Archives for September 2011

September 2011 - Page 10 of 10 - Money Morning - Only the News You Can Profit From

Silver Content Of Half Dollars

Right now, Silver investment prices are on a major tear. They are poised to break even higher by the end of the year.

And this report shows why that's not about to end any time soon – and exactly how far silver is expected to run.

In fact, silver could be the most lucrative precious metal of 2011.

Here's why...

The Future of the European Union May Be Decided in Less than a Week

The clock may be ticking on the future of the European Union (EU).

After being shaken to its core by the sovereign debt crisis, the entire Eurozone now runs the risk of blowing up within a week.

Germany's highest court, the German Federal Constitutional Court, on Sept. 7 rules on the legality of German participation in the euro rescue fund that was established to bail out Greece.

If the court rules that Berlin's commitment to the European Financial Stability Facility (EFSF) goes against EU law, or worse, against the German constitution, the entire Eurozone could collapse.

Think of the Eurozone as a minefield full of bombs that have long lay dormant, but are all still very active. Now, Germany's court ruling – itself a single bomb timed to go off next Wednesday – could ignite a massive chain reaction.

Germany: The Eurozone's Bomb Squad

Peripheral Eurozone countries like Portugal, Ireland, Greece, Spain, and Italy (the PIIGS) are in serious trouble and European banks face monumental liquidity and balance sheet issues.

So far, only Germany's singular fiscal conservativism and economic strength have kept the EU from self-destructing. But now the Eurozone's only legitimate bomb squad may be hanging up its lead-suits, pliers, and contagion containers.

What's at issue for the Constitutional Court is whether Berlin broke the EU's Maastricht Treaty, which unequivocally stipulates that member states cannot assume each other's debts. And, more germane to German citizens and the center-right coalition government, will be the Court's ruling on whether German Chancellor Angela Merkel's decision to fund the bailout facility circumvented constitutional requirements to put such fiscal matters before the German parliament.

And while the court isn't ruling directly on the EU's currency – or Merkel's support of it – the decisions rendered will have consequences for the euro's future and by extension, the EU as a whole.

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A Currency Markets Primer with Four Ways to Pocket a Profit

If you haven't traded in the currency markets, you're missing out on the largest financial market in the world.

Average daily trading volume in the global foreign-exchange markets (forex or FX markets) was $3.98 trillion in 2010, according to the Swiss-based Bank for International Settlements, and estimates put current totals well above $4 trillion.

Daily forex trading dwarfs volumes for all other leading investment vehicles – by a huge margin. Bloomberg estimates average daily trading volume for all U.S. Treasury securities at roughly $300 billion. Stocks barely register at all in comparison; average daily volume on the New York Stock Exchange (NYSE) is just around $25 billion.

Even if you combined the volume of all the world's stock exchanges, it still wouldn't equal the value of daily forex trades.

One reason the forex market can be so huge is that it isn't confined to a physical location, nor does it have a central exchange. Unlike the NYSE, which has a trading floor for stocks and bonds as well as a computerized trading network, the forex market is strictly an "interbank" or "over-the-counter" enterprise.

That means banks and other large currency traders can either deal directly with one another, or they can match their foreign-exchange needs via one of several Electronic Brokering Services (EBS) such as the Society for World-Wide Interbank Financial Telecommunication (SWIFT).

The forex markets also operate 24 hours a day, five and a half days a week – shutting down only on Saturday and early Sunday.

Given the huge volumes, the bulk of currency trading is conducted by banks, Wall Street-type institutions, governments and other truly major players. However, forex markets are structured to allow fairly easy access for individual traders.

This means there are trillions of dollars trading each day that you should be a part of – and here's how.

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Russian Arctic Oil to Give Exxon Mobil Leg Up on Rivals

With fresh sources of oil becoming increasingly scarce, Exxon Mobil Corp. (NYSE: XOM) scored a major coup on Tuesday by making a deal for access to the vast reserves of Russian Arctic oil.

Many companies were in the hunt for the Russian Arctic oil, including BP PLC (NYSE ADR: BP), Royal Dutch Shell PLC (NYSE ADR: RDS.A), Chevron Corp. (NYSE: CVX), Total SA (NYSE ADR: TOT) and Statoil ASA (NYSE ADR: STO), but it was Exxon that walked away with the prize.

The arrangement with state-controlled Rosneft (PINK: RNFTF) gives Exxon a significant advantage over its major rivals — all of which have struggled in recent years to replace the oil they're extracting with new sources.

Rosneft, in which the Russian government has a 75% stake, estimates the three Kara Sea blocks where Exxon will be exploring contain about 36 billion barrels of recoverable oil.

"If that figure is correct and Exxon is able to produce the fields, we are talking about one of the world's largest oil discoveries in the last 50 years," Fadel Gheit, an energy analyst at Oppenheimer & Co., told MarketWatch. "But it remains to be seen how much of that oil is economically recoverable."

Rosneft estimates total reserves in the area at about 110 billion barrels of oil equivalent – an amount four times the size of Exxon's proven global reserves.

Quid Pro Quo

Having access to reserves of that size will help Exxon rectify its replacement ratio for oil. Earlier this year Exxon reported that for every 100 barrels of oil it produced, it found just 95 barrels of new oil.

Exxon has been more successful in replacing natural gas resources – it finds 158 cubic feet of gas for every 100 it extracts. But with natural gas prices slumping, the company would much rather find more oil.

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