currencies.

In a highly unusual move, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and their counterparts from the Group of Seven nations said in a statement: "Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability."

XX My question -- how does "concern" translate into real action? The third paragraph of the story tells us ...
Currency traders scrutinize the wording of official pronouncements for the tiniest changes in inflection. By those standards, Friday's communique was blunt, even though the group stopped short of using official money to buy up dollars and push the currency upward.
The once mighty greenback has been declining against the euro since 2000. If there isn't action beyond words by the G-7 on the dollar soon, I expect its slide to become steeper and faster.
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Weekend Laughs

Here are some business jokes to tickle your funnybone ...

MANAGEMENT TRAINING
Lesson 1:

A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings. The wife quickly wraps herself in a towel and runs downstairs. When she opens the door, there stands Bob, the next-door neighbor.

Before she says a word, Bob says, "I'll give you $800 to drop that towel."

After thinking for a moment, the woman drops her towel and stands naked in front of Bob After a few seconds, Bob hands her $800 and leaves.

The woman wraps back up in the towel and goes back upstairs. When she gets to the bathroom, her husband asks, "Who was that?"

"It was Bob, the next door neighbor," she replies.

"Great!" the husband says, "did he say anything about the $800 he owes me?"

Moral of the story :
If you share critical information pertaining to credit and risk with your shareholders, in time, you may be in a position to prevent avoidable exposure.

Lesson 2:

A priest offered a Nun a lift. She got in and crossed her legs, forcing her gown to reveal a leg. The priest nearly had an accident. After controlling the car, he stealthily slid his hand up her leg.

The nun said, "Father, remember Psalm 129?" The priest removed his hand.

But, changing gears, he let his hand slide up her leg again.

The nun once again said, "Father, remember Psalm 129?"

The priest apologized "Sorry sister but the flesh is weak."

Arriving at the convent, the nun sighed heavily and went on her way.

On his arrival at the church, the priest rushed to look up Psalm 129

It said, "Go forth and seek, further up, you will find glory."

Moral of the story:
If you are not well informed in your job, you might miss a great opportunity.

Lesson 3:
A sales rep, an administration clerk, and the manager are walking to lunch when they find an antique oil lamp. They rub it and a Genie comes out.

The Genie says, "I'll give each of you just one wish."

"Me first! Me first!" says the admin clerk. "I want to be in the Bahamas, driving a speedboat, without a care in the world."

Puff! She's gone.

"Me next! Me next!" says the sales rep. "I want to be in Hawaii, relaxing on the beach with my personal masseuse, an endless supply of Pina Coladas and the love of my life."

Puff! He's gone.

"OK, you're up," the Genie says to the manager.

The manager says, "I want those two back in the office after lunch."

Moral of the story:
Always let your boss have the first say.

Lesson 4
An eagle was sitting on a tree resting, doing nothing. A small rabbit saw the eagle and asked him, "Can I also sit like you and do nothing?"

The eagle answered: "Sure , why not."

So, the rabbit sat on the ground below the eagle and rested. All of a sudden, a fox appeared, jumped on the rabbit and ate it.

Moral of the story:
To be sitting and doing nothing, you must be sitting very, very high up.

Lesson 5
A turkey was chatting with a bull. "I would love to be able to get to the top of that tree," sighed the turkey, "but I haven't got the energy."

"Well, why don't you nibble on some of my droppings?" replied the bull.

They're packed with nutrients."

The turkey pecked at a lump of dung, and found it actually gave him enough strength to reach the lowest branch of the tree. The next day, after eating some more dung, he reached the second branch. Finally after a fourth night, the turkey was proudly perched at the top of the tree.

He was promptly spotted by a farmer, who shot him out of the tree.

Moral of the story:
Bullshit might get you to the top, but it won't keep you there.
Check out my new gold and energy blog at MoneyAndMarkets.com

Friday, April 11, 2008

Six Stories That Will Move the Market Today

1) GE's poor outlook is weighing on stock futures -- at this point, Dow futures are down over 100 points.
General Electric Profit Declines 12% on Finance Unit; Annual Forecast Cut General Electric Co. said first- quarter profit fell 12 percent, missing analyst estimates, because it couldn't complete asset sales and had higher-than- expected losses at its finance businesses due to disruptions in global capital markets. GE cut its full-year forecast.

2) Boris Schlossberg writes about some of the whipsaw forces driving currencies ...

Most of the dollar crosses have started to consolidate ahead of the G-7 meetings as a number of initiates to restore stability to the financial system will be bantered about. Monetary leaders are expected to weigh a number of ideas to provide additional liquidity to the markets and create measures to prevent recent problems from repeating in the future. New BoJ governor Shirakawa is expected to steer the talks toward restoring the dollar’s strength, as his country has been negatively impacted by its recent depreciation. However, don’t expect the U.S. and European countries to support those efforts, as Kathy Lien wrote in Why G-7 meetings matter.

And yes, the G-7 is meeting.

3) The China problem isn't going away, and the surge in China's currency reserves could push the US government to further weaken the US dollar (in a misguided attempt to improve our trade balance with China)
China's Foreign-Currency Reserves Surge 40% to $1.68 Trillion on Inflows China's foreign-exchange reserves, the world's largest, surged to $1.68 trillion at the end of March, adding pressure on the government to prevent money inflows from fueling inflation already at an 11-year high.

4) The mortgage crisis continues to spread overseas.
S&P Cuts Rating on $4.6 Billion of Australian, New Zealand Mortgage Bonds Standard & Poor's lowered the credit ratings on about A$5 billion ($4.6 billion) of Australian and New Zealand residential mortgage-backed securities in the first cut to the nations' home loan bonds from the U.S. housing collapse.

5) Global inflation continues to worsen.
India to Scrap Export Incentives on Rice, Steel as Inflation Accelerates India scrapped export incentives for rice, steel and cement to boost local supplies and tame runaway inflation, which is damping consumer demand for manufactured products.

6) We are one bad harvest away from a global food crisis.
Philippines Seeks Wheat `All Over' After China Turns Down Export Request The Philippines said China turned down a request to supply wheat, adding to concern that the world faces a worsening shortage of staple foods that has already driven grain prices to records.

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Thursday, April 10, 2008

Farm Talk

Here's a comment from another farmer, passed along by a friend ...

In 2006, we finished planting my crops on April 23. In 2007, we were done on April 18. I don't want to be the first guy planting, but I don't like being third, either. Early (timely) planting won't happen this year if the weather forecast for the coming weekend proves accurate. Soils are completely saturated to the point of that erosion has already occurred and will get worse with additional heavy rains, and are COLD. I can't tell you how cold because I've not even checked temps yet.

If planting is not done by May 1, there will be some nervous farmers in LaSalle County and I'll be one of them. There are many factors that I can't manage that resulted in outstanding yields in '06 and '07 and early planting is one of them. Hard to over-emphasize the importance of having seeds in the ground during the long days of May.

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Interesting Morning Reads

Getting Ready for the Third Wave of Financial Panic
Mortgage rates are going up even as central bank rates are going down, and it means that banks still see more skeletons in each other's accounts. More scrificial lambs mght be needed...

Oil Prices Rise to Record $110 a Barrel
"I keep hearing from professional traders who are getting out of the oil market because it is just too volatile," said Sean Brodrick, a Florida-based natural resource analyst for the e-mail investment newsletter Money and Markets."When you scare away the pros," Brodrick said, "you know you're looking at a real roller coaster ahead."
[XX actually, I believe I said "sitting out" -- it's not like these guys are retiring. They're just trading grains, which are an easier trade right now, and avoiding the headache (and wallet-crunch) of energy at this time].

Inflation Is Getting Worse
[nice charts in this one]No one really knows where prices will end up -- despite their best intentions and good faith efforts to try and figure it out. However, here is the basic issue with energy demand: so long as India and China are still growing at strong clips, expect more upside price pressure. Those two countries add 2 billion people to the demand side of the equation.
Check out my new gold and energy blog at MoneyAndMarkets.com

This Is Your 19th Dollar Breakdown

News this morning was bearish for the dollar -- the British Central Bank only cut rates by 25 basis points and the European Central Bank didn't cut rates at all.

If you look at the chart above, you can see the US dollar breaking down from a triangle. It looks ready to go revisit its lows from last month. So, sell the US dollar and buy gold, right?

Not so fast! If the experience of the last painful month has taught us anything, it's that the market's zigs and zags are getting bigger. Maybe the dollar will go directly to its old lows. But here is an alternate scenario:

Yes, the US dollar is breaking down from a triangle, so it should go lower. The problem is, that’s what everyone expects. So that means …
  1. It could jig lower and suck in some shorts
  2. then the dollar could rebound, the shorts get burned and cover and some other people go long
  3. then the dollar goes lower AGAIN, and the longs get burned and the shorts are disgusted.
  4. It's hard to say what will happen. But could it be better to wait and see if we get a better buying opportunity in gold?
Here are some more news stories on currency developments ...

Bank of England Cuts Rate to 5% as House-Price Slump Fans Recession Risks The Bank of England cut the benchmark interest rate for the third time since December as higher credit costs and the worst housing slump in 16 years threatened to push the economy into a recession.

ECB Leaves Benchmark Interest Rate at Six-Year High to Contain Inflation The European Central Bank kept interest rates at a six-year high today to quell inflation, even as the euro's appreciation and a credit squeeze threaten to choke economic growth.

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Wednesday, April 09, 2008

Hurricane Forecast -- We're So Screwed

I literally shouted aloud in despair when I read this ...

HURRICANE FORECAST TEAM AT COLORADO STATE UNIVERSITY PREDICTS WELL ABOVE-AVERAGE SEASON

BAHAMAS - The Colorado State University forecast team upgraded its early season forecast today from the Bahamas Weather Conference, saying the U.S. Atlantic basin will likely experience a well above-average hurricane season.

"Current oceanic and atmospheric trends indicate that we will likely have an active Atlantic basin hurricane season," said William Gray, who is beginning his 25th year forecasting hurricanes at Colorado State University.

The team's forecast now anticipates 15 named storms forming in the Atlantic basin between June 1 and Nov. 30. Eight of the storms are predicted to become hurricanes, and of those eight, four are expected to develop into intense or major hurricanes (Saffir/Simpson category 3-4-5) with sustained winds of 111 mph or greater. Long-term averages are 9.6 named storms, 5.9 hurricanes and 2.3 intense hurricanes per year.


Read the whole thing at http://www.newsinfo.colostate.edu/.


Update: My friends Mike (a weather bug's weather bug) and Karen are trying to talk me in off the ledge, noting that Gray's forecast fell apart last year.

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