Archives for January 2013

January 2013 - Page 9 of 20 - Money Morning - Only the News You Can Profit From

Gold Prices: Have We Reached "Peak Gold"?

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Expectations for gold prices just grew brighter due to a recent outlook on production numbers.

Gold producer Iamgold Corp. (NYSE: IMG), which has mines in Canada and Mali, forecasts gold prices will soar to a record $2,500 an ounce as global output peaks and ore grades decline.

Grade is the relationship between quality, tons, geometry and depth that indicates if a gold find can be extracted at a cost that makes doing so profitable. High grade is key in a gold deposit.

Iamgold CEO Steve Letwin told Bloomberg News in a Jan. 10 interview that the industry has exploited its best-quality gold reserves and as a result is tapping lower-grade and higher-cost deposits.

In fact, he sees this as a sign of "peak gold" – when the maximum rate of global gold extraction is reached.

"I really think we are at Peak Gold. Nobody has seen the kind of production profiles they thought they were going to see," Letwin explained.

What is Peak Gold?

After peak gold is reached, there's a terminal decline in the rate of production.

The "peak gold" theory mirrors the "peak oil" theory, which maintains the earth holds a finite amount of crude, and production will eventually outstrip supply.

The peak gold phenomenon was actually spotted several years back.

Barrick Gold (NYSE: ABX) CEO Aaron Regent told The Daily Telegraph in 2009 at the Royal Bank of Canada's annual gold conference "there is a strong case to be made that we are already at peak gold."

"Production peaked around 2000 and it has been a decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," Regent said.

In 2001, the world saw what was believed to be record global gold production of 2,649 tons.

And what has happened since then in gold production supports the peak gold theory…

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Why Oil Prices Could Soar 40% by Summer

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Oil prices have continued their upward move that began at the end of 2012, gaining over 8% in the past month.

Now, an oil analyst with Goldman Sachs Group Inc. (NYSE: GS) predicts Brent crude could soar much higher in the next few months.

Jeff Currie, GS's head of commodity research, said he wouldn't be surprised "if we woke up in summer and oil cost $150" per barrel.

That would be a 35% gain from Brent's recent price of $111.

Using the narrowing spread between the Brent price and that of West Texas Intermediate (WTI), at $95, Currie's forecast implies a 40% increase in WTI prices.

And there are many reasons oil could hit those highs by summer, or even sooner.

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Short-Term Debt Ceiling Increase a Strategic Move for GOP

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Republicans this week will vote on a short-term debt ceiling increase that gives Washington three more months to agree on budget cuts.

The GOP would approve the short-term increase with the requirement that both the House and Senate pass a budget before the new deadline – or fail to get paid.

The move, according to Republican party strategists speaking to The Washington Post, was designed to give the GOP leverage in the spending cuts fight that will begin in March.

"Republicans have to do a better job of picking our fights," one prominent Republican consultant told The Post. "So, we need more concern about the impact of Obama's reckless spending before we fight with a guy who controls the bully pulpit."

Debates over what to do about the automatic spending cuts, or sequestration, will start before the new April 15 debt ceiling deadline. Republicans want drastic spending cuts, but if Congress can't agree, then deep across-the-board cuts will go into place anyway. Democrats will have to compromise if they want budget cuts other than the sequester.

The GOP compares this to the president's position in the fiscal cliff fight, when Democrats wanted tax hikes on the rich.

"In the fiscal cliff fight, the president had greater leverage because current law was on his side," a House Republican aide told The Post, noting that if nothing was done on the cliff taxes would have gone up on all Americans. By contrast, the aide added, "in the sequestration fight, we have greater leverage because current law is on our side."

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Bull of the Day: Alkermes - Bull of the Day

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We are impressed by the expanded product portfolio at Alkermes (ALKS) following its purchase of Elan's EDT unit. The company continues to expect adjusted earnings per share in the range of $0.88-$1.02 for fiscal 2013. Revenues are still projected in the range of $510-$540 million. The US approval of type II diabetes drug Bydureon is […]

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Investing in S. Korea Today is Like Buying the U.S. in the 1990s

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If you're tired of the crisis a month routine we've seen with the United States and the Eurozone, there's always South Korea.

In fact, for demographic and budgetary reasons, South Korea is much like the United States was during the prosperous 1990s–not the deficit-ridden, slow-growing place the U.S. has become.

The truth is South Korea, has very little foreign debt, and recently re-elected the pro-business party by a comfortable margin. What's more, South Korea has kept its government the smallest in the OECD club of rich nations.

So if you haven't considered investing in South Korea you should.

Here's why…

Don't Get Suckered by the Boeing Media Frenzy

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Look for a chance to buy Boeing now.

You heard me right.

As someone who worked in the news business for nearly three decades, I've seen these kinds of media "feeding frenzies" take hold more times than I can count. They take on a life of their own – meaning that facts, logic and context can fall by the wayside.

And make no mistake: The grounding of the problem-plagued 787 "Dreamliner" fleet by the U.S. Federal Aviation Administration (FAA) and aviation authorities in other countries is turning into just such a media feeding frenzy – with The Boeing Co. (NYSE: BA) as the main course.

I'm referring to it as a feeding frenzy because the grounding was the culmination of 11 days of escalating, negative news coverage about the 787. The potential for battery fires was presented as the ultimate culprit, and the reason for the grounding order. But the stories that preceded that edict dealt with such unrelated issues as fuel leaks and a cracked windshield.

In other words, this firestorm has been stoked by non-expert journalists – each of them fixated on writing "a story," while not really understanding "the story."

That said, there is a safety issue here – one that Boeing badly mishandled by not getting out in front of. If we're handing out grades for crisis management, the U.S. aerospace giant gets an "F."

With that bit of background, let's take a look at what the Dreamliner crisis means for Boeing – both the company and the stock.

AIG and the New Victim Mentality

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I'm hurt.

Some of you made harsh comments about what I wrote about AIG. I said that AIG should sue the U.S. government and the Fed for saving it when it could have (more likely would have) gone under during the peak of the crisis in 2008.

Insights & Indictments reader Darrell said, "Enough. This is the most vile piece… I have ever read. Those people SHOULD have been allowed to fail. FULL bankruptcy! To borrow from the taxpayers to compensate the "managers" who steered us into this mess with bonuses, and then whine [when] the terms of the loan were too extreme is beyond hypocritical. Capitalism without risk is NOT capitalism. Something you would do well to learn. I am unsubscribing form this service."

Ouch!

Matt chimed in, "I'm with you. Acting like AIG is a victim of the big, mean Fed is preposterous. Maybe Shah and Alex Jones should take their baloney show on the road."

I'm shattered. I've been put upon. I feel victimized by these comments. Where's the safe harbor for journalists and bloggers? How can I be criticized so harshly and not feel victimized? Oh, the humanity!

Of course I'm kidding.

I subject myself to any and all comments when I exercise my freedom of speech. I keep a "Comments" section on my website so my readers can exercise their freedom of speech. I'm not a victim. I don't need any protection from free speech. Free speech is a two-way street.

The point is that I'm sick of the victim mentality. Are you fed up yet?

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Will the New U.S. Shale Boom Kill Oil Prices?

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These days everybody wants to extol the virtues of rising U.S. domestic crude oil production.

From decades of increasing reliance on foreign providers, some hardly sympathetic to American interests, the new prospect of having significant unconventional oil reserves here at home has been a major development.

The assumption advanced says that domestic sources will be cheaper. As a result, this should comprise a positive boon to consumers of oil products but a problem for producers and refiners. In short, the mantra among some commentators is to proclaim the end of the oil market as an attractive option for investors.

As with most such simplistic observations, however, it turns out not to be true.

A number of these "analysts" are actually talking down the prospects of oil prices because they have already shorted the commodity and will benefit their own investments if they can continue the downward push.

Well, oil prices are now going up, with both West Texas Intermediate (WTI) in New York and Brent in London at more than three-month highs.

In addition, the spread between WTI and Brent is narrowing.

The narrowing of that spread is occurring while both benchmarks are rising in price. The mantra of the pricing doomsayers would expect it to be going in the other direction.

There are two broad categories of reasons why matters are not happening as the doomsayers had expected (aside from the obvious – they misunderstood the dynamics from the beginning).

And once you understand both, you'll be in position to profit as prices continue to rise.

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PG&E to Employ EXAscan Technology - Analyst Blog

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Pacific Gas and Electric Company, a business wing of PG&E Corporation (PCG), announced that it has incorporated the new advanced hand-held laser scanner device, EXAscan, to improve natural gas pipeline safety. The revolutionary device offers accurate and effective means to maintain the safety and reliability of the pipelines. As per the company’s Pipeline Safety Enhancement […]

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Martin Luther King Quotes to Remember

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Martin Luther King Jr., would be 84 years old this week. In honor of the holiday, here's a selection of some of his most famous quotes.

Great words spoken by a great man…

  1. "I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character."

  2. "History will have to record that the greatest tragedy of this period of social transition was not the strident clamor of the bad people, but the appalling silence of the good people."

  3. "A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan."

  4. I say to you that our goal is freedom, and I believe we are going to get there because however much she strays away from it, the goal of America is freedom.

  5. Cowardice asks the question, "Is it safe?" Expediency asks the question, "Is it politic?" And Vanity comes along and asks the question, "Is it popular?" But Conscience asks the question "Is it right?" And there comes a time when one must take a position that is neither safe, nor politic, nor popular, but he must do it because Conscience tells him it is right.

  6. "Almost always, the creative dedicated minority has made the world better."

  7. "Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that."

  8. "Rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think."

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