Saturday, July 28, 2012

Peter Schiff – Gold Just Broke Out & Is Now Off To The Races / July 26, 2012

Today Peter Schiff told King World News that “Gold has now broken out of a channel. There was a very nice trendline and we just broke out of that today.” He also said, “Now that we have broken out of that channel, there is a lot of room to the upside.”

Schiff discussed the Fed, mining shares, and key levels in the gold market, but first, here is what he had to say about today’s comments out of Europe by Draghi: “Draghi is just saying he’s going to print as many euros as he has to. That’s what people are interpreting here is him saying, ‘We are not going to let countries default. We’re going to keep countries on board, which means we are going to acquiesce to the pressure to print money.’”

Peter Schiff continues:

“This is music to the ears of the people who control the markets, the people that control the lion’s share of all of the money and that make all of the decisions. That’s what drives the market in the short-run. You’ve got a lot of leveraged players that key off of everything central planners say.

But the Dow is already off its highs. The euro, the main currency in focus, is back over 1.22….


One of the scarcest resources in the world / By Simon Black /

Trakai, Lithuania

We’ve spoken before about the importance of a second passport. It is, in short, one of the best insurance policies you can have.

If you only have one passport, you become trapped by a single government– a government that has the power to tax you into the poorhouse, steal your assets, send your children into combat against their will, and much more.

A second passport provides options. And the more options you have, the more freedom you have.

With a second passport, you’ll find that you can bank in more places, do business in more places, travel to more places… and that’s just the beginning.

In a real crisis situation, a second passport may be the only ticket out. We can cross our fingers and hope this doesn’t happen, or we can take steps to have this vital insurance policy should the need arise.

Now, some people are really lucky. They happen to be descended from Irish, Italian, Polish, etc. These countries have a ‘citizenship by ancestry’ option to anyone who can prove ancestry.

Others have to work a bit harder for it. They have to move to places like Brazil, Chile, Uruguay, or Singapore and eventually become naturalized after a period of several years.

In Brazil, for example, it can happen in as little as one year. In Singapore, as little as 2-3 years. And in Chile, typically 5 years.


Ten Reasons Why Fracking is Doomed

Proponents of natural gas fracturing and oil drilling are delirious with joy over the ability to recover shale gas, which has brought down world gas prices and made the US a major player again. Likewise, North Dakota wells are set to produce up to 800,000 barrels of oil a day soon. (Although, since the world uses roughly 89 million barrels a day, and the US uses a fifth of that, and demand in Asia will likely spike in coming years, the ND addition is just not that much).

Fracking is dangerous to ground water purity, and both oil and gas, as hydrocarbons, contribute to global climate change, which is a dire threat to human well-being in coming decades and centuries.
But oil and gas triumphalists have another thing coming. It is that the cost of generating electricity by wind and solar is falling rapidly. However hard they try to suppress government funding and tax breaks for renewables, Big Oil and Big Gas are doomed to lose, and in only about 4 years. At that point where it is just cheaper to generate electricity with renewables, no one is going to invest in hydrocarbons. Even with a price advantage it will take decades for renewables to displace hydrocarbons (the electricity grid, transportation, batteries, all have to be redone). But it isn’t a matter of “if.” It is a matter of when. All the anti-climate-warming propaganda and pro-hydrocarbon advertising is intended to slow this process; even Big Oil and Big Gas are not so stupid as not to see the writing on the wall. But if their delaying tactics can make them billions in the meantime, they have every reason to go for it, especially if they are moral cretins who don’t care about the health of the planet. (more)

The New Economic Collapse Video: It makes uncomfortable but urgent viewing

When Casey Research Chief Technology Investment Analyst Alex Daley met former Reagan Budget Director David Stockman to talk about the economy and where he sees it leading taxpayers investors and savers in the near future, he got some very intriguing insights from a man who served right at the heart of the US federal government.

True, some if it makes for uncomfortable watching, but the message is critical if you want to keep your assets safe in what David calls calls "the great unwind."

Watch the video and secure your money.

Who is really pulling the strings in our politicized economy, and what should individual savers do immediately to make sure they have the best protection for their assets when the consequences unfold?

Still Think That Money Market Fund Is “Cash”?

When investors decide to close out their riskier positions and move into “cash”, they don’t actually go to the bank and get a stack of twenties. Most just sell their stocks and let their broker sweep the proceeds into a money market fund which, they assume, is the same thing as cash because it holds high-quality short-term commercial paper that almost never defaults.

That pleasant assumption breaks down as soon as you look at a typical money market fund’s holdings and see that it owns, among other disturbing things, a lot of European bank debt.

But at least you can get your money out with a mouse click, right?

Well, maybe not. Apparently the Fed, cognizant of the potential weakness of the money fund system, is considering withdrawal limits: (more)

The Location Of All Of The World's Gold [Infographic]

7 Companies with Ten Straight Years of Revenue Growth

Consistency is hard to find these days. Corporate profits as a whole are fairly strong, but due to macroeconomic and worldwide sovereign debt burdens, there is a continual sense of malaise in the markets. Even some stalwarts like Johnson and Johnson and Procter and Gamble have been rather unimpressive for long term investors in the past few years, with their sideways revenue performance due to product recalls or divestitures.

The good thing about investing for the long term in shareholder friendly companies that pay dividends is that it really doesn’t take much top line growth to get solid returns on your investment. For some, investing is thought of almost purely as “grow grow grow!”, which is key for certain businesses, but not all of them. For companies that pay dividends (or less enthusiastically, perform share buybacks), it’s all about “total shareholder returns!” as far as investors are concerned.

Total shareholder returns come from a combination of core growth and returning cash to shareholders in one way or another. If a company achieves, say, 2% actual volume growth and 2% pricing growth on that volume to keep up with inflation, then they’re looking at approximately 4% core revenue growth. If their profit margins stay static, that implies net income growth also at 4% or so. Then if they have net share repurchases of 2% of market cap per year, total EPS could grow by 6% or more per year. If the company is paying a 4% dividend yield, and the dividends are reinvested, then the investor could be looking at 10% annual returns over the long haul. (more)

Rain Makes Grain - Maybe

When was the last time you heard, Rain Makes Grain? If you heard it, most likely it was in jest or someone said it because they needed rain. With one of the weather models predicting August could be wetter than average, maybe by the end of the month, it can become a recovery chorus. The trouble is, August isn’t a wet month. What some call wetter than average may not be near enough.
I think there is one safe prediction for the summer crops of 2012, and I have hesitated making any formal prediction. I am waiting for the first Country and Western song about the plight of the US farmer and the drought of 2012.
The northern Midwest has received some rain and if a normal summer prevails for August, there will be some very good crops in the upper Midwest. But for the majority of the corn and soybean crops in the US, it will be up to genetics, management, prayer and rain dances.
In Kansas City, during the early hours of Thursday morning, it rained about four tenths of an inch. I woke up and opened the window. It sounded so nice that I decided to keep the window open but since the thermometer said it was still 84 degrees, I also kept the air conditioner on. By morning the pavement was completely dry and the grass felt like light dew. After days and days of 100 plus degrees, about all that can be said of a half inch or even an inch of rain; it sure sounds nice. Also, with high 90’s predicted for the coming week and then back to over 100, I can’t wait until harvest to see actual yields. I don’t want to make it appear I repeat myself, but I still feel estimating yields is a study in futility and waste of time. (more)

Where is the QE3 Premium for Oil?

Despite more and more actions that make the initiation of Quantitative Easing 2 by the Federal Reserve more likely, the exchange traded fund for oil, United States Oil (NYSE: USO), is off in trading for the week. Even more paradoxical is the 43.25% short float for United States Oil.

Over the course of Quantitative Easing 2 from its introduction in August 2010 to its cessation in June 2011, United States Oil soared from the low 30s to the high 40s. Quantitative Easing 2 consisted of the Federal Reserve expanding its balance sheet to purchase about $700 billion in US Treasury Bonds.

As a result of this massive creation of Greenbacks without the corresponding economic growth in the United States, traders dumped US Dollars (NYSE: UUP) and bought hard assets such as oil, gold (NYSE: GLD) and silver (NYSE: SLV). As SPDR Gold Shares, the exchange traded fund for gold rose to being the second the most valuable exchange traded fund in terms of market capitalization behind that of only the SPDR S&P 500 Index (NYSE: SPY) with the UUP falling from around $26 to about $20.

The denouement of Quantitative Easing 2 was a downgrade of the credit rating of the United States Government in August 2011, the only time in history.

Testimony this week by Secretary of the Treasury Tim Geinthner combined with a front page article in The Wall Street Journal detailing the dissatisfaction of members of the Federal Reserve have the Dow Jones Industrial Average soaring as more economic stimulus measures, such as Quantitative Easing 3, are expected from the Federal Reserve. But for the last week of market action, USO is down 1.42%.

While it is trading above its 20-day and 50-day moving average, it is 9.42% lower than its 200-day moving average. In addition, volume today has been very weak, less than half its average. The last month of market action witnessed a double digit jump for USO of 11.42% with a very bullish candlestick pattern chart of long and engulfing bodies. Much of that can be attributed to increasing tensions in Iran, however.

Gold Bullion and silver have been basically flat for the last week and month of trading. Fundamental economic demand for oil appears to be topping as traders preparing for Quantitative Easing 3. The world’s largest importer of oil, China, reported economic growth for the second quarter of 2012 that is about 25% lower than its previous average. Europe is in a recession. South Korea just reported its lowest growth rate since 2009. India and Brazil, also big users of crude, are experiencing lower economic growth, too.

With the short float so high, it appears that traders are expecting the USO to trend lower, also.

46.5 Million Americans, Record 22.3 Million US Households, On Foodstamps; 8,753,935 On Disability / by Tyler Durden on 07/27/2012 11:26

America’s transition into a welfare state continues, as May saw a new all time high number of American households, 22.3 million to be exact, enter technical poverty and collect foodstamps. At the individual level, 46.5 million Americans lived off foodstamps, a 222,157 increase in the month, or nearly three times the number of people who found jobs in June according to the BLS. Next month this too will be a record, as it is currently just 17,367 before the previous all time high set in December of 2011. The good news, and we use the term loosely, is that the average benefit per household rose from all time lows of $275.82 to $276.76. Surely, the bottom is in and just like housing, there is on blue skies ahead.