Monday, June 14, 2010

US discovers huge Afghan mineral wealth: report

Afghanistan has nearly one trillion dollars in mineral deposits, according to a US study, but there are doubts the war-torn and graft-prone country can manage the windfall offered by the untapped riches.

President Hamid Karzai said in January that the deposits could help the war-ravaged nation become one of the richest in the world, based on preliminary findings of the United States Geological Survey.

The final results, reported in the New York Times Monday, found previously unknown reserves of lithium, iron, gold, niobium, cobalt and other minerals that the paper said could transform Afghanistan into a global mining hub. (more)

FDIC Bank Failures

Technically Precious with Merv, June 11, 2010

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Why Many U.S. Housing Markets Continue to Weaken

In the first quarter of this year, the Case-Schiller U.S. National Price Index was 2% higher than in the same quarter a year earlier. Many housing market analysts concluded from this statistic that the housing market was stabilizing. Let’s see whether the really significant numbers support such a conclusion.

Home Sales Are Now Tanking

Each week, the Mortgage Bankers Association (MBA) releases a “seasonally-adjusted” index of mortgage loan applications. Five weeks after the April 30 expiration of the first-time buyer tax credit, the unadjusted figure for purchase loan applications was down 49%. The figure for the first week in June was 44% lower than the year earlier number. In fact, the unadjusted index has been lower than the year earlier figure throughout 2010. It appears certain that the tax credit has indeed pulled home sales from the future. (more)

Dow Theory Update

I continue to receive questions regarding Dow theory and whether or not a so-called "sell signal" has been triggered. Technically, with Dow theory there is no such thing as a buy or sell "signal." Rather, the Dow theory founding fathers anticipated trend changes and during these periods of such participation they would begin to establish their positions ahead of the anticipated trend change. They referred to these periods of anticipation as "buy and sell spots." Then, once the trend change occurred, that served as confirmation of the "buy and sell spots." Because there are very few original writings by our Dow theory founding fathers and because much of what is written is so often incorrect, most people today have misunderstood the orthodox Dow theory trend changes as being a Dow theory "buy or sell signal." In accordance with orthodox Dow theory, this is not correct. (more)

Buy Coffee

The financial media has been focusing on the financial storm brewing on Wall Street, but today I'm here to tell you about an upcoming storm of a different sort. You see, the weather can have a palpable impact on financial markets, and right now it looks poised to send one of my favorite soft commodities soaring.

I think the coffee price is heading higher.

Right on cue, the announcement last week of higher storm estimates for the 2010 hurricane season has started to impact commodities. The National Oceanic and Atmospheric Administration, is predicting an above-average year of tropical storms for the Atlantic basin. (more)

Sprott: 17 Reasons to Own Gold

click here to read article in pdf

Big Risk: $1.2 Quadrillion Derivatives Market Dwarfs World GDP

One of the biggest risks to the world's financial health is the $1.2 quadrillion derivatives market. It's complex, it's unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost -- and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so.

A quadrillion is a big number: 1,000 times a trillion. Yet according to one of the world's leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University (and whose speaking voice sounds eerily like John Lennon's), $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world's annual gross domestic product is between $50 trillion and $60 trillion. (more)

Schultz: Deflation Now, Hyperinflation Soon

Deflation is the biggest worry now but it will turn into hyperinflation soon, says Harry Schultz, author of the successful International Harry Schultz Letter.

"We are poised at a heart-stopping moment in economic times,” Schultz writes.

“On one extreme side, the world is on the edge of massive deflation and depression. At the other extreme, hyperinflation.”

Schultz’ view: “Both these extremes are possible.”

Deflation is the issue now because money supply is actually declining, he says, according to a MarketWatch report. (more)