Re-Direct to My UncommonWisdomDaily Blog

Due to time constraints, I have to stop publishing to this blog and focus my efforts on my UncommonWisdomDaily blog. I'll come back to this one down the road, probably, if there are things I can't fit on UncommonWisdomDaily.com. But for now, I have to redirect traffic to: http://blogs.uncommonwisdomdaily.com/red-hot-energy-and-gold/



That's a rather long and clunky web address, so if you want a tinyurl address, here you go: http://tinyurl.com/dxfyhs

It's the same great blog (perhaps without the worst of my sophomoric attempts at humor) with lots of charts and plenty of analysis of the natural resource markets. So please be sure to bookmark it.

Thanks, Sean

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

Will January Haunt Us?

The babbling heads are atwittter with the terrible statistics on January — the Dow closed down 8.8% for the month and the S&P dropped 8.75%. And if you measure from January 2nd (first trading day of the New Year) and not December 31st, the Dow dropped 11.4% and the S&P 500 shed 11.3%.

The Wall Street standard is that if the S&P falls in January then it will fall for the rest of the year. Since 1969 this trend has been repeated 32 of a possible 39 times.

Other statistics:

Dow Jones Industrial Average: Since 1897, the Dow ’s full year has followed its January direction 72.3% of the time.

S&P 500: Since 1929, the S&P’s full year performance has followed January 76.3% of the time.

Nasdaq: Since 1970, the Nasdaq’s full year moves in the same direction as January 75.7% of the time.

The logic behind this is simple. Traders have a nose for trouble and they start selling a bad year early.

Hey, you know what had a good January? Gold ended the month up 5.2%, despite the fact that it closed down as much as 8% on January 14th.

Today gold is down about $10 as I write this, but holding support at $900. Will it continue to hold support? Stay tuned.

Here is some other news of interest …

Natural Gas Glut Could Hit U.S. As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas. Just as these new supplies come on line, worldwide demand is expected to drop as the global recession deepens.

Wind turbine firms feel downturn’s pinch Last summer, wind turbine manufacturers couldn’t make parts fast enough to meet demand. Now, industry executives say, financing has all but disappeared because of the economy, causing some planned projects to be put on hold. Unless there’s a robust economic rebound, or the government steps in, they say, construction of wind turbines nationwide will be set back, and the companies that make turbine parts could be forced to cut jobs.

Zimbabwe Removes 12 Zeroes From Currency in Bid to Quell Black Market Zimbabwe, which has the world’s highest inflation rate, slashed 12 zeroes off its currency and announced measures to make trade in foreign exchange more transparent, Gideon Gono, the central bank governor, said.

Investment Planned for Australia Drops to $392 Billion as Miners Pull Back Planned investment in Australia dropped for the first time in four years as mining companies scaled back production because of the global economic slowdown, Access Economics said.

2008 Was Worst for Consumer Spending in 47 Years A Commerce Department report showed spending by individuals fell 1% last month, after dropping a revised 0.8% in November. Economists surveyed by Briefing.com had forecast a 0.9% drop.

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

Gold Soaring … And So Is Cost of Bailout

Gold soared this morning, so I feel vindicated, if not fine.
You saw the gold chart I posted yesterday. Today’s chart is more of the same, only with surging volume, as gold rises to a 3-month high.

That’s usually a bullish sign. The question before us now is, is this a real breakout or the mother-of-all fakeouts? Remember, this is happening when the U.S. dollar is also very strong, and currency markets are much bigger than the metals markets.
I think it’s a risk worth taking. We’ll have to move fast if gold is lying to us, though, so if you’re one of my subscribers, stand by.
Now, here is news you can use for this Friday …
Goldman Sachs says the cost of shoring up banks could run as high as $4 trillion. That’s up from the $1.5 trillion already spent specifically on banks. Why, why, WHY aren’t we proceeding with a Resolution Trust Corporation solution to this? Like the one we used in the Savings & Loan Crisis in 1989. Instead, we keep pouring good money after bad. Yes, an RTC solution would cost money but not as much money as this cockamamie bailout we’re seeing now, and it would mean an end to the whole mess. Right now, the bailout is open-ended. How are we supposed to pay back another $4 trillion? The US economy is shrinking, tumbling the most since 1982.
And that, my friends, is one reason why gold is taking off.
Meanwhile, California — the world’s eight largest economy – is so broke that the state is going to start sending out IOUs. This despite the fact that the governator is going to furlough ALL of the state’s rank-and-file employees for two months. He’d better not furlough the prison guards, because once you stop sending poor people their food stamps, what else do they have to lose? I have to think the chance of riots in California is rising. Meanwhile, California is dealing with the worst drought in its history.
Another sign of impending apocalypse — scientists have invented carnivorous robots. It’s only a hop, skip and a jump to Skynet and the Rise of the Machines.
On the lighter side, here are some cool electric concept cars. Let’s hope we don’t end up too bankrupt to afford them.

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

A Lot Happened While I Was Away

Chart of the ever-lovin’ day …

This chart is just the beginning of the new report I just sent to my Red-Hot Global Small-Caps subscribers, “3 Red-Hot Picks From Vancouver.” If you’re a subscriber, look in your in-box. If you’re not a subscriber, you can change that pretty quickly and act on these three recommendations immediately: click here.

Anyway, I’m back from Vancouver. Here are some of the things that caught my eye while I was away …

First, the Guardian in the UK gives us

“25 People at the Heart of the Meltdown.” It’s a bit British-heavy, but that’s understandable for a paper published in London. But why’d they leave out Robert Rubin? Maybe I should make my own list.

Meanwhile, John Hempton at Bronte Capital believes the

Fed should literally try throwing money out of helicopters. I have to believe there are aspects to that plan that he is just not thinking through.

Now for the story that caused steam to come out of my ears in my Vancouver hotel room. Remember how the US taxpayers have bailed out Citigroup (

C: 4.06 -0.14 -3.33%) with $45 billion of our hard-earned money? Well, Citi turned around and was going to buy a $50 million corporate jet from France.

Citigroup is one of the biggest recipients of TARP funds. It received $25 billion under the original payout late last year and received another $20 billion after its stock started to sink in November. It also got the government to backstop some $306 billion in troubled assets on its books. <>So, naturally, buying a $50 million corporate jet is the only thing to do <>

Perhaps I missed it because I was running around Vancouver like a crazy man, but I didn’t see this story on CNBC. Maybe that’s because back in 2007 — almost exactly two years ago – CNBC’s

Maria Bartiromo got in some hot water for taking Citi’s corporate jet with then Citi-executive Todd Thomson.

Oh, wait, look here: CNBC prints an AP story that

Citi will not take possession of the new jet. That story ran at 8:04 pm the day the scandal broke. Yeah, hot on the trail of that one!

And it’s not that Citi suddenly developed a sense of shame.

ABC News reports that Obama administration officials called Citi execs about the jet and told them to “fix it.”

Now, don’t you go feeling sorry for the Citi execs. Even after reducing the size of their air fleet, they STILL have two jets.

In other news, the

Congressional Budget Office compared the economic downturn we’re experiencing today to the Great Depression. Does that make it official? Someone find out for me.

Now for three non-business stories that interested me and may interest you …

1) Here is some comic relief if you have a weird (gallows) sense of humor:

An Interview With The Central Banker of Zimbabwe. And if you think a trillion is a large number when applied to currency, brace yourself for “sextillion.” I assume the central banker of Zimbabwe didn’t scream that number while spitting blood and tearing his hair out in clumps, so you’ve got to admire his coolness in crisis.

2) It will surprise many leaders in the business community (but should surprise no one) that

Free Monty Python Videos on Youtube Lead to 23,000% DVD Sale Increase. Why does that work? Because no one wants to watch bad-quality YouTube videos for very long.

3) The headline says it all: Pakistani Taliban Turns Honeymoon Spot into Slaughterhouse. Such lovely people. And yes, that was sarcasm.

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

Friday Morning Roundup

I’m busy getting ready for my trip to Vancouver and the 2009 Vancouver Resource Investment Conference this weekend. So I’ll keep this brief.

First, a chart of Agnico-Eagle Mines (AEM: 54.18 +2.92 +5.70%). This will be of interest to my Red-Hot Global Small-Caps subscribers as well as anyone who bought by “Golden Parachute for 2009″ report …

Gold Hits 3-Week High on Safe-Haven Demand Gold has breached well above its 200-day moving average against both the euro and the dollar, but the metal remains 11% lower than its 200-day moving average in yen terms. “Since there remains ample upside in yen terms, Japanese investors may deem this as an opportunity to drive up the metal to next key targets, thus prompting global investor demand further higher,” Laidi said.

In other news, I was just on the radio talking to The Big Money Show out of Denver Colorado and promised to put up a chart of vehicle miles driven year over year … which right now are falling off a cliff.

Here you go …

Source: http://www.calculatedriskblog.com/

Briefly, the decline in miles driven is worse than during the early ’70s and 1979-1980 oil crisis. Miles driven in November 2008 were 5.4% less than November 2007, so the YoY change in the rolling average may get worse.

Now for a few Weekend ReadingLinks …

Macroblog takes a look at charts showing Presidents and where they started with GDP, unemployment, CPI and industrial production. Needless to say, President Obama has his work cut out for him. The charts are eye-popping. Here is one …

Now take a look at the rest.

Here are three (probably) good books about how Wall Street Bankers got us into the mess we’re in. The details in the book review alone will set your teeth on edge.

It turns out the NSA spied on everyone — EVERYONE — during the Bush administration. Who could have predicted that if you lifted the restraints on America’s internal spying apparatus, they would suddenly turn into the KGB? Well, just about everyone to the left of Pat Buchanan could have predicted it, but we were written off as fools and liars by the mainstream media. Now, I predict a boom for security software.

Finally, in a lighter note, apparently, some dung beetles are sick of eating crap and have decided to turn carnivore. It’s evolution in action. Fascinating. Go, beetles! Make sure you get a cool new name. I’d suggest Velociraptor Beetle. That’ll get you more respect at the bug club.

That’s it for this Friday. The broad indices are down, oil is sliding and gold and the dollar are up. We’ll see where we go from here.

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

Gold Near Make-or-Break Point

The gold stock I recently recommended in Red-Hot Global Small Caps is doing well, but be careful. I’m watching gold like a hawk as it pushes up against overhead resistance …

Looking at a weekly chart, we can see that gold is still in a downtrend. It needs to break out of that downtrend for gold stocks to really take off.

As I explained in the RGS issue that went out today …

“Investors around the world are scared out of their pants by the financial crisis. So, they’re rushing into the U.S. dollar, even though the U.S. Treasury is printing money so fast I’m surprised the presses don’t catch on fire. And people are rushing into gold because you can’t print more of it. It is a flight from risk to safety. This is good for gold and big gold miners with plenty of cash that are leveraged to the price of gold.”

In other news …

Chinese Growth Plunges China’s economy expanded at the slowest pace in seven years as the global recession dragged down exports, increasing pressure for more government spending and lower interest rates to buoy growth. Gross domestic product grew 6.8 percent in the fourth quarter from a year earlier, after a 9 percent gain in the previous three months, the statistics bureau said in Beijing today.

The Chinese Devil Wears Prada: Why 0% Growth is the New Size 6.8% Indeed if one were to convert the 6.8% y-o-y figure in the more standard quarter over quarter annualized figure Chinese growth in Q4 would be close to zero if not negative.

Gold, Precious Metals Climb in New York as Investors Seek Out Safe Harbors Gold rose, along with silver, platinum and palladium as investors sought a store of value amid tumbling New York and European equity markets.

Potash Corp. Fourth-Quarter Profit More Than Doubles as Prices Increase Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, said fourth-quarter profit more than doubled because of higher potash prices.

Summary of Weekly Petroleum Data for the Week Ending January 16, 2009 U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased 6.1 million barrels from the previous week. At 332.7 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 6.5 million barrels last week, and are at the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories increased by 0.8 million barrels, and are above the upper limit of the average range for this time of year.

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

Wednesday Roundup

Here’s a scary chart from the Council on Foreign Relations, showing that foreigners are buying far fewer long-term US bonds than they used to.

You can draw your own conclusions.

Meanwhile, just how bad off is Chrysler? So bad off that, when Fiat basically gets a third of the company for no money, we still have to loan them $3 billion to make it happen.

For the record, I would take a third of Chrysler off someone’s hands if they would loan me $3 billion to do it. And here’s a suggestion: Why don’t we put Fiat in charge of our entire auto industry? They obviously know how to swing an advantageous deal.

Here’s a link to an amazing satellite image of yesterday’s crowd on the Mall in Washington D.C. at the Presidential inauguration. The dark clumps on the mall are people clustered around the Jumbotron TV screens.

One of our analysts, Amber Dakar, attended the inauguration. She, her mom and friends had to get up at 2 am to get to the Mall at 4 am. They then stayed through the bitter cold till the end. She told me this morning: “Now, we’re all sick, but it was GREAT!”

Here’s another meaningless Election/Politics/Market statistic/chart. I only link to it because it will likely be popular and one of your friends may buttonhole you and start yapping about it. The correct response: “It’s meaningless.”

It’s not that I hate Thomas Friedman — it’s hard to hate a person you haven’t even met in the flesh — it’s that I hate the fact that my otherwise-brilliant friends and family are snookered by such a pompous bag of wind. Matt Taibbi sums up my feelings on Friedman’s latest book.

I wrote a MoneyandMarkets.com piece about oil. In the short-term, I think it’s going lower. The longer-term forces are still there, but when will the next push higher begin? That’s the trillion-dollar question.

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