Investment/Trends

A Central Banker with Austrian Instincts

"Raghu Rajan is a very good neoclassical economist who has made important contributions to banking, finance, the theory of the firm, corporate governance, economic development, and other fields. He is also taking over as head of India’s central bank. Rajan is no Austrian, but he has a quasi-Austrian take on the financial crisis, and far greater appreciation for free markets in general than any of the key US or European policymakers. As I tweeted this morning, Rajan is about 1,000,000 times better than either Summers or Yellen. I’d gladly trade him for any US central banker." Continue reading →

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What’s in the Vault?

"The request represented less than 5% of all the gold that the Fed officially holds in its New York vaults. (Interestingly, an earlier request by Germany to inspect its assets was denied by the Fed). Despite the relatively small request (relative to the total holdings), repatriation is expected by 2020. Perhaps for fear that she may be 'persuaded' to accept being 'cash-settled' with U.S. dollars in lieu of gold, Germany dared not complain. The letter issued on April 1, 2013 by Dutch State-owned ABN-AMRO bank to holders of paper claims to gold and silver held in its vaults advised that any physical metal custodied at the bank would in the future be 'cash-settled'." Continue reading →

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In decline: the changing face of the world’s highest grade gold mines

"Many of the world's gold miners are struggling to keep their heads above water at current gold prices. A fact that many investors are struggling to understand given the hefty increase in gold prices seen over the last decade. Granted, prices of the yellow metal have fallen sharply from their highs but, they are considerably higher than they were at the start of the bull run. One of the main reasons given by gold miners for this is the fact that gold mines are not what they once were, many are old and the replacement ounces that are being found are of much lower grade." Continue reading →

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Rail Fails While Pipelines Prevail

"It costs approximately $15 per barrel to send oil by rail — compared with $1 a barrel by pipeline and $2 a barrel by ship. However, the steep premium for Brent made up for the huge shipping costs. Bakken oil sent by train was still cheaper than Brent oil carried by ship. Unfortunately for trains, though, prices are now shifting. The price advantage Bakken enjoys over Brent has fallen to only about $10–12 a barrel. Suddenly, spending $15 a barrel to ship Bakken by train doesn’t make sense. Instead, refiners are finding buying Brent is a better and safer deal. But all this talk about ships versus trains leaves out the best solution for crude oil transport." Continue reading →

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The Future of Transportation

"The Hyperloop is a futuristic form of travel, whereby passengers will be blasted to their destinations in ultra-high-speed pneumatic vacuum tubes. It’s not exactly teleportation… but it’s pretty darn close. We’re talking about traveling at speeds of up to 4,000 mph. Shooting from the East Coast to the West Coast in less than an hour will be doable. In keeping with his entrepreneurial spirit (Musk co-founded PayPal and is co-founder and CEO of electric car company Tesla Motors and private spaceflight company SpaceX), he wants partners who share his vision of 'breakthrough tech done fast without wasting money on BS.'" Continue reading →

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Rail Fails, Pipelines Prevail

"It costs approximately $15 per barrel to send oil by rail — compared with $1 a barrel by pipeline and $2 a barrel by ship. However, the steep premium for Brent made up for the huge shipping costs. Bakken oil sent by train was still cheaper than Brent oil carried by ship. Unfortunately for trains, though, prices are now shifting. The price advantage Bakken enjoys over Brent has fallen to only about $10–12 a barrel. Suddenly, spending $15 a barrel to ship Bakken by train doesn’t make sense. Instead, refiners are finding buying Brent is a better and safer deal. But all this talk about ships versus trains leaves out the best solution for crude oil transport." Continue reading →

Continue ReadingRail Fails, Pipelines Prevail

Estate auction set for $6.5 million gold coin fortune amassed by Nevada recluse

"The final treasures of a quiet man who collected a fortune in gold coins will be auctioned off Tuesday in Nevada. The body of Walter Samaszko Jr. was found in his Carson City home in June 2012. A cleaning crew hired to tidy his modest, ranch style home where he had lived for four decades came upon a stunning discovery — boxes and boxes full of gold coins and bullion collected over an unassuming lifetime. It was enough to fill two wheelbarrows. The fortune, after taxes, will go to Samaszko's only surviving cousin, Arlene Magdanz of San Rafael, Calif. A substitute teacher, Magdanz has shunned media attention and not spoken publicly about her new-found riches." Continue reading →

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Bond Losses at Federal Reserve Top $192 Billion In 3 Months

"Granted, the Bernanke & Co. does not value its massive bond portfolio on a mark-to-market basis. But the surge in interest rates has already erased almost $200 billion in the Federal Reserve’s capital. But that’s not all. If interest rates continue to head higher, the value of the Fed’s liquid assets that it could sell would decline and further undermine its capital cushion. And if the velocity of rate increases intensifies, the Fed, with only $62 billion in capital, could see its entire capital base completely wiped out. This could have a serious domino effect. It could paralyze the Fed’s ability to defend the dollar’s purchasing power." Continue reading →

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Poor Economy = Low Gold Price?

"By the time 1979 hit, inflation was rising, gas prices were soaring, incomes were dropping, and mortgage rates were climbing. The S&P was rising, but not so much in real terms. GDP growth was high, but it was clearly not a rosy time for consumers or workers. So how did gold perform during this challenging economic environment? The gold price rose 23% in 1977 and 37% in 1978, both of which are considered economic expansion years. But as things worsened in 1979, the price accelerated and went into a mania, ending the year with an incredible 127% return." Continue reading →

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Housing…”For-Sale” Supply Wave Hitting Market?

"The housing market has been turbocharged by the greatest direct stimulus in history over the past 18 months. I hear so much that the past year 'recovery' has to be 'organic' because the 'government' is not providing any stimulus or subsidies. Perhaps, technically they are correct because the Fed is not a government agency. But when you factor in the power of the Fed buying rates down from 5.5% in 2011 to 3.25% in 2012/13 on demand and 6.5 million mortgage mods on supply you come up with a very volatile situation if that go-go-juice is ever taken away. And it was just taken away." Continue reading →

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