I'm sure this is the moment you've all been waiting for. I liquidated all my old stocks switched my account over to Charles Schwab and begun anew. Well, almost.
I held on to two of my old stocks.
Oil Sands Quest Inc. (BQI)
This is still one of my favorite companies. Their outlook continues to get better and better as the keep drilling off the HUGE amount of land that they own. They keep hitting potential reserves and their drilling is ahead of schedule. I will continue to hold and have high hopes for this company. Side note: Mexico has announced a drastic decline in their offshore Cantarell reserve. This is one of the 3 largest reserves in the world and is now in sharp decline. This partially because they had injected nitrogen into the reserve to keep us pressure. This had limited success and now the reserve is filling up with sea water. They have dropped an approximate 400000 barrels of oil production per day. After this news, I believe that it's safe to get back into the oil market.
U.S. Gold Corp. (UXG)
I still love this company. I think that they have massive potential drilling off the Cortez trend. I continue to have strong confidence in Robert McEwen, their CEO. He did wonderful things with Gold Corp. If you wonder why I love Rob McEwen, all you have to do is Google the Colorado Gold conference and click on the key note speaker.
The New stocks:
Fortuna Silver (FVITF)
Fortuna Silver Mines is a silver producer focused on Latin America. Their primary assets are the Caylloma Silver Mine in southern Peru, and the San Jose Silver-Gold Project in Oaxaca Mexico. The 100% owned Caylloma Mine contains an NI 43-101 compliant estimate of 7 million ounces silver (777,630 tonnes at 9.2 oz/t Ag) in Proven and Probable Reserves, plus 14 million ounces silver (1,146,599 tonnes at 12.4 oz/t Ag) in Inferred Resources. The acquisition also includes a 300 man camp, a 600 tpd mill and all associated infrastructure. The mine was temporarily closed in 2003, but produced 2.6 million ounces of silver in 2002. As of September 2006 Caylloma has reopened and is currently producing.
When it comes to silver mines, there's no place I'd rather have my money than Latin America, specifically Mexico. They have been mining there for hundreds of years and have barely scratched the surface. Fortuna, as well as Impact silver (soon to be mentioned) are companies that are sitting on top of huge potential. They are currently modernizing their mining equipment. As this happens expect the amount of silver produced to increase as well as their earnings. This will show in their stock performance. Even if silver prices were to remain rather subdued, they will still increase their value. Just think what might happen when silver goes through the roof.
Impact Silver (ISVLF)
Impact Silver Corp. is a profitable junior silver producer and explorer striving to become an intermediate silver producer focused on economic projects in mining friendly and politically stable parts of the world. At the Royal Mines of Zacualpan project in Mexico, Impact owns and operates a 500 ton per day mill and mines. Production has been profitable in every quarter of operation since it started in January 2006. Impact plans to scale up the production volume to the full capacity of the mill. Huge exploration potential in 100% owned under-explored 125km2 silver district. This historic district has never been explored with modern methods. Impact is working diligently to unlock the value of its assets.
Pacific Rim Mining (PMU)
Pacific Rim is a growth-oriented and revenue-generating gold exploration company with operational and exploration assets in North, Central and South America. The Company is exploring and developing its advanced-stage high-grade, low cost El Dorado gold project in El Salvador and is actively exploring a pipeline of grassroots gold projects. The Company is well-financed and benefits from continuing cash flow from gold production at its 49%-owned Denton-Rawhide residual leach operation.
SXR Uranium One Inc. (SXRFF)
SXR Uranium One Inc. is engaged in the exploration and development of uranium and gold resource properties in South Africa, Australia and Canada and is actively pursuing growth opportunities in the western United States. The Corporation's principal assets are the Dominion Uranium Project in South Africa, the Honeymoon Uranium Project in Australia and, through its majority-owned subsidiary Aflease Gold Limited, the Modder East Gold Project in South Africa. Through a joint venture with Pitchstone Exploration Ltd., the Corporation is also engaged in the acquisition and development of uranium exploration properties in the Athabasca Basin in Saskatchewan, Canada.
There they are folks. SXR, BQI, and Impact are definitely my 3 favorites here. They have some great properties, and great management to go along with them. You might notice some common things in these companies. First, all either have some sort of production, or are near term producers. All of them are conducting large amounts of exploration with some positive outlooks.
Another thing you might notice is that, it looks like I have a lot of eggs in one basket. I own physical gold/silver, and I have a lot of money tied up in the mining of precious metals. This goes against all basic investing principles. I have some strong beliefs backed up by stronger data. I'm dealing with a high risk/reward scenario her. You also might notice that not all of these companies are on the ticker provided. First off, I might be one of the least computer savy persons that you have ever met. Some of the symbols were just not available through the ticker I use. I will look into it and get something better up there for you.
I have recently written a short thesis regarding how the U.S. monetary/fiscal irresponsibility has insured a grim future for the U.S. and a great future for gold/silver. If you would like a copy of it please email me and I'll send you it. (jones973@tc.umn.edu) It's too long to post on the web site not that's its a book or anything (2.5 pages single spaced), but it's quite interesting.
I guess I'm not your basic investor. If you are looking to do some investing on your own, please do your own due diligence. I am not a financial advisor or anything close. I don't want my money in a CD, mutual fund, or money management fund. At this point, it's not for me. Happy Investing!
Monday, January 29, 2007
Friday, January 26, 2007
Corn, Tortillas, and Ethanol
In this post I am going to write about how the U.S. government meddling in the economy has created some nasty unintended consequences.
It is well known that corn prices have gone through the roof. A bushel of corn is around $3.40, which is the highest its been in more than a decade. The main cause of this is ethanol. Before ethanol, corn was already a highly subsidised commodity. Now corn happens to be the highest subsidized service/good here in the United States.
Currently, 14% of the corn grown here in the United States goes to producing ethanol. If you haven't heard, there is to be a huge influx of new ethanol plants by 2009 created with government assistance. If they reach there target for 2009, then 90% of the corn produced in the United States will be used for ethanol. This is absolutely ridiculous and shows exactly why ethanol is a political scam, directed at the naive American, to get senators and other figure heads into office. It is obvious that, at this rate, we will come to the point where there won't be enough corn for food anymore. Ethanol IS NOT a solution to our energy problems.
The interesting thing is that even though our ethanol production, as well as other means of alternate energy, increase exponentially every year, they also count for less of a percentage of our total energy every year. In other words, our increasing use of alternate energy is not increasing as fast as our demand for energy is increasing. So if you think that the United States will put 90% of its corn into an alternate energy source that will not decrease our reliability of foreign oil, your crazy. I hate to reiterate this point, but like I said, ethanol is not a long run solution.
So, once again, I'm sure you're staring into your computer, in a cold sweat by now, thinking, "what should we do?!?" I can just shake my head in shame and reply, "I don't know. It's too late." To really protect ourselves from this problem we should have seriously started taking action 10-15yrs ago. The government would rather postpone the inevitable and not inform the public of the coming crisis in order to make it appear as if everything is hunky dory. There still doing it to some extent today. I'm sure that everything will be fine some day. In the mean time we will be forced to deal with $100-$150 /barrel for oil.
Enough of that gibberish for a second. I would like to look at the affect of our government influence for the futile solution to our energy crisis. Like I said, the price of corn has sky rocketed. Back to microeconomics, when the input prices of a good increase the output price of the good increases as well. Let's head south of the border...Mexico. Beautiful beaches, cabanas and palm trees. A wonderful vacation destination if I may say so myself. The president of Mexico Felipe Calderon signed an accord on Thursday to "curb soaring tortilla prices, as the corn tortilla is the basic staple of Mexican diet and especially crucial for the poor." That's what he said publicly, but I believe that he had a few, choice, 4-letter words, in private, regarding the U.S. government. This is because we are the reason for the soaring corn prices therefore corn tortilla prices as well. The past 3 years, the price of corn tortillas in Mexico has grown on average of 14% /year. That 3 times the inflation rate in Mexico. Ouch.
Side point: I would like to point out an important lesson regarding inflation here. The poor are always the first victims of price inflation that always following a monetary inflation. Remember the poor are many while the rich are few. This makes the rich (and all their political friends) quite nervous.
It is well known that corn prices have gone through the roof. A bushel of corn is around $3.40, which is the highest its been in more than a decade. The main cause of this is ethanol. Before ethanol, corn was already a highly subsidised commodity. Now corn happens to be the highest subsidized service/good here in the United States.
Currently, 14% of the corn grown here in the United States goes to producing ethanol. If you haven't heard, there is to be a huge influx of new ethanol plants by 2009 created with government assistance. If they reach there target for 2009, then 90% of the corn produced in the United States will be used for ethanol. This is absolutely ridiculous and shows exactly why ethanol is a political scam, directed at the naive American, to get senators and other figure heads into office. It is obvious that, at this rate, we will come to the point where there won't be enough corn for food anymore. Ethanol IS NOT a solution to our energy problems.
The interesting thing is that even though our ethanol production, as well as other means of alternate energy, increase exponentially every year, they also count for less of a percentage of our total energy every year. In other words, our increasing use of alternate energy is not increasing as fast as our demand for energy is increasing. So if you think that the United States will put 90% of its corn into an alternate energy source that will not decrease our reliability of foreign oil, your crazy. I hate to reiterate this point, but like I said, ethanol is not a long run solution.
So, once again, I'm sure you're staring into your computer, in a cold sweat by now, thinking, "what should we do?!?" I can just shake my head in shame and reply, "I don't know. It's too late." To really protect ourselves from this problem we should have seriously started taking action 10-15yrs ago. The government would rather postpone the inevitable and not inform the public of the coming crisis in order to make it appear as if everything is hunky dory. There still doing it to some extent today. I'm sure that everything will be fine some day. In the mean time we will be forced to deal with $100-$150 /barrel for oil.
Enough of that gibberish for a second. I would like to look at the affect of our government influence for the futile solution to our energy crisis. Like I said, the price of corn has sky rocketed. Back to microeconomics, when the input prices of a good increase the output price of the good increases as well. Let's head south of the border...Mexico. Beautiful beaches, cabanas and palm trees. A wonderful vacation destination if I may say so myself. The president of Mexico Felipe Calderon signed an accord on Thursday to "curb soaring tortilla prices, as the corn tortilla is the basic staple of Mexican diet and especially crucial for the poor." That's what he said publicly, but I believe that he had a few, choice, 4-letter words, in private, regarding the U.S. government. This is because we are the reason for the soaring corn prices therefore corn tortilla prices as well. The past 3 years, the price of corn tortillas in Mexico has grown on average of 14% /year. That 3 times the inflation rate in Mexico. Ouch.
Side point: I would like to point out an important lesson regarding inflation here. The poor are always the first victims of price inflation that always following a monetary inflation. Remember the poor are many while the rich are few. This makes the rich (and all their political friends) quite nervous.
Wednesday, January 24, 2007
Bonds and Returns
Now the title of this post might initially bore some folks before they even read the first sentence. Now that I have gotten you to read the first sentence, I hope your a little more interested because this topic is quite interesting. I am going to cover bonds and there REAL returns. I will do this by basically throwing out self explanatory numbers for you to consider.
I first need to state that my definition of inflation might be different from yours. I believe that inflation is not the rise in prices measured by the CPI, but instead is the increase in the amount of currency in circulation. That is a statistic measured by an index regarded as M2. The Feds used to also have an index called the M3 which is believed to be more accurate, but they decided it was "too expensive" to keep measuring the M3. Yeah right, in actuality they wanted to print more money without you, citizens of the U.S., knowing about it. Anyways the M2 is still a fairly accurate measurement. I don't like the CPI because it doesn't take into account energy and food prices. Now that that's cleared up...
Right now, a U.S. two year bond yields around 4.85% return. In the U.S. the CPI, in 2006, was measured at about 3.3%. This results to what appears to be a real return of 1.55%. Now, the M2 experienced a gain of about 10%. That means there was 10% more U.S. dollars in circulation than the beginning of the year (printed by the Federal Reserve). Now the real return is -5.15%. So investing in a 2-year bond doesn't lose money in regards to the amount of dollars that you owe. But it loses in the sense that the value of the money put into the bond is worth less than when it was initially invested.
Now I have a bad tendency to rag on the United States, so let's look at another example, Britain. A British two year bond yields about 5.38%. There CPI was said to be about 3% giving the investor about a 2.38% real return. Now, the British M2 was measured at around, or above, 12% in 2006. The the actual real return is -6.62%. So the British bond in 2006 was actually a bigger loser than the American bond. See, I can be a fair guy.
We might see a different story regarding the M2 here in the United States this year and the coming year. Once the recession comes public and the ball drops on the economy the Feds will begin to lower interest rates. This won't work like it has in the past. The reason the Feds lower interest rates is in regards to an incentive to consumers to invest in cars and houses to ignite the economy. Good luck trying get people to invest in a housing market that is crashing and burning and will continue its downward trend for 3-4 years. Next solution: run the printing press, and they will. They will print as much money as they can in hopes to inflate their way through this crisis. In other words, screw the U.S. citizen over instead of facing this recession responsibly. I apologize, this was supposed to be a short post regarding bond returns and it turned into a session of ranting and raving, but I have to finish now that I'm all riled up. By now I'm sure your screaming. "WHAT SHOULD I DO?" I reply with utter calmness, "buy gold." Gold is the only way to protect yourself from the manipulations implemented by government policy regarding its fiat currency. I promise you, it will soar. I can't predict exactly when, though I feel it will be sooner than later. But I do promise you. It...Will...Come...
I first need to state that my definition of inflation might be different from yours. I believe that inflation is not the rise in prices measured by the CPI, but instead is the increase in the amount of currency in circulation. That is a statistic measured by an index regarded as M2. The Feds used to also have an index called the M3 which is believed to be more accurate, but they decided it was "too expensive" to keep measuring the M3. Yeah right, in actuality they wanted to print more money without you, citizens of the U.S., knowing about it. Anyways the M2 is still a fairly accurate measurement. I don't like the CPI because it doesn't take into account energy and food prices. Now that that's cleared up...
Right now, a U.S. two year bond yields around 4.85% return. In the U.S. the CPI, in 2006, was measured at about 3.3%. This results to what appears to be a real return of 1.55%. Now, the M2 experienced a gain of about 10%. That means there was 10% more U.S. dollars in circulation than the beginning of the year (printed by the Federal Reserve). Now the real return is -5.15%. So investing in a 2-year bond doesn't lose money in regards to the amount of dollars that you owe. But it loses in the sense that the value of the money put into the bond is worth less than when it was initially invested.
Now I have a bad tendency to rag on the United States, so let's look at another example, Britain. A British two year bond yields about 5.38%. There CPI was said to be about 3% giving the investor about a 2.38% real return. Now, the British M2 was measured at around, or above, 12% in 2006. The the actual real return is -6.62%. So the British bond in 2006 was actually a bigger loser than the American bond. See, I can be a fair guy.
We might see a different story regarding the M2 here in the United States this year and the coming year. Once the recession comes public and the ball drops on the economy the Feds will begin to lower interest rates. This won't work like it has in the past. The reason the Feds lower interest rates is in regards to an incentive to consumers to invest in cars and houses to ignite the economy. Good luck trying get people to invest in a housing market that is crashing and burning and will continue its downward trend for 3-4 years. Next solution: run the printing press, and they will. They will print as much money as they can in hopes to inflate their way through this crisis. In other words, screw the U.S. citizen over instead of facing this recession responsibly. I apologize, this was supposed to be a short post regarding bond returns and it turned into a session of ranting and raving, but I have to finish now that I'm all riled up. By now I'm sure your screaming. "WHAT SHOULD I DO?" I reply with utter calmness, "buy gold." Gold is the only way to protect yourself from the manipulations implemented by government policy regarding its fiat currency. I promise you, it will soar. I can't predict exactly when, though I feel it will be sooner than later. But I do promise you. It...Will...Come...
Tuesday, January 23, 2007
Here we go!
I hope that I am not premature with this post being that the markets are still open. I am looking at a $11 of so gain for gold to about $644 /oz and a about a $.30 gain for silver to about $13.15 / oz. I have recently talked about how gold is just kind of hanging around with limited action either up or down. Well, this might be the beginning to a couple of pokes at a major breakout.
There is a strong resistance point for gold at around $650-$655 /oz and around $13.30 for silver. I don't necessarily think there will be a breakout today or tomorrow, but I do believe that it's on the horizon. We will probably see a couple attempts at the barrier before we actually break through. There are still a lot of investors "straddling the fence" in regards to the precious metals market. Some believe that there is still a chance for a strong break down. I don't count this out of the question, but a bold move to the resistance point of 650 will sway some opinions. That's why I'm quite excited about today's action thus far.
I am tempted to say "when", but I will leave it at "if", we break out, look to see a $20-$30 gain in gold and a $1.00-$1.50 gain in silver immediately. This will happen because if we break out, all the fence straddlers will hop on board sending the price of precious metals through the roof. Folks, if you want to get on the train you better start running, because its about to leave the station.
Overall this is positive news and I still stand beside my prediction of gold and silver hitting record highs this year.
There is a strong resistance point for gold at around $650-$655 /oz and around $13.30 for silver. I don't necessarily think there will be a breakout today or tomorrow, but I do believe that it's on the horizon. We will probably see a couple attempts at the barrier before we actually break through. There are still a lot of investors "straddling the fence" in regards to the precious metals market. Some believe that there is still a chance for a strong break down. I don't count this out of the question, but a bold move to the resistance point of 650 will sway some opinions. That's why I'm quite excited about today's action thus far.
I am tempted to say "when", but I will leave it at "if", we break out, look to see a $20-$30 gain in gold and a $1.00-$1.50 gain in silver immediately. This will happen because if we break out, all the fence straddlers will hop on board sending the price of precious metals through the roof. Folks, if you want to get on the train you better start running, because its about to leave the station.
Overall this is positive news and I still stand beside my prediction of gold and silver hitting record highs this year.
Monday, January 22, 2007
Resilience of Gold
The precious metals market in the early part of 2007 took an expected hit. I've talked about this in past posts. This is regards to the fact that after the May 2006 high, the gold market still needed to kick out all excess liquidity before a major breakout. Well the correction in the market has so far been pretty minor. The individuals selling physical, in preparation for a downfall in the price of gold, have taken place. So what!
Let's talk about some news that is quite bullish regarding precious metals. Oil has dropped and dropped hard as I predicted. It has experienced about a 13% decline down to $49.90 /barrel. It might still drop a little more, it might not, but I do believe the bottom is near. What happened to gold during this period? I would like to talk about the historical correlation between the two. Historically, gold and oil work with a positive correlation, meaning, when oil goes up gold increases as well. Well, gold held strong during this drop and even increased slightly.
Another positive indicator for the precious metals market is in regards to the U.S. dollar. The U.S. dollar index has experienced about a 2% rise in value. This is a result of a couple items. First is the above mentioned, oil. The decrease in the price of oil is great for the U.S. dollar. Another aspect that I have mentioned in previous posts is the resistance point of 80 regarding the U.S. dollar index. I've discussed how there will be several attempts at breaking this barrier without success. Each time the index nears 80 it responds with a sharp increase. Side note: when we break that barrier the decline in the value of the dollar will be fast, dramatic, and historic.
Conclusion: The value of gold has hung around and been quite resilient against low oil prices, the rise in value of the U.S. dollar, and the premature selling off of precious metals in preparation for a sharp downfall that never quite panned out. So what happens when oil prices start to rise and the U.S. dollar starts to fall? You can imagine. It's going to be the equivalent of throwing gas on the fire. Gold will go parabolic, and all the individuals who sold short will be looking to get back in the precious metals market, fueling the fire even more. Buy now! It's still cheap, and I still hold strong to gold/silver hitting record highs this year.
Let's talk about some news that is quite bullish regarding precious metals. Oil has dropped and dropped hard as I predicted. It has experienced about a 13% decline down to $49.90 /barrel. It might still drop a little more, it might not, but I do believe the bottom is near. What happened to gold during this period? I would like to talk about the historical correlation between the two. Historically, gold and oil work with a positive correlation, meaning, when oil goes up gold increases as well. Well, gold held strong during this drop and even increased slightly.
Another positive indicator for the precious metals market is in regards to the U.S. dollar. The U.S. dollar index has experienced about a 2% rise in value. This is a result of a couple items. First is the above mentioned, oil. The decrease in the price of oil is great for the U.S. dollar. Another aspect that I have mentioned in previous posts is the resistance point of 80 regarding the U.S. dollar index. I've discussed how there will be several attempts at breaking this barrier without success. Each time the index nears 80 it responds with a sharp increase. Side note: when we break that barrier the decline in the value of the dollar will be fast, dramatic, and historic.
Conclusion: The value of gold has hung around and been quite resilient against low oil prices, the rise in value of the U.S. dollar, and the premature selling off of precious metals in preparation for a sharp downfall that never quite panned out. So what happens when oil prices start to rise and the U.S. dollar starts to fall? You can imagine. It's going to be the equivalent of throwing gas on the fire. Gold will go parabolic, and all the individuals who sold short will be looking to get back in the precious metals market, fueling the fire even more. Buy now! It's still cheap, and I still hold strong to gold/silver hitting record highs this year.
Friday, January 19, 2007
Banana Republic
Normally I like to do my own comparisons and analysis of data, but I recenetly was reading an article by an analysist named Marc Faber. It was so very interesting and sought to the very exact words I couldn't come up with myself. He was writing, comparing the current and future state of the United States of America. In a nutshell he said that we are drifting to the state of a Banana Republic. He goes on to point out the econmic and political characteristics that are constant among the Banana Republic countries. These just so happen to be the same characteristics that we are starting to see all to clearly here in the United States. Well, I'll let Mr. Faber speak for himself:
The prime identifying characteristics (of a Banana Republic) are a spoiled political system, corrupt wealthy elite in power, control exerted by foreign entities, huge wealth inequities and a shrinking middle class, decayed infrastructure, urban wastelands with filthy pockets, primitive segments of the economy, low capital expenditures, capital flight externally, reliance upon foreign capital, heavy monetary inflation, outsized federal budget deficits, excessive import dependence, elite accounts in foreign locations, lowly paid common working class, large police and security forces, enormous prison population, proliferation of gambling casinos, and a weak currency.
God bless America
The prime identifying characteristics (of a Banana Republic) are a spoiled political system, corrupt wealthy elite in power, control exerted by foreign entities, huge wealth inequities and a shrinking middle class, decayed infrastructure, urban wastelands with filthy pockets, primitive segments of the economy, low capital expenditures, capital flight externally, reliance upon foreign capital, heavy monetary inflation, outsized federal budget deficits, excessive import dependence, elite accounts in foreign locations, lowly paid common working class, large police and security forces, enormous prison population, proliferation of gambling casinos, and a weak currency.
God bless America
Wednesday, January 17, 2007
Gold Vs. Gold ETF
This post is regarded to a question from one of my loyal readers. He asks what the advantages/disadvantages to owning physical gold to a gold ETF.
I would like to start the answer to this question with a statment. The government does NOT want you to own gold/silver. They realize that it is a key indicator of the government screwing you, the average citizen and consumer, over. The government is very good at keeping the shifty business on the down low. The skew curtain statistics and spin others. An example of this is the CPI. I have previously mentioned that under the Clinton administration they decided to remove food and energy costs from the CPI. Those are two of the highest inflatonary goods in our economy. True inflation is not judged by the price of goods, but instead it is measured by the amount of currency in circulation. So what does this have to do with gold and silver? Gold does not lie and is a true judge of when the government is printing "funny money" and inflating its currency to the eventual outcome of nothing. Trust me I'm getting at something here. So how does the government try to influence the investor to stay away from precious metals. They tax precious metals profits approximately 30%. "Regular" stocks profits are only taxed 10%. The advantage of owning physical gold and silver as opposed to an ETF is that the government doesn't know about it. They can't get their filthy hands on your money. You can go to local hole in the wall coin/bullion shops and pay cash and never have your name listed on anything. I personally buy from a supplier in Colorado who has the same policy. He keeps ZERO records of personal transactions. In summary, owning physical metals is more low key to put it bluntly.
I would like to talk about another advantage of owning the physical metals. The government can't tamper with it. Well, to an extent. The federal reserve likes to sell of their gold reserves in an attempt to artificially keep the price of gold low. They do this for the previous above mentioned reasons of keeping their shady business on the down low.
A friend of mind with a slightly more pessimistic view on the situation had some interesting things to say on the topic. He believes there is a sort of "day of reckoning" coming. The equivilant of Black Friday I guess. I would like to use a quote of his and pardon the language. He stated, "When shit hits the fan, gold and silver is gonna be your midnight crossing the border money. You won't be able to take a piece of paper that says you own gold." This brings me to another brief point. Gold and silver are the only thing that you can take anywhere in the world and trade it for goods or services.
I guess what I'm saying is physical is the way to go. I would like to touch briefly on an indirect positive effect regarding the gold ETF. The ETF has allowed the average investor who doesn't want to hold physical metals to diversify their investments. This has created a large increase in demand for the yellow metal. Streettracks gold trust-GLD is the most popular gold ETF. They own 448.76 tonnes of gold. That's 14,428,096 ounces of gold worth $9,045,781,137.46 (U.S. dollars.) So you can see why the ETF has been good for the demand for gold.
Quick Note-I recently liquified my account and I am currently in the process of switching over to Charles Shwabb. This will take a week or so, but I've got some GREAT stock picks for 2007. Some that I guarantee, minus some mining disaster, will double or even triple in the next 12 months. I also have gotten rid of my gold ETF :) I will keep you posted with my 2007 picks.
I would like to start the answer to this question with a statment. The government does NOT want you to own gold/silver. They realize that it is a key indicator of the government screwing you, the average citizen and consumer, over. The government is very good at keeping the shifty business on the down low. The skew curtain statistics and spin others. An example of this is the CPI. I have previously mentioned that under the Clinton administration they decided to remove food and energy costs from the CPI. Those are two of the highest inflatonary goods in our economy. True inflation is not judged by the price of goods, but instead it is measured by the amount of currency in circulation. So what does this have to do with gold and silver? Gold does not lie and is a true judge of when the government is printing "funny money" and inflating its currency to the eventual outcome of nothing. Trust me I'm getting at something here. So how does the government try to influence the investor to stay away from precious metals. They tax precious metals profits approximately 30%. "Regular" stocks profits are only taxed 10%. The advantage of owning physical gold and silver as opposed to an ETF is that the government doesn't know about it. They can't get their filthy hands on your money. You can go to local hole in the wall coin/bullion shops and pay cash and never have your name listed on anything. I personally buy from a supplier in Colorado who has the same policy. He keeps ZERO records of personal transactions. In summary, owning physical metals is more low key to put it bluntly.
I would like to talk about another advantage of owning the physical metals. The government can't tamper with it. Well, to an extent. The federal reserve likes to sell of their gold reserves in an attempt to artificially keep the price of gold low. They do this for the previous above mentioned reasons of keeping their shady business on the down low.
A friend of mind with a slightly more pessimistic view on the situation had some interesting things to say on the topic. He believes there is a sort of "day of reckoning" coming. The equivilant of Black Friday I guess. I would like to use a quote of his and pardon the language. He stated, "When shit hits the fan, gold and silver is gonna be your midnight crossing the border money. You won't be able to take a piece of paper that says you own gold." This brings me to another brief point. Gold and silver are the only thing that you can take anywhere in the world and trade it for goods or services.
I guess what I'm saying is physical is the way to go. I would like to touch briefly on an indirect positive effect regarding the gold ETF. The ETF has allowed the average investor who doesn't want to hold physical metals to diversify their investments. This has created a large increase in demand for the yellow metal. Streettracks gold trust-GLD is the most popular gold ETF. They own 448.76 tonnes of gold. That's 14,428,096 ounces of gold worth $9,045,781,137.46 (U.S. dollars.) So you can see why the ETF has been good for the demand for gold.
Quick Note-I recently liquified my account and I am currently in the process of switching over to Charles Shwabb. This will take a week or so, but I've got some GREAT stock picks for 2007. Some that I guarantee, minus some mining disaster, will double or even triple in the next 12 months. I also have gotten rid of my gold ETF :) I will keep you posted with my 2007 picks.
Sunday, January 14, 2007
2007 and Beyond
Well 2006 was definitely an interesting year economically, but I believe that 2007 will sure be a lot of fun if you are on the winning side. In the next couple of weeks or so, I will be doing an overhaul of my stocks.
I have a lot of money tied up in GLD the gold etf. I am starting to dislike this very much. First off, you have to pay 3 times more tax on profits that are precious metal related compared to other stocks.
I plan to get rid of Dune Energy. I still REALLY like this company in the long run but let me explain to you why I am getting rid of it. I still hold to my prediction of oil going to $100/barrel and beyond. This won't happen before what I believe to be a drop of the price of oil down to around $40/barrel. As you know, I am know millionaire. If I had sufficient funds I would just be able to stick it out. That's not the case. I have to be more ticky-tacky with my investments.
Last, but not least, I am considering removing Uranium Resources. This has nothing to do with me feeling bearish on Uranium. In fact I am quite bullish on the "yellow cakes." My problem lies with the management of this company. They make me nervous, and I am not sure that they are shareholder friendly. At this point, I haven't made a final decision, but I will keep you informed.
With all this liquidated cash from the above mentioned portfolio decisions, I'm sure that you are wondering what my plans are. Let me start with a few predictions for 2007. I believe base metals have peaked in value and are on there way down. This is open for debate. My reasoning has to do with the coming recession in 2007. With recession comes decreases in manufactured goods. Less manufactured goods equals less of a demand for base metals. The counter argument has to do with China, India and other developing countries in Asia. There increased industrialization results in a higher demand for base metals. You have to remember that I am considering 2007 here. I believe that in the coming years there will be a huge demand by Asia for base metals, but it will take them a little while to get on board.
I have told you about my thoughts on oil so I won't go into it. Remember it's still a great long term investment. OPEC has announced recently that we have hit peak oil. That mixed with growing demand has strong implications of a higher price in oil. I don't like it when the public gets to knowledgeable on a subject. As the old saying goes, "if you get too many people on one side of the canoe the canoe will tip." That why I see some coming lows in the price of oil. This will also be true for the early part of 2007 regarding the U.S. dollar. That's a story for another day.
My next to predictions are two that I have said for a long time and are something I feel quite strong about. Here me now, for 2007, uranium will hit $100/pound and gold and silver will reach record highs. Now I am really going to put my money where my mouth is. I'm not going to get into the specifics of why I feel the way precious metals and uranium because I've already told you. You can refer to previous posts if you don't know. I will be putting much more weight on my portfolio regarding gold/silver mining and uranium mining. I haven't made any final decisions, but a few companies I am considering strongly are Paladin Resources, Impact Silver, Great Panther Resources, and Jinshan Gold Mines. I will keep you posted with my further action regarding these companies and future actions with my portfolio as well as more detailed information regarding the specifics of these companies. Feel free to check them out for yourselves. I always encourage research and personal due dilligence.
I have a lot of money tied up in GLD the gold etf. I am starting to dislike this very much. First off, you have to pay 3 times more tax on profits that are precious metal related compared to other stocks.
I plan to get rid of Dune Energy. I still REALLY like this company in the long run but let me explain to you why I am getting rid of it. I still hold to my prediction of oil going to $100/barrel and beyond. This won't happen before what I believe to be a drop of the price of oil down to around $40/barrel. As you know, I am know millionaire. If I had sufficient funds I would just be able to stick it out. That's not the case. I have to be more ticky-tacky with my investments.
Last, but not least, I am considering removing Uranium Resources. This has nothing to do with me feeling bearish on Uranium. In fact I am quite bullish on the "yellow cakes." My problem lies with the management of this company. They make me nervous, and I am not sure that they are shareholder friendly. At this point, I haven't made a final decision, but I will keep you informed.
With all this liquidated cash from the above mentioned portfolio decisions, I'm sure that you are wondering what my plans are. Let me start with a few predictions for 2007. I believe base metals have peaked in value and are on there way down. This is open for debate. My reasoning has to do with the coming recession in 2007. With recession comes decreases in manufactured goods. Less manufactured goods equals less of a demand for base metals. The counter argument has to do with China, India and other developing countries in Asia. There increased industrialization results in a higher demand for base metals. You have to remember that I am considering 2007 here. I believe that in the coming years there will be a huge demand by Asia for base metals, but it will take them a little while to get on board.
I have told you about my thoughts on oil so I won't go into it. Remember it's still a great long term investment. OPEC has announced recently that we have hit peak oil. That mixed with growing demand has strong implications of a higher price in oil. I don't like it when the public gets to knowledgeable on a subject. As the old saying goes, "if you get too many people on one side of the canoe the canoe will tip." That why I see some coming lows in the price of oil. This will also be true for the early part of 2007 regarding the U.S. dollar. That's a story for another day.
My next to predictions are two that I have said for a long time and are something I feel quite strong about. Here me now, for 2007, uranium will hit $100/pound and gold and silver will reach record highs. Now I am really going to put my money where my mouth is. I'm not going to get into the specifics of why I feel the way precious metals and uranium because I've already told you. You can refer to previous posts if you don't know. I will be putting much more weight on my portfolio regarding gold/silver mining and uranium mining. I haven't made any final decisions, but a few companies I am considering strongly are Paladin Resources, Impact Silver, Great Panther Resources, and Jinshan Gold Mines. I will keep you posted with my further action regarding these companies and future actions with my portfolio as well as more detailed information regarding the specifics of these companies. Feel free to check them out for yourselves. I always encourage research and personal due dilligence.
Sunday, January 7, 2007
Vacation
Dear Readers:
I would like to apologize for the lack of recent posts. I have been traveling, mostly skiing the mountains. I will continue to be very busy for the next few weeks and I will post if I have time. Otherwise, I will continue posting on a regular basis around the 16th of January. So, sorry once again and I hope you all stay tuned. This is going to be an interesting 2007.
I would like to apologize for the lack of recent posts. I have been traveling, mostly skiing the mountains. I will continue to be very busy for the next few weeks and I will post if I have time. Otherwise, I will continue posting on a regular basis around the 16th of January. So, sorry once again and I hope you all stay tuned. This is going to be an interesting 2007.
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