Monthly Archives: September 2013

Gold By The Planeload! Precious Metals Update Part II

"If you believe that gold and silver prices are due to recover, like I do, then you should look for plays that can surf the wave. In particular, you want companies unburdened by debt and not locked into large, complex, expensive projects. Does that ring any bells? Let’s consider royalty companies… Royalty companies own interests in mine production without taking on operational risks and costs. That is, royalty guys 'loan' money upfront to capitalize the mine developers, usually at an early stage. In return, the royalty company lays claim to an ongoing income stream generated in the future by the mining project. It’s a well-understood form of project finance, in many instances." Continue reading →

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Five Ways To Play Gold and Silver: Part I

"Times are tough for miners. Costs are high. Metal prices are low. Share prices and market capitalizations are in the pits, so to speak. Overall, sentiments toward the mining sector are negative. The 'commodity super-cycle is over,' if you believe the headline writers of the Financial Times or The Economist. Still, with a recent upturn in metals prices are there opportunities in this scenario? I believe there are still some bargains out there — and if metals prices inch higher over the coming days and months, a few well run miners should pay off handsomely." Continue reading →

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South African gold miners strike over ‘slave wages in white man’s economy’

"About 80,000 gold miners in South Africa walked out on strike on Tuesday night, raising fears of renewed violence in the crisis-hit industry and underlining the government’s dwindling authority. The dispute over pay comes a year after 46 people died during unrest in the platinum belt and amid signs that the century-old mining industry model is broken. For years South Africa was the world’s top gold producer, accounting for more than two-thirds of output in 1970, but it has slipped to fifth place with just 6% of global production. The NUM is demanding rises of up to 60% after talks broke down." Continue reading →

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The Smartphone Wars: Nokia gives it up for Microsoft

"If Elop was a mole, what were his instructions? 'Elop. Go forth. Destroy Nokia so we can buy things we already effectively control for huge amounts of money.' I’m put in mind of the wave of mergers in the 1980s among mainframe computer manufacturers, what we called at the time 'dinosaurs mating'. Those didn’t make any sense either; when you merge two huge, doomed, inefficient thunder-lizards together you don’t tend to get a mammal. Meanwhile – and of course – Android continues to stomp its competition flat. Even the post-Jobs Apple can’t stem the tide; it’s pretty close to the 10% niche market share I predicted back in 2009 already, with no sign that trend will or can be reversed." Continue reading →

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When Dominance Leads to Incompetence and Catastrophe

"It's rather staggering to list Microsoft's failures over the past decade. The strategy that worked in the 1990s--copy rivals and add more features to the copycat products and services--is no longer working. Dominance in any space breeds complacency and enables the luxuries of political squabbling, sclerosis and loss of focus. Competence becomes incompetence, and the infrastructure that fosters creativity and flexibility--that is, a keen appreciation of risk and spontaneity--is slowly dismantled. That applies not just to corporations but to governments, nations and empires." Continue reading →

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20 Investment Insights from Peter Lynch

"5. Stocks are most likely to be accepted as prudent at the moment they’re not. For two decades after the Crash, stocks were regarded as gambling by a majority of the population, and this impression wasn’t fully revised until the late 1960s when stocks once again were embraced as investments, but in an overvalued market that made most stocks very risky. Historically, stocks are embraced as investments or dismissed as gambles in routine and circular fashion, and usually at the wrong times." Continue reading →

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WATCH OUT BELOW: S&P 1987 Compared with S&P 2013

"It's a terrible mistake to just look at the data from two time periods and forecast the trends to continue. However, as I have been pointing out at the EPJ Daily Alert, there are many reasons to suspect another crash may be on the way: 1. Money supply growth has declined dramatically since the start of the year. 2. There is a natural tendency for the consumption-savings ratio to move towards consumption, starting in September. BTW: In the summer of 1987, money supply, in the manner I track it in the EPJ Daily Alert, collapsed, just like it has this summer." Continue reading →

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The Joke Shack of the Housing Sector

"REITs, or real estate investment trusts, are companies that own and manage real estate. Before December of last year, there was no such thing. Now there are three, with more on the way. Do these vehicles deserve a spot in your portfolio? I’m going to make the case that they do not. I say this as someone who has been a housing bull. I still think housing is OK, but not as attractive as it was. The investment case for rental homes was plain and I made the case a number of times in these pages in 2011 and 2012. I even bought a rental property for myself. And it’s worked out very well so far. I was far from the only one who saw such an opportunity." Continue reading →

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Gold Declines Trigger Brief Trading Halt

"Exchange operator CME Group Inc. said it briefly halted gold trading on Thursday morning to prevent excessive price volatility. Stop Logic, a type of circuit breaker that pauses trading for between five and 20 seconds, was triggered in the December-delivery gold futures contract at 2:54 a.m. EDT and lasted for 20 seconds, the spokesman said. A set of automatic sell orders were triggered as futures neared $1,350 an ounce early in European trading hours, said George Gero, a vice president and precious metals strategist with RBC Capital Markets, in a note. The sales sent gold prices as much as $10 an ounce lower in the space of a minute, triggering the trading pause." Continue reading →

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The Treasury Secretary on How Unstable U.S. Government Finances Are

"Treasury Secretary Jack Lew made the following statement during remarks today before the Economic Club of Washington D.C.: '[W]e are relying on investors from all over the world to continue to hold U.S. bonds. Every Thursday, we roll-over approximately $100 billion in U.S. bills. If U.S. bond holders decided that they wanted to be repaid rather than continuing to roll-over their investments, we could unexpectedly dissipate our entire cash balance.'" Continue reading →

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