from TransferOfWealth:
http://www.butlerresearch.com/ Theodore (Ted) Butler must certainly be the foremost silver analyst of our time. Not only is he a pioneering thinker on the subject of silver, he is also way ahead of the curve with what’s happening in the silver market. Many of his ideas are original and new. It’s no exaggeration to say that almost everything you see other people write about silver today comes from Ted Butler.
Goldman sites that the biggest drag on China has been fiscal tightening because of inflation fears. However, that could be about to change. Inflation is slowing, and that means the government will have room to lower interest rates and allow more lending.
So which sector should benefit the most as China rebounds? One of the worst performing sectors this year...
As you can see from the chart above, basic materials have significantly out-performed the S&P 500 during the last five years. However, Basic Materials has been the second worst performing sector this year and could be a good mean reversion trade as demand for the sector picks up.
Why?
China's long-term appetite for commodities, materials and industrial consumption stems from the rapid growth in transportation, housing and infrastructure projects. This has lead to the lower and middle classes increases in wages and demand for food related goods and services. As a larger portion of the lower and middle classes income increases, so will the demand for agricultural related products. This ultimately should drive earnings power for our three favorite basic materials stocks and one industrial that has a high correlation to the sector.
1) Freeport-McMoRan Copper & Gold (NYSE: FCX) engages in the exploration, mining, and production of mineral resources. The company primarily explores for copper, gold, molybdenum, silver, and cobalt.
2) Monsanto Company (NYSE: MON), together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. The Seeds and Genomics segment produces corn, soybean, canola, and cotton seeds, as well as vegetable seeds, including tomato, pepper, eggplant, melon, cucumber, pumpkin, squash, beans, broccoli, onions, and lettuce seeds.
The Mosaic Company (NYSE: MOS) engages in the production and marketing of concentrated phosphate and potash-based crop nutrients for the agriculture industry worldwide. The company also offers phosphate-based animal feed ingredients and produces and sells potash for use as fertilizers and animal feed ingredients, as well as for use in industrial applications.
Potash Corporation of Saskatchewan Inc. (NYSE: POT) produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada. The company mines and produces potash, which is used as fertilizer. It also offers solid and liquid phosphate fertilizers; animal feed supplements; and industrial acids that are used in food products and industrial processes.
Action to Take --> Friday's rally has pushed the prices of some of these securities above our recommended "buy" levels stated in the graphs. I recommend traders wait for a pull back before jumping into these trades.
Whether it’s pirated software, poison-infused baby formula, cancer-causing drywall, luxury purses, or fake medicines, if you need a knock-off, China has traditionally been the go-to country, with a counterfeiter always willing to oblige.
Now, with precious metals prices on the cusp of possibly the biggest price explosion in centuries, fake gold and silver products are becoming a booming industry say Global Piracy & Counterfeiting Consultants:
We have read about one Chinese counterfeiter openly bragging about producing 100,000 fake U.S. Silver Dollars per year, and that’s just one counterfeiter. At this point, we are telling all investors of gold, or silver coins, and or any type of precious metal bar to only buy from a reputable U.S. dealer, that has an established track record, and a money back guarantee. We fear this Chinese counterfeit gold, or silver coins, or bars, could be a multi billion dollar a year business, and we greatly fear many innocent investors could be taken to the cleaners.
…
Based on our research some of the Chinese counterfeit coins, are of such high quality, it is not uncommon for even experts to be deceived. We think its smart for every investor to have gold, or silver, our big worry is pretty simple, what if they invest 10%, or 20% of their net worth in what are counterfeit precious metal coins, that are basically worthless? We would call this a disaster for the investor, and out big fear is there are probably tens of thousands of investors in the United States, who have been duped. Even worse, once again for all intents, and purposes the U.S. Federal Government is a no show-once again.”
…
“The world needs to come to grips with the largest counterfeiter in the world, the fact that 10% of China’s GDP is a direct result of counterfeiting. If it’s not knock off pharmaceuticals, that can kill people, it’s high tech smart phones, or electronics. Our new worry is pretty obvious related to Chinese counterfeiters bankrupting innocent precious metal, or coin investors, with what could be their life savings. At what point do consumers in the United States, Europe, Japan, or the rest of the world say no thanks to any more Chinese products, given its uncaring attitude about flooding the global markets with counterfeits, or fakes?
David Rosenberg of Gluskin Sheff joined Consuelo Mack on Wealth Track this weekend to discuss his outlook for the economy. Rosenberg isn’t just bearish. He say the US economy is in a modern day depression similar to what Japan has suffered from for the last 20 years. He bases this view on the idea that de-leveraging tends to coincide during a prolonged period of economic weakness that is not merely consistent with recession.
Rosenberg says we’re just 4 years into a depression that will likely last 7-10 years. He says the economy is likely to begin contracting again in 2012 and that the employment situation is going to deteriorate further. He calls the MF Global bankruptcy the Bear Stearns of 2011.
Contrary to common misconception, Rosenberg is not bearish on everything. After being a long-time US Treasury bull, Rosenberg is sounding a bit less bullish on government bears. He says the love affair is over. He now prefers corporates and income at a reasonable price.
by Chris Horlacher, MapleLeafMetals.ca:
With the recent introduction of the Royal Canadian Mint’s ETR program, I thought now might be a good time to really explain why I’m in the business that I’m in and why I think that taking physical possession of your precious metals is the safest, most cost effective way of investing in precious metals.
This November 28th a new offering of a gold investment vehicle by the Royal Canadian Mint will close. This program, known as an Exchange Traded Receipt (“ETR”), is another in a long line of paper-gold investments that are now trading on securities exchanges worldwide. It, like all of the other programs, comes with a slew of fees, risks and other items that investors need to be aware of because they can have a serious impact on their financial security especially during these volatile times.
Fees
The number one question investors should ask when participating in ETR’s, or any other kind of proxy gold investment, is “What are the costs?” The Mint’s program has a number of them that make ETR’s unattractive. The first is the 3% agent’s fee. What this means is that for every $100 invested in to the ETR’s, $97 is used to purchase gold and $3 is handed over to the banks and brokerages as their commission for making a successful sale. The second is the storage fee, which equates to 35 basis points, or 0.35%, per annum.
Oil, of course, has been mentioned frequently — Libya is Africa‘s largest oil producer. But one possible reason in particular for Gadhafi’s fall from grace has gained significant traction among analysts and segments of the non-Western media: central banking and the global monetary system.
According to more than a few observers, Gadhafi’s plan to quit selling Libyan oil in U.S. dollars — demanding payment instead in gold-backed “dinars” (a single African currency made from gold) — was the real cause. The regime, sitting on massive amounts of gold, estimated at close to 150 tons, was also pushing other African and Middle Eastern governments to follow suit.
And it literally had the potential to bring down the dollar and the world monetary system by extension, according to analysts. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. The “Insiders” were apparently panicking over Gadhafi’s plan.
"Any move such as that would certainly not be welcomed by the power elite today, who are responsible for controlling the world's central banks,” noted financial analyst Anthony Wile, editor of the free market-oriented Daily Bell, in an interview with RT. “So yes, that would certainly be something that would cause his immediate dismissal and the need for other reasons to be brought forward [for] removing him from power."
According to Wile, Gadhafi’s plan would have strengthened the whole continent of Africa in the eyes of economists backing sound money — not to mention investors. But it would have been especially devastating for the U.S. economy, the American dollar, and particularly the elite in charge of the system.
“The central banking Ponzi scheme requires an ever-increasing base of demand and the immediate silencing of those who would threaten its existence,” Wile noted in a piece entitled “Gaddafi Planned Gold Dinar, Now Under Attack” earlier this year. “Perhaps that is what the hurry [was] in removing Gaddafi in particular and those who might have been sympathetic to his monetary idea.”
Investor newsletters and commentaries have been buzzing for months with speculation about the link between Gadhafi’s gold dinar and the NATO-backed overthrow of the Libyan regime. Conservative analysts pounced on the potential relationship, too.
“In 2009 — in his capacity as head of the African Union — Libya's Moammar Gadhafi had proposed that the economically crippled continent adopt the ‘Gold Dinar,’” noted Ilana Mercer in an August opinion piece for WorldNetDaily. “I do not know if Col. Gadhafi continued to agitate for ditching the dollar and adopting the Gold Dinar — or if the Agitator from Chicago got wind of Gadhafi's (uncharacteristic) sanity about things monetary.”
But if Arab and African nations had begun adopting a gold-backed currency, it would have had major repercussions for debt-laden Western governments that would be far more significant than the purported “democratic” uprisings sweeping the region this year. And it would have spelled big trouble for the elite who benefit from “freshly counterfeited funny-money,” Mercer pointed out.
“Had Gadhafi sparked a gold-driven monetary revolution, he would have done well for his own people, and for the world at large,” she concluded. “A Gadhafi-driven gold revolution would have, however, imperiled the positions of central bankers and their political and media power-brokers.”
Adding credence to the theory about why Gadhafi had to be overthrown, as The New American reported in March, was the rebels’ odd decision to create a central bank to replace Gadhafi’s state-owned monetary authority. The decision was broadcast to the world in the early weeks of the conflict.
In a statement describing a March 19 meeting, the rebel council announced, among other things, the creation of a new oil company. And more importantly: “Designation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”
The creation of a new central bank, even more so than the new national oil regime, left analysts scratching their heads. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” noted Robert Wenzel in an analysis for the Economic Policy Journal. “This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences,” he added. Wenzel also noted that the uprising looked like a “major oil and money play, with the true disaffected rebels being used as puppets and cover” while the transfer of control over money and oil supplies takes place.
Other analysts, even in the mainstream press, were equally shocked. “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power?” wondered CNBC senior editor John Carney. “It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.”
Similar scenarios involving the global monetary system — based on the U.S. dollar as a global reserve currency, backed by the fact that oil is traded in American money — have also been associated with other targets of the U.S. government. Some analysts even say a pattern is developing.
Iran, for example, is one of the few nations left in the world with a state-owned central bank. And Iraqi despot Saddam Hussein, once armed by the U.S. government to make war on Iran, was threatening to start selling oil in currencies other than the dollar just prior to the Bush administration’s “regime change” mission. While most of the establishment press in America has been silent on the issue of Gadhafi’s gold dinar scheme, in Russia, China, and the global alternative media, the theory has exploded in popularity. Whether salvaging central banking and the corrupt global monetary system were truly among the reasons for Gadhafi’s overthrow, however, may never be known for certain — at least not publicly.
| time (et) | report | period | Actual | forecast | previous |
|---|---|---|---|---|---|
| MONDAY, NOV. 14 | |||||
| None scheduled | |||||
| Tuesday, NOV. 15 | |||||
| 8:30 am | Retail sales | Oct. | 0.2% | 1.1% | |
| 8:30 am | Retail sales ex-autos | Oct. | 0.1% | 0.6% | |
| 8:30 am | Producer price index | Oct. | 0.0% | 0.8% | |
| 8:30 am | Core PPI | Oct. | 0.1% | 0.2% | |
| 8:30 am | Empire state index | Nov. | -3.0 | -8.5 | |
| 10 am | Inventories | Sept. | 0.2% | 0.5% | |
| Wednesday, NOV. 16 | |||||
| 8:30 am | Consumer price index | Oct. | 0.0% | 0.3% | |
| 8:30 am | Core CPI | Oct. | 0.1% | 0.1% | |
| 9:15 am | Industrial production | Oct. | 0.4% | 0.2% | |
| 9:15 am | Capacity utilization | Oct. | 77.6% | 77.4% | |
| 10 am | Home builders' index | Nov. | 19 | 18 | |
| Thursday, NOV. 17 | |||||
| 8:30 am | Jobless claims | 11-12 | 397,000 | 390,000 | |
| 8:30 am | Housing starts | Oct. | 605,000 | 658,000 | |
| 10 am | Philly Fed | Nov. | 10.0 | 8.7 | |
| FRIDAY, NOV. 18 | |||||
| 10 am | Leading indicators | Oct. | 0.7% | 0.2% | |
