Doug Casey Answers The Hard Questions About Hard Times

The following must-watch interview of Doug Casey was conducted on September 9, 2011 by Tommy Humphreys as part of his new Speculator Series.

Humphreys does a great job of pushing Doug to defend his brand of no-holds-barred capitalism and the impact it would have on real people with real problems in today’s tough economy. Doug’s answers might surprise you; they will certainly educate you.

On viewing the video, Doug commented that he thought it was the best interview he’s done in a couple of decades, and we agree.

Time To Invest In U.S. Oil? : APC, CHK, RDS.A, RDS.B

The United States has more oil and natural gas resources than previous estimates, according to a recent study by National Petroleum Council. The study also concluded that development of these resources will reduce but not eliminate dependence on imported energy and production, and delivery of these resources should be done in an environmentally responsible manner.

The National Petroleum Council is a federally-charted but privately-funded organization set up after World War II to advise the government on issues pertaining to oil and gas matters.

The industry is well represented on the National Petroleum Council, with James Hackett, the CEO of Anadarko Petroleum (NYSE:APC), Aubrey McClendon, the CEO of Chesapeake Energy (NYSE:CHK) and Marvin Odum, the director for Upstream operations in the United States for Royal Dutch Shell (NYSE:RDS.A, RDS.B) as members. (For related reading, see Peak Oil: What To Do When The Wells Run Dry.)

Natural Gas
The study's first conclusion is rather obvious given the recent media spotlight on domestic onshore natural gas development. The United States is the world's largest producer of natural gas and has an enormous natural gas resource base that can meet demand for generations if new basins are allowed to be developed.

Although this conclusion seems obvious to us now, just a few short years ago, many observers were climbing over themselves to come up with the direst predictions of falling natural gas supply in the United States. The conventional wisdom at that time was that the United States needed massive investment in liquefied natural gas (LNG) facilities to provide for soaring future domestic demand for natural gas.

Oil
One finding that may surprise some investors and also strike some fear into peak oil advocates is the conclusion that crude oil is much more abundant in the United States than previously thought. This new supply is coming from a number of different areas, including tight oil areas where new technology has been applied to develop resources that were previously not economic to produce. In the long term, supply will come from offshore areas, the Arctic region and even shale oil deposits in Colorado. (For related reading, see Unearth Profits In Oil Exploration And Production.)

A recent report from an analyst at Goldman Sachs (NYSE:GS) predicts that the United States will surpass Saudi Arabia and Russia and becomes the world's largest oil producer by 2017. The firm expects United States production to reach 10.9 million barrels per day by 2017. This production figure includes natural gas liquids in the total.

This level of production is certainly doable given the current level of industry activity in the United States. The U.S. Energy Administration reported that the United States produced 8.95 million barrels per day of crude oil, natural gas liquids and other liquids in May 2011. The 10.9 million barrel projection implies total production growth of 21.8% over the next six years.

Despite the optimism on oil production, the United States will still be a net importer of this commodity even under an unconstrained development scenario under which production rises to approximately 22 million barrels per day by 2035.

Environmentally Responsible Development
The final conclusion was that the oil and gas resources need to be developed in a responsible manner to gain the trust of the public. The study also recommended educating the public on the risks of drilling and quoted a study from MIT that found only 43 gas well accidents out of nearly 20,000 wells drilled over the last decade.

The Bottom Line
The conventional wisdom on the amount of natural gas and oil resources in the United States appears to be incorrect, with the only question being whether we will allow these resources to be developed. (For related reading, see Oil: A Big Investment With Big Tax Breaks.)

Gerald Celente on Goldseek Radio - 28 September 2011

Gerald Celente on Goldseek Radio - 28 September 2011 : there is no fixing it , this thing is going to continue to collapse in Europe and just like in the United Statesfollowing the panic of 08 when things should have collapsed a lot quicker they pomped it up with all this phony money , this will lead to the greatest depression there is no way out of this , they are doing the same thing now in Europe this is what the FED did and they are doing it again ...it has only been held up again and made up look like a recovery from the continuing dumping of dollars and Euros into failing banks and institutions , in Europe they are doing it against the Lisbon Treaty the Masstricht agreement and every piece of paper they made to design their monetary union ...the European Central bank is not supposed to be buying bonds of failing countries they are not supposed to be covering the debt of failing banks and they are doing it just like they are doing it here in the US ....

Fertilizer Stocks Stink: CF, MON, MOS, POT

The Agriculture Chemicals/Fertilizer stocks have been stinking it up recently after showing promise as recently as this July. The group had been a very strong performer in the last bull market and was definitely worth watching to see if a positive trend could develop. However, after a brief sprint higher, the majority of this group failed to follow through and has been heading lower. Even the lone stalwart, CF Industries Holdings, Inc. (NYSE:CF) eventually caved in and headed lower. With renewed fears of an ailing economy, this group has suffered through renewed selling.

After a brief scare in early August, CF Industries Holdings, Inc.embarked on a month-long rally that carried it to almost $200 per share. This was a powerful move that defied what was going on with its peers. However, the move quickly failed, and CF fell even faster than it rose. CF has not technically broken down into a downtrend, but the reversal has to be disheartening for bulls in the stock. It is now struggling to hold above its 200-day moving average, and could begin a much deeper correction if it can’t hold near these levels.

Monsanto Company (NYSE:MON) also had a brief run in July as it cleared a trendline that had been acting as resistance. However, there was very little upward progress, and MON reversed to head back towards the bottom of its base. It has been stuck moving sideways as it tries to hold near $63 as support, but could be close to breaking under this level. The 50- and 200-day moving averages are starting to act as resistance and MON could complete a topping pattern with a close under $62.

Potash Corporation of Saskatchewan (NYSE:POT) has already broken down under its base after a similar reversal in late July. POT was unable to make any progress on its breakout attempt and instead reversed to dip under the key $50 level. While it found support at $50 in August, it faltered on its rally attempt and is back under this important level. This area should act as significant resistance at this point, and could lead to POT heading much lower.

Mosaic Company (NYSE:MOS) is another fertilizer stock that could be in trouble. Unlike the others, MOS never attempted to rally this summer, and instead has been working its way lower. The past few months have seen very volatile swings, although the end result seems to always be lower lows. MOS should be considered suspect until it can clear its recent highs near $74, as this level has acted as clear resistance over the past few months. (For more, see What The Heck Is Wrong With Fertilizer Stocks?)

The Bottom Line
The recent move in the fertilizer stocks reveals the danger of a bear market. The down moves certainly occur much quicker than the preceding rally attempts. This group likely trapped a lot of buyers after looking strong a couple of months ago and could be headed even lower. Traders should be very careful if they are long in this space, and may be better off looking for shorting opportunities on bounces.

Bears Feast on Economically Sensitive Stocks: XLB, FCX, DD, AKS< XLI, CAT, MMM, NSC, XLE, HFC, SLB, XLF, INTC

Despite bursts of strength, weakness in stocks tied closely to the economy shows the market's true state.

While sexy technology stocks, such as Amazon (AMZN - News), grab headlines with hot new products, basic resource and industrial stocks continue to struggle. And even though the domestic economy may be less reliant on the latter, their struggles remain a giant drag on the stock market.

In other words, strong performance by a few groups cannot change the message of the majority: This is a bear market.

To be sure, trading over the past few days did not feel like a bear market. In afternoon trading Tuesday, the Dow Jones Industrial Average was within striking distance of a full recovery of last week's steep losses. And the technical breakdown below the August-September trading range seemed to be negated.

But when we dig down beneath the surface and go beyond the fresh eight-week high in such strong tech stocks as International Business Machines (IBM - News), we will see the dark underbelly of the bear.

For example, even after a strong open this week, the Select Sector SPDR-Materials (XLB - News) exchange-traded fund still shows a breakdown from its August-September range (see Chart 1).

Last week, this ETF was led lower by the likes of metals miner Freeport-McMoRan Copper & Gold (FCX - News), chemicals maker (DD - News) and AK Steel Holding (AKS - News). The ETF itself shows a steep, high-volume decline and an unsuccessful recovery on declining volume.

Tuesday, the ETF was able to test, or revisit, its point of breakdown, but it could not hold that level. With Wednesday's decline, the bears have resumed control.

The materials ETF contains a cross-section of companies operating at the base of the economy producing the inputs needed for manufacturing and building. As they say, if the foundation is wobbly, then the house will not be strong.

But the next level of the economic house is also struggling. The Select Sector SPDR-Industrial (XLI - News) ETF broke down hard last week (see Chart 2). Some of its higher profile components, such as machinery maker Caterpillar (CAT - News), industrial conglomerate 3M (MMM - News) and rail stock Norfolk Southern (NSC - News) provide solid evidence for the bearish case.

Moving along the economic continuum, energy stocks also hold breakdowns on the charts. The Select Sector SPDR-Energy (XLE - News) ETF cracked last week on heavy volume (see Chart 3). It, too, rallied back to test its breakdown level but seems to have hit a ceiling. This action cuts across all sectors but is quite clear in refiners such as HollyFrontier (HFC - News) and oil-services stocks such as Schlumberger (SLB - News).

Moreover, financial stocks remain weak. The Select Sector SPDR-Financial (XLF - News) continues to underperform the broad market over any time frame we can choose from one month to one year. And its chart shows a breakdown last week with a rather tepid recovery attempt.

Even in stronger groups, such as technology, there are haves and have nots. Internet and computer-hardware stocks are definitely the leaders this month. But semiconductors and networking stocks are not. Giant chipmaker Intel (INTC - News). Select Sector SPDR-Financial (XLF - News) may have performed very well in September, essentially ignoring last week's decline, but its volume statistics show very little conviction in the rally.

Traditional measures of market breadth, such as the advance-decline line are weak, but do not show any real danger. But the technical breakdown in a large swath of the market suggests that overall the list of good stocks is getting smaller.

All of which adds up to a bear market. Don't be fooled by the occasional shows of strength.

Top 5 Easy Saving Tips

Most people could do with trying to save a few dollars. If you are in debt then the imperative to save money is great and certainly urgent. Any savings can be automatically transferred to pay off your debt - which is a positive step to financial freedom.

If you are not in debt you may be among the thousands of Americans who have absolutely no savings at all. The financial worries in the current economic climate might well be eased if there was a 'back-up' plan sitting in the bank.

If you had savings, it would cushion the difference between your income and your expenses, especially if you or a partner suddenly lost a job, for example. As a target, you should try to have three-to-six months income saved in an emergency fund. But how do you go about doing this? If every month you are counting the days until payday, it can be difficult to make cutbacks. Here we will outline five things that you can do straight away to start that savings fund

401ks
Consider reducing your 401(k) contributions and instead put that money away in savings. Continue to contribute enough money to your company's 401(k) to receive the matching contribution, if they offer it - but if you don't have sufficient cash savings, don't put in any more than that amount. Don't suspend 401(k) contributions altogether, because it's still tax-deferred savings, which is a big bonus.

You Don't Miss What You Never Had
Siphon off a percentage of your salary at the start of the month into savings. In fact, some companies will allow you to make direct deposits from your paycheck into savings. Ask your employer if you can designate several accounts for your paycheck, and take advantage of this option. See if you can manage to save 10% of your monthly salary - you'll be surprised at how you'll get along without it.

Save the Extras
Do you have a tax rebate? Have you recently had a raise at work or received monetary gifts? Pretend you never received it - however large or small. You didn't have or need that money before, so don't depend on it now. Use an income tax refund, if you're fortunate enough to get one, as the start of your savings pot. Start seeing any extras as welcome additions to the savings fund.

Turn Off the lights
Get the whole family involved on a mission to decrease your electricity bill. Turn off the lights when you are not in the room, unplug the television and stop leaving things on standby, and you will notice the bill decrease. To really make a sizable saving - turn down your thermostat just two degrees and you could save thousands on your annual heating bill. For each degree you turn down the thermostat in the winter, you can save as much as 5% on your heating costs. And remember don't spend this 5% saving - put it straight into the bank.

Get Bank Aware
Did you know that many banks are currently paying 0% on savings? If you don't know if your bank is one of them - you need to find out. Call them up right now and make the inquiry. If they are not paying you any interest on savings then you need to move banks. Many people are blindly loyal to their bank. Your bank is not loyal to you - if you are overdrawn or miss a payment, they are unlikely to consider your lengthy courtship.

Because banks are so keen for our business, they make switching to them very easy, and will often complete all of the paperwork and processes on your behalf. Do not have any savings sitting around and earning no interest whatsoever.

The Bottom Line
By starting today and following these steps, you can easily have one month's expenses saved before long. Once you have achieved this, you can take steps to getting three-to-six times this into that savings account. You'll be delighted you've done it.

Precious Metals Charts Point to Lower Prices – Get Ready

Over the past week precious metal investors have had a wakeup call from their big shiny nest eggs. Last week’s free fall in both gold and silver spot prices was enough to get investors into a panic. More on this in a minute though…

The fall was triggered by three key factors which caused the powerful move down. The first factor is based on pure technical analysis (price and volume patterns). Because the metals had such a strong run up this summer and prices had moved to far too fast, it is only natural so see price correct back to a normal price level. In general any investment that surges in one direction in a short period of time almost always falls back down shortly after. As I stated in my weekly report on August 31^st, “gold is forming a topping pattern and all investors should take profits or tighten protective stops (exit orders)”. Three days later gold popped to the new high completing the pattern and was quickly sold off which continues to unfolding as we speak from $1920 down to $1532 in only a couple weeks.

The second factor which I think had the most power behind the drop were the margin requirements changes. This new rule literally overnight caused traders and investors holding to much of the metals in their account to liquidate (sell) their positions without having any say in the matter. That is when the most damage was done to the price of gold and silver.

The key factor was the US Dollar which rocketed higher and adding a lot of pressure to the metals. I also covered this in my Aug 31^st report in detail. Overall, past few years we have seen both gold and silver move in opposite direction of the dollar. I don’t expect that to change much going forward. Back in August the US Dollar was coiling (building power) and it was only a matter of time before it would explode to the up side and rallied. This high probability move in the dollar was what triggered me to exit our long gold positions shortly after. I expected the dollar rally to last a month or more and that means we would see a lot of pressure on equities and metals going forward.

Now keep in mind, if Greece or other countries continue to get worse then we could see the dollar and gold move higher together as they are seen as the safe haven at this time. But with the nature of the two I am anticipating a rising dollar and sideways trading range for gold.

Ok, so back to precious metals investor sentiment…

Last Friday and all of this week I have been getting emails from traders and friends saying they are going to sell their gold and silver because they are concerned metals will continue to fall and because many of them are now losing money after chasing prices higher through the summer. The good news is that one of my best indicators for helping to time market tops and bottoms is to just read my emails and answer the phone. During market tops, generally the final month when prices are soaring to new highs every day/week is when everyone contacts me and says they just bought gold or are about to buy more gold cause it’s such a great investment. Once I start getting 2-5 of these messages a day alarms start going off in my head. This works the same with market bottoms. So with everyone now in a panic and selling their positions I feel we are darn close to one if we did not see it already…

Let’s take a look at the charts…

Silver Spot / Futures Price Chart

As you can see on the hard right edge silver is forming a very similar pattern which happened this past spring. I would like to note that this type of pattern is typical with extreme market selloffs as to how they generally bottom. I am anticipating silver trades in this range for a couple months and that we could see lower prices in the near term. But my upside target for silver in the coming few months is the $35-$36 level.

Gold Spot / Futures Price Chart

Gold is doing much the same as silver but I have noticed that when gold falls hard the second dip generally does not make a new low as often. If we do get a new low, all the better for buying on the dip but overall I feel gold should trade sideways for a couple months. My upside target for gold is the $1750-$1775 area.

US Dollar Index Price Chart

The Dollar index is looking ripe for another bounce and possibly another rally to new highs in the coming week. If this happens then we should see the SP500 short position (SDS) which we took Tuesday afternoon (Sept 27^th) to continue rocketing another 5-8% in our favour again.

Mid-Week Trading Conclusion:

In short, I feel the US dollar is going to continue higher and that will put the most pressure on stocks, oil and silver. Depending how things evolve overseas gold could hold up and possibly rise with the dollar.

Watchdog warns Canada governments of fiscal crunch

The finances of Canada's federal government and its 10 provinces are unsustainable over the long term and they will need to either raise taxes or cut spending, in part because the population is aging, the country's budget watchdog said on Thursday.

"Fiscal sustainability requires that government debt cannot ultimately grow faster than the economy," Kevin Page, the parliamentary budget officer, said in a report that looked at likely trends over the next 75 years.

Page's team projected government debt relative to the size of the economy over the long term in the light of current spending and taxes as well as projected demographic and economic trends.

"(Our) debt-to-GDP projection indicates that the current federal and provincial-territorial fiscal structure is not sustainable over the long term," he wrote.

"Addressing this fiscal gap and restoring sustainability to public finances would require permanent policy actions of 2.7 percent of gross domestic product, either to raise taxes, reduce overall program spending, or some combination of both."

Page said slower labor force growth caused by an aging population would reduce annual average real gross domestic product growth from the 2.6 percent observed over the 1977-2010 period to 1.8 percent over the 2011-2086 period.

Buffett ‘Put’ Gives a Hint of What’s Coming

One of the biggest questions surrounding Berkshire Hathaway stock has been what happens the day Warren Buffett retires or gets hit by the proverbial truck.

Now we know the answer. The stock will trade at least 10 percent higher than Berkshire's book value, or roughly what's left after liabilities are subtracted from assets.

We can infer this from Berkshire's open-ended share repurchase plan, in which it may buy back stock any time the shares fall below 110 percent of book value as long as the company has $20 billion in cash and equivalents on hand.

Among the reasons Berkshire cited for the buyback plan was the recent stock price -- $100,000 for the Class A shares -- which the company said was considerably less than the value of its underlying businesses. The A shares rose 8.1 percent on Sept. 26, the day of the announcement, to $108,449. The stock closed at $106,500 yesterday.

Buffett wants Berkshire's stock price to reflect its "intrinsic value," which in his opinion should be a premium to stated book value. But this has never been a reason for a share buyback before. Buffett has always cited other, better opportunities, or the need to hold dry powder for when they might appear.

Even during the worst of the financial crisis from September 2008 to March 2009, when Berkshire's stock fell by 50 percent, the company didn't start a buyback. Only once in the past four decades, in 2000 at the peak of the Internet bubble, did Berkshire offer to repurchase shares. In the end, it didn't because the announcement drove up the stock price so much.

‘Not a Dime'

In January 2010, Buffett said the shares were undervalued and regretted having to use them for the stock portion of the $34 billion acquisition of Burlington Northern Santa Fe. In his latest shareholder letter this February, Buffett made it a point of honor to say that "not a dime of cash has left Berkshire for dividends or share repurchases during the past 40 years."

Now that Buffett has done it, the main effect is to set a floor under the stock. Although book value is subject to market fluctuations, Berkshire's existing businesses over time will grow, increasing book value. Think of it this way: An option to sell, or "put," the stock back to Berkshire at 110 percent of a rising book value is dear -- assuming, of course, that the company does go ahead with repurchasing shares. This again raises the question of why Buffett would make such a commitment simply because the stock is undervalued today. (more)

C$ hits 1-yr low, month end flows spur volatility

Canada's dollar dropped to a one-year low against its U.S. counterpart on Thursday, hurt by ongoing fears about Europe's debt crisis and big investors adjusting currency exposure on portfolios before month- and quarter-end.

Global markets were earlier buoyed by a vote by German lawmakers to beef up the crisis-hit euro zone's bailout package and better-than-expected data from the U.S. labor market, but the relief rally did not last.

Currency dealers said many institutional investors who suffered stock market losses in the quarter were rebalancing their foreign exchange exposure, buying the greenback against the Canadian dollar.

"Just looking at the performance of the equity market over the last month, I think most of the rebalancing flows will be buy dollar-Canada, that's probably why we've seen Canada underperform currencies like the euro," said David Bradley, director of foreign exchange trading at Scotia Capital.

The Canadian dollar ended the North American session at C$1.0366 to the U.S. dollar, or 96.47 U.S. cents, below Wednesday's North American session close of C$1.0326, or 96.84 U.S. cents.

It was a volatile session. The Canadian dollar touched C$1.0403, or 96.13 U.S. cents, late in the afternoon, its weakest point since September 2010, after having climbed as high as C$1.0256, or 97.50 U.S. cents, after the U.S. data was released.

Bradley said the Canadian dollar could weaken further on Friday, the last trading day of the month and quarter.

"We can probably test up toward C$1.0450. Really, on the brink of C$1.04 there is not much resistance until C$1.0675 which is the highs from last summer. It was really gappy when we were up here before," Bradley said.

The Canadian currency had initially firmed after Europe again averted disaster in its debt crisis when German lawmakers rallied behind Chancellor Angela Merkel to approve a stronger euro zone bailout fund, known as the European Financial Stability Facility (ESFS).

"It was nice to get the German passage of the ESFS bill but that's hardly the signal that the EU crisis is over. If anything it is just the start of the next phase of the crisis," said David Watt, senior currency strategist at Royal Bank of Canada.

Bigger challenges loom for the euro zone now. Financial markets are already anticipating a likely Greek default and demanding more far-reaching measures to prevent the crisis that began in Athens from spreading far beyond Europe and its banks.

Initial claims for U.S. unemployment benefits last week fell to a five-month-low of 391,000, well below economists' expectations for 420,000 and below the key 400,000 level for the first time since early August.

Separately, the U.S. economy grew at annual rate of 1.3 percent, the government said in its final estimate for the second quarter, up from the previously estimated 1.0 percent.

That reflected consumer spending and export growth that was stronger than earlier estimated.

Bond prices were mixed. The two-year Canadian government bond was unchanged in price to yield 0.928 percent, while the 10-year bond lost 10 Canadian cents to yield 2.206 percent.