Saturday, September 7, 2013

How to Play the Looming Platinum Supply Crisis

South Africa, platinum mining giant, is about to fall off the investment map, says Dave Forest of Pierce Points. Until the country sorts out its labor politics, there is a real need to establish alternative sources of platinum group metals, vanadium and manganese. In other words, while it's a bad time to be a miner in South Africa, it's a good time to hold in-ground reserves. In this interview with The Metals Report, Forest names deposits in the Americas and elsewhere in Africa with the potential to meet global platinum needs. But he's choosing carefully, because even in times of scarcity, Forest argues, it just won't do to develop anything other than the best, most economic mining projects. (9/3/13) More >

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McAlvany Weekly commentary

U.S. Stock Market: Tapertantrums and Hopium

-Debt ceiling debate a bottomless pit
-Big government means slow growth
-Gold bottom in, with rise to come

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How Many Treasurys Do Russia And China Own?

Between the two of them, this much: $1,414 billion, or 25% of all foreign held US Treasury paper.
Now the question is - if the military escalation begins, would one or both dump without regard for price, crush the carefully manicured rate-driven recovery, and punch the ultimate decision-maker behind the Syrian war, the Federal Reserve and the banker uberclass, where it really hurts?

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Poland Confiscates Half Of Private Pension Funds To “Cut” Sovereign Debt Load

To summarize:
1. Government has too much debt to issue more debt
2. Government nationalizes private pension funds making their debt holdings an “asset” and commingles with other public assets
3. New confiscated assets net out sovereign debt liability, lowering the debt/GDP ratio
4. Debt/GDP drops below threshold, government can issue more sovereign debt

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How Low Can/Will Corn Prices Move?

I realize that most traders are inclined to be bullish and long the grain market, especially on the back side of a very dry August. However, the corn crop was made during July when moisture was plentiful and pollination occurred during a long cool spell. How quickly traders forget. Granted, dry August conditions and one week of warmer than normal temperatures (that's right only about five to seven days of above normal temperature occurred in most of the Midwest during August) took the top side off of corn yields, but generally we're looking at respectable yields that should fall between 152 and 156 bushels per acre on a national level. Factoring in the acreage and we'll likely harvest a record large crop, one that is likely going to be closer to 14 billion bushels than 13 billion.

In addition to the high likelihood of reaping a record large corn crop this fall, most traders don't seem to realize that we've peaked corn demand. One third of corn demand, for this crop, will come from the ethanol industry. At this moment there's not one new ethanol plant under construction in the U.S. What I'm trying to say is that one third of corn demand is a mature market that will not experience any growth over the next 12 months, regardless of price. The second component of corn demand, exports is also small relative to historical levels. There are two major reasons for this, stable meat production outside of the U.S and dramatically higher corn production outside of the U.S. 

 World Corn Production

 The sharp rise in corn prices over the last two years has stimulated a massive response on the part of world corn producers. With ethanol demand stable and with export demand slowly recovering but small compared to historical standards, the burden on demand lies solely on the feed component. Cattle numbers, however, are still declining so we'll not see increased corn feed demand from the beef industry for several years. The good news for corn producers is that poultry production is rising and there's a very good chance that U.S. hog producers are also entering into a major expansionary phase. Expansion in the hog sector, however, has not been confirmed yet by the USDA. 

The math, while simple, is simply strange for the corn trader to get used to. Indeed, we've become accustomed to and almost complacent toward historically high corn prices. It won't last. Rising production and declining demand will allow ending corn stocks to swell dramatically both at the U.S. level and on a world level. Most traders simply won't believe the math and the dramatic change in the supply/demand table until the crop is in the bin. The sharp move downward in corn will be nearly over by then. Look for a move toward $4.00 during harvest.
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Bob Hoye – Credit Bust Going According To Plan

from Financial Survival Network
Bob Hoye, master financial historian, joined us again for a close look at the re-emerging financial crisis. It’s clear from what’s going on now that we’re entering another phase of the financial crisis. Expect more volatility and more collapses, seemingly happening out of nowhere. Of course they’ll be accompanied by governmental assurances that the situation is under control and that you shouldn’t be worried. But you alreday know what that’s worth.
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The Real Carnage The World Will Have To Face Is Still To Come

Eric King: “Ron, you’ve been at this business for nearly six decades, where are we at this point in this historic cycle, and where do you see us headed from here?”
Rosen: “We are now in the process of making a secondary low in the gold and silver markets. This will confirm that a major bottom in both gold and silver has already taken place, and this pullback will be over in a matter of weeks — I would say 3 to 5 weeks at the most….
“At that point gold and silver will be heading dramatically higher into much of 2014. Gold and silver will be making new all-time highs by early next year, but silver will be outperforming gold during this time frame.”
Ron Rosen continues @
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