Saturday, December 1, 2012

You Won't Believe Where I Found Yields of Up to 16%

As the European crisis unfolds, businesses and consumers are forced to cut back spending on all non-essential services. Having enough money to cover the basics is enough of a challenge. From phone service to mail delivery to electricity, there are certain regular expenditures that simply can't be avoided.
Yet European stocks of all stripes have taken it on the chin during the past few years anyway, regardless of what type of economic exposure they have. And that has created some eye-popping dividend yields.
In fact, there's one sector in Europe that routinely sports double-digit yields these days: Telecom. Leading phone service providers, which tend to generate stable operating profits in any economic climate, haven't been able to avoid the European-wide sell-off. Check out the super-high yields you will find for these telecom stocks:
Make no mistake, consumers in these countries are feeling pinched these days, but phone bills are up there with death and taxes in terms of unavoidable certainties. Still, as all of these firms face the same industry dynamics, it's wisest to focus on just one two of these stocks for your portfolio, perhaps in the relatively stronger European economies of Germany, Austria or the Netherlands. (more)

Harvey Organ – The Emerging Gold Shortage

Harvey Organ has been a precious metals investor and student of the market. He’s be writing a blog and monitoring the paper precious metals markets daily. During this time he has uncovered a number of irregularities that have led him to believe that the central banks of the West have either sold or leased out all their sovereign gold. The Chinese, Russians and others are buying up every ounce they can. Harvey believes that the Comex will fail and then everything is going to hit the fan. He may be right.

An Outrageous Prediction about Oil for 2013

With the drama of the presidential election behind us, it's time for investors to focus on the real task at hand: How investments will pan out next year, particularly in the energy sector. After all, energy has a role in just about every good produced and service rendered in this country.

Being the contrarian investor that I am, I think 2013 could mark the end of triple-digit prices for oil. The good news is energy investors don't have to panic. There are plenty of opportunities to profit from cheap oil.

Black gold's last "hurrah..."

From its 2008 peak near $133 per barrel, oil has settled back to around $88 per barrel -- a nearly 34% drop. But the best way to track oil prices is by following the performance of the United States Oil Fund ETF (NYSE: USO), which tracks the minute-by-minute fluctuations of West Texas Intermediate (WTI) crude.

Take a look at the chart below...
Since the steady climb in 2008, USO has been in a clear downtrend. Yes, oil has rallied somewhat here and there this year thanks to geopolitical tension in the Middle East and the Federal Reserve's quantitative easing (inflation supports commodity prices, deflation softens them, and the Fed has definitely had an inflationary posture). But the fact is that oil is headed down below $90 per barrel and possibly lower in 2013 and the next several years.

Here's why...

Increased domestic production -- I may sound like Captain Obvious as I talk about the huge wealth of fossil fuel resources currently being tapped in the Bakken and Eagle Ford deposits. But the underlying numbers the nation has to look forward to are downright epic. The United States will likely be producing nearly 11 million barrels of oil per day domestically by 2015, according to the National Association of Business Economists. By 2020, that number could jump to 14 million barrels per day. This brings the country pretty close to energy independence. In fact, U.S. Department of Energy data shows that for the first time since 1949, the United States exported more petroleum products than it imported in 2011.

The days of U.S. dependence on foreign oil are dwindling and the country will enjoy this bonus in the form of lower energy prices, a stronger domestic economy, as well as a tamer geo-political climate. Oil exploration and production will likely continue to grow in the country as the federal government crafts new and definitive energy policies in the next few years.

1. Tensions easing in Iran -- The United States is not dependent on crude oil from Iran, but it does pose a real threat to the security of the global flow of oil. Its close proximity to the Strait of Hormuz -- the only open passage from the Persian Gulf to the open ocean -- along with its belligerent relationship with Israel and its advanced pursuit of nuclear weaponry keep global financial markets on tender hooks. But expect to see some form of resolution in tensions with Iran. Even if an airstrike is carried out, expect oil prices to spike only temporarily.

2. Softer global demand -- While the U.S. economy seems to be muddling toward improvement, the fiscal and economic problems in Europe continue to cloud the global economic outlook with uncertainty. Germany is showing visible signs of slowing and France is heading into a recession. And the troubles in Spain, Greece and Italy have been well-documented at this point. In light of all this, the Paris-based International Energy Agency projects crude oil demand in Europe to contract 2.5% this year. (more)

Gold: Solution to the Banking Crisis / By Eric Sprott & David Baker
The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world’s largest financial institutions. It is part of the Bank of International Settlements (BIS) and is often referred to as the Central Banks’ central bank. Ever since the financial meltdown four years ago, the Basel Committee has been hard at work devising new international regulatory rules designed to minimize the potential for another large-scale financial meltdown. The Committee’s latest ‘framework’, as they call it, is referred to as “Basel III”, and involves tougher capital rules that will force all banks to more than triple the amount of core capital they hold from 2% to 7% in order to avoid future taxpayer bailouts. It doesn’t sound like much of an increase, and according to the Basel group’s own survey, the 100 largest global banks will only require approximately €370 billion in additional reserves to comply with the new regulations by 2019.1 Given that the Spanish banks alone are believed to need well over €100 billion today simply to keep their capital ratios in check, it is hard to believe €370 billion will be enough protect the world’s “too-big-to-fail” banks from future crises, but it is indeed a step in the right direction.2

Initial implementation of Basel III’s capital rules was expected to come into effect on January 1, 2013, but US banking regulators issued a press release on November 9th stating that they wouldn’t meet the deadline, citing a large volume of letters (ie. complaints) received from bank participants and a “wide range of views expressed during the comment period”.3 It has also been revealed that smaller US regional banks are loath to adopt the new rules, which they view as overly complicated and potentially devastating to their bottom lines. The Independent Community Bankers of America has even requested a Basel III exemption for all banks with less than $50 billion in assets,“in order to avoid large-scale industry concentration that would curtail credit for consumers and business borrowers, especially in small communities.”4 The long-term implementation period for all Basel III measures actually extends to 2019, so the delays are not necessarily meaningful news, but they do illustrate the growing rift between the US banking cartel and its European counterpart regarding the Basel III framework. JP Morgan’s CEO Jamie Dimon is on record having referred to Basel III regulations as “un-American” for their favourable treatment of European covered bonds over US mortgage-backed securities.5 Readers may also remember when Dimon was caught yelling at Mark Carney, Canada’s (soon to be former) Central Bank Governor and head of the Financial Stability Board, during a meeting in Washington to discuss the same topic.6 More recently, Deutsche Bank’s co-chief executive Juergen Fitschen suggested that the US regulators’ delay was “hurting trans-Atlantic relations” and creating distrust… stating, “when the whole thing is called un-American, I can only say in disbelief, who can still believe in this day and age that there can be purely European or American rules.”7 Suffice it to say that Basel III implementation has not gone as smoothly as planned.

Shale Gas Will be the Next Bubble to Pop

by James Stafford,

Shale Gas Will be the Next Bubble to Pop – An Interview with Arthur Berman
The “shale revolution” has been grabbing a great deal of headlines for some time now. A favourite topic of investors, sector commentators and analysts – many of whom claim we are about to enter a new energy era with cheap and abundant shale gas leading the charge. But on closer examination the incredible claims and figures behind many of the plays just don’t add up. To help us to look past the hype and take a critical look at whether shale really is the golden goose many believe it to be or just another over-hyped bubble that is about to pop, we were fortunate to speak with energy expert Arthur Berman.

Arthur is a geological consultant with thirty-four years of experience in petroleum exploration and production. He is currently consulting for several E&P companies and capital groups in the energy sector. He frequently gives keynote addresses for investment conferences and is interviewed about energy topics on television, radio, and national print and web publications including CNBC, CNN, Platt’s Energy Week, BNN, Bloomberg, Platt’s, Financial Times, and New York Times. You can find out more about Arthur by visiting his website:

In the interview Arthur talks about:
· Why shale gas will be the next bubble to pop
· Why Japan can’t afford to abandon nuclear power
· Why the United States shouldn’t turn its back on Canada’s tar sands
· Why renewables won’t make a meaningful impact for many years
· Why the shale boom will not have a big impact on foreign policy
· Why Romney and Obama know next to nothing about fossil fuel energy

Interview conducted by James Stafford of

James Stafford: How do you see the shale boom impacting U.S. foreign policy?

Arthur Berman: Well, not very much is my simple answer.

A lot of investors from other parts of the world, particularly the oil-rich parts have been making somewhat high-risk investments in the United States for many years and, for a long time, those investments were in real estate.

Now these people have shifted their focus and are putting cash into shale. There are two important things going on here, one is that the capital isn’t going to last forever, especially since shale gas is a commercial failure. Shale gas has lost hundreds of billions of dollars and investors will not keep on pumping money into something that doesn’t generate a return.

The second thing that nobody thinks very much about is the decline rates shale reservoirs experience. Well, I’ve looked at this. The decline rates are incredibly high. In the Eagleford shale, which is supposed to be the mother of all shale oil plays, the annual decline rate is higher than 42%.
They’re going to have to drill hundreds, almost 1000 wells in the Eagleford shale, every year, to keep production flat. Just for one play, we’re talking about $10 or $12 billion a year just to replace supply. I add all these things up and it starts to approach the amount of money needed to bail out the banking industry. Where is that money going to come from? Do you see what I’m saying?  (more)

Buy a Business To Insure Your Financial Survival

from FinancialSurvivalNet
Ted J. Leverette of Partner on Call was happy working for large corporations, but as his fellow employees exited and started acquiring businesses, he saw a great business opportunity. He started by helping his associates acquire small businesses. Then he went on to start a professional network to assist former managers in their quest to buy profitable businesses. That was in the 1970′s and Ted now has hundreds of success stories under his belt. In the current economy, when a manager in the prime of his career is downsized or outsourced, he turns to Ted to find a business worth buying.
Click Here to Listen to the Audio

US Dollar Could Be Nearing Endgame

It now looks as if the expected Dollar DCL has played out with the recent (Monday) Day 27 Low.  There was some positive (in relative term) news out of Europe with the announcement of yet another Greek bailout adjustment that the market was expecting to be bullish for the Euro.
Instead it was the Euro that fell upon the announcement, a clear indication that the news had already been bought the previous session.  These “sell the news” events are often found during key Cycle (pivots) lows.

The rise in the early portion of this now 3rd Daily Cycle has provided some considerable head-winds for risk markets.  As I had outlined within the weekend report, a DCL was expected, but what to expect out of the coming Daily Cycle is still a relative mystery.  Odds favor that we see around 7-10 days of strength out of the Cycle and at least a meaningful effort to get back up towards the prior Cycle High of 81.45.
But I have a sneaking suspicion that the Investor Cycle is tiring and could well have topped with the prior Daily Cycle.  This Investor Cycle is now 11 weeks in and passing its typical half way mark, but yet it has failed to make any significant gains.  Ordinarily we could simply excuse any Investor Cycle for being flat, but in this case the Investor Cycle happens to fall in the timing band where a significant 3 Year Cycle Top may occur.  So in isolation this Cycle may be simply “catching its breath”, but from the dominant Cycle perspective, it is signaling that a significant decline is probably unfolding.  The proof will be in this coming 3rd Daily Cycle because beyond this Daily Cycle it will be just too late for the Dollar to mount any type of surge.

As it appears the Dollar (chart above) will not make new IC highs (above July 2012 high) it will form its first lower Investor Cycle high of this 3 year Cycle.  That in itself is not “an endgame”, but if the coming Dollar ICL (in 6-12 weeks’ time) falls below the September low (78.60), that will spell big trouble.  At that point the 3 Year Cycle would have failed and we will have the first set of lower highs and lower lows.  That type of action is what defines a Cycle in decline.

Why Nations Fail and Robber Barons Succeed with Dr. James Robinson!

Welcome to Capital Account. It has been more than 10 years since Argentina defaulted on its debt, but the saga continues with creditors to this day. Last week a New York court ruled harshly against Argentina and the decision could erode the ability of countries to spurn creditors in the future, according to the FT. But what has influenced the economic development of Latin American countries, like Argentina, versus their northern neighbors? James Robinson, the author of Why Nations Fail, tells us why economic prosperity as primarily a function of political institutions is crucial for a nation’s health and survival.