Monday, December 6, 2010

Rice May Triple in 18 Months as Supplies Tighten, Duxton's Peter Forecasts

Rice, the staple food of more than three billion people, may as much as triple in 18 months as flooding in exporters including Thailand tightens supplies and demand climbs, according to Duxton Asset Management Pte.

“Rice will blow out the stocks,” said Ed Peter, chief executive officer, who co-founded the company last year with Managing Director Desmond Sheehy. Both worked at Deutsche Asset Management and the Deutsche Bank AG unit owns 19.9 percent of Duxton, while Peter, Sheehy and staff own the rest. Duxton, based in Singapore, invests in farmland, Asian stocks and wine.

Peter’s forecast, in an interview on Nov. 29, would put rice at more than the peak during the 2008 food crisis, which triggered social unrest in poorer states. Wheat and corn also surged that year, while record oil prices boosted fertilizer costs. Kiattisak Kanlayasirivat at Novel Commodities SA, which trades rice, said farmers can replant quickly as floods recede. (more)

The Wall Street Journal Asia - 06.12.2010

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Technically Precious with Merv

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The scramble for physical metal intensifies

The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which come with counterparty risk. This conclusion is apparent from the following two charts of gold and silver forwards, which are based on data made available by the London Bullion Market Association through November 24th (the most recent data available).

Because gold is money, gold almost always trades in contango, meaning the future price is higher than the spot price. The percentage difference between gold’s spot and future price is gold’s interest rate, so in this regard, gold is not different from other moneys, except gold’s interest rate is lower than those of national currencies. Interest rates are a reflection of risk, and because gold’s purchasing power cannot be debased by central bank or government actions, the risk of losing purchasing power when holding gold is low. So gold is rewarded by the market with a low interest rate.

If the future price is lower than spot, which is called backwardation, you can sell your metal in the spot market, invest the dollars you receive to earn interest, and then buy your metal back in the future at a lower price and profit the difference. But there is another important factor to consider outside the math of this formula. (more)

7 Stocks Insiders Are Buying Like Crazy

Academic studies have shown that insider trading is most profitable when several insiders buy around the same time. A study by University of Illinois professor Josef Lakonishok and his student Inmoo Lee shows that insider purchases generate more than 7%/year in excess returns above index funds when there are several insiders purchasing. Insider Monkey, your source for free insider trading data, compiled the list of companies with at least three insiders buying with the latest purchase made in late November.

Here are the seven stocks insiders are buying like crazy:

  1. Bank of America (BAC): We reported significant insider trading in Bank of America three weeks ago. On Wednesday, a fourth director purchased 5,000 shares at $11.30. This is nearly 10% less than the price paid by previous insiders. We weren’t enthusiastic about the previous purchases, but we believe this is a better point to monkey insider buys.
  2. Versar Inc. (VSR): This is a $30 million company with several insider purchases over the past 3 months. The prices paid were as low as $2.60 per share at the end of September and as high as $3.25 on Wednesday. The daily transaction volume is less than 50,000 shares, so it doesn’t seem to be a good stock to monkey. (more)

JP Morgan Silver Manipulation Explained

Kiplinger's Personal Finance - January 2011

Kiplinger's Personal Finance magazine provides intelligent advice and sound reporting on topics regarding personal finance issues. Find information on investments, taxes, insurance, retirement and savings in Kiplinger's Personal Finance magazine.

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Bernanke On 60 Minutes: "We're NOT Printing Money"

A history of gold

3600 BC - First smelting of gold

Egyptian goldsmiths carry out the first melting or fusing of ores in order to separate the metals inside. They use blowpipes made from fire-resistant clay to heat the smelting furnace. (more)

US Economic Calendar for the Week

DateTime (ET)StatisticForActualBriefing ForecastMarket ExpectsPriorRevised From
Dec 73:00 PMConsumer CreditOct--$2.0B-$2.3B$2.1B-
Dec 87:00 AMMBA Mortgage Applications12/03-NANA-16.5%-
Dec 810:30 AMCrude Inventories12/04-NANA1.07M-
Dec 98:30 AMInitial Claims12/04-420K430K436K-
Dec 98:30 AMContinuing Claims11/27-4250K4250K4270K-
Dec 910:00 AMWholesale InventoriesOct-0.5%0.8%1.5%-
Dec 108:30 AMTrade BalanceOct--$43.0B-$44.4B-$44.0B-
Dec 108:30 AMExport Prices ex-ag.Nov-NANA0.7%-
Dec 108:30 AMImport Prices ex-oilNov-NANA0.3%-
Dec 109:55 AMMich SentimentDec-72.572.571.6-
Dec 102:00 PMTreasury BudgetNov-NA-$134.0B-$120.3B-