Monthly Archives: July 2013

Japan Government To Change Inflation Calculation Ushering In Even More BOJ Liquidity

"The official explanation for this upcoming adoption of core-core-CPI which also excludes energy prices in addition to fresh food costs (as core CPI does everywhere else in the world) is to 'raise the bar' on Abe's inflation goal. In reality, it will simply grant the BOJ unlimited ammo to continue injecting liquidity indefinitely because absent exploding energy costs (as we have discussed), inflation in Japan is quite dormant. But what will really happen is that inflation will merely become just one more governmentally-determined and goalseeked economic indicator and policy tool, as it is in the US and China." Continue reading →

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Chinese Gold Rush Underway

"This featured chart depicts the explosion in Chinese gold imports from Hong Kong since January 2012, during which China imported an astonishing 1,206 tonnes of gold – 20% more than the nation's latest official gold holdings of 1,054 tonnes. In the first quarter of 2013 alone, China imported 372 tonnes from Hong Kong, or nearly what was imported through the entire first half of 2012." Continue reading →

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Citi: “No Gold Company… Will Generate Free Cash Flow At Current Gold Prices”

"After updating their precious metals' company cost curve, Citi's ominous warning that, 'a combination of rising unit costs (15% yoy), sustained high capital budgets and a falling gold price have resulted in a fast contraction in margins - so much that no gold company under our coverage will generate Free Cash Flow at spot gold.'" Continue reading →

Continue ReadingCiti: “No Gold Company… Will Generate Free Cash Flow At Current Gold Prices”

Mining Stocks: Fool’s Gold or Diamonds in the Rough?

"Many junior miners are already struggling to remain profitable. We may soon see them begin to close down some of their more costly mines, spend less on exploration and invest less in general. However, as miners are forced to cut output, prices should begin to stabilize. If your appetite for risk is relatively high, you may want to consider bargain hunting in this sector. If you do decide to look more closely at mining stocks, you must remain nimble, and try to find large, relatively stable companies that pay a healthy dividend. One company that fits the bill is Newmont Mining (NEM), which has a dividend yield of 4.7 percent." Continue reading →

Continue ReadingMining Stocks: Fool’s Gold or Diamonds in the Rough?

Gold Beats Cocaine as Colombia Rebel Money Maker

"Colombian armed groups are reaping profits from illegal gold mining that are five times greater than returns from cocaine, according to Colonel Hector Paez, acting director of the country’s rural police division. Cocaine typically takes six months to produce and requires considerable knowledge, while an illegal mining operation in the Colombian jungle can extract two kilograms of gold a week, Paez said in a June 19 interview in Bogota. Gold, which slumped below $1,300 an ounce for the first time since September 2010 in New York yesterday, has become Colombia’s biggest export after oil and coal." Continue reading →

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Big tobacco stubs out e-cigarette competitors

"In anticipation of Reynolds’ first effort in the e-cigarette market, the company’s lobbyists are pushing laws at the state level that could add costs, paperwork and headaches onto smaller competitors that have largely served the e-cigarette market so far. More worrisome is that the online activities of thousands of e-cigarette consumers, who are looking for a tar-free alternative to smoking, could be effectively outlawed. The number of American smokers who have tried e-cigarettes doubled from 10 percent in 2010 to about 21 percent in 2011." Continue reading →

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Campus ‘smoke-free’ edicts extend to smokeless products and e-cigarettes

"The number of campuses enacting bans has been rapidly increasing. In early 2007, there were about 140 smoke-free campuses. By July 1, 2012, that number rose to about 770, according to the advocacy group. University of Massachusetts-Amherst's tobacco-free policy began July 1. Junior Derek Fisher said it is annoying that the university bans all forms of tobacco, even those that do not cause secondhand smoke, like chewing tobacco or electronic cigarettes. Electronic cigarettes are not currently regulated by the Food and Drug Administration. Many schools are including the products in their bans until health risks associated with them are known, Williams said." Continue reading →

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Simulated ‘Street Wide’ Cyber Attack on Wall Street Coming

"A source provides me with this internal advisory put out by the Depository Trust & Clearing Corporation. Always be on your toes when 'simulations' are scheduled. Remember, simulation drills were on going at the time of 9-11 and also at the Boston Marathon bombing." Continue reading →

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Japanese Are Bailing Out of US Treasury Bonds

"It appears that the bulk of the bonds that Japanese investors sold in May were US Treasurys and the roughly $30 billion were a record amount. This follows the $15.5 billion sales in April. May was the fifth consecutive month Japanese investors have reduced their U.S. Treasury holdings and over this period sold about 8 trilion yen. The second-quarter selloff appears driven to a larger extent by worries about Fed tapering and its potential to push up global bond yields, they said. This is what is going to make it very difficult for the Fed to slow/stop buying Treasury securities. When they slow/stop, there will be even more upside pressure on rates, with very serious sellers." Continue reading →

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Bill Bonner: Can the Fed’s “Credit Cure” Really Work?

"The US economy reached a turning point in the 1980s. Natural, healthy, sustainable growth gave way to credit-boosted phony growth. The 'growth' of the last 30 years was not like the growth of the 30 years before it. It was not based on rising productivity, increased wages and real capital formation. Wages stagnated. The only way people could increase their standards of living was by spending money they didn't have. That's where the credit came in, made possible by America's post-1971 flexible paper money system. Spending money you don't have is one of those things that economist Herb Stein had in mind when he said, 'When something can't go on forever, it will stop.'" Continue reading →

Continue ReadingBill Bonner: Can the Fed’s “Credit Cure” Really Work?