- Published on Tuesday, 13 November 2012 13:25
- Written by By the Hard Assets Alliance Team
I recently wrote an article about the challenge to "Discover the Next Starbucks". When Starbucks had its IPO many years ago it was as good as gold was to investors who bought it around $285 back in 2001.
Now the price of gold seems to be like shares of Starbucks...caught in a rather narrow range. But it may be safe to say that...Add a comment
- Published on Wednesday, 07 November 2012 19:26
- Written by Casey Research
On May 11, 2012, the US Bureau of Land Management (BLM) published proposed regulations governing "Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands." BLM is a latecomer to this party. Its belated meddling lacks practical or economic justification. Instead, the proposed BLM rule would drive oil and gas developers off federal and tribal lands. Complying with the rules is too complicated and costly. Producers can realize a much faster and much better return on their capital investment by developing oil and gas reserves on adjoining private lands.Add a comment
- Published on Wednesday, 31 October 2012 13:21
- Written by Dr. Richard M.Smith, Founder, TradeStops.com
[Editor's Note: Dr. Richard M. Smith received a PhD in Mathematical Systems Theory from New York State University, Binghamton, after completing his undergraduate degree at the University of California, Berkeley. He's the founder and President of TradeStops.com, which has just launched its latest, most effective version].
Don't we all need a "safety net" underneath our investment portfolios? Only gamblers and inexperienced traders would answer "no". As an investor, there’s one simple step you can take to protect your investments that stands out above the rest.Add a comment
- Published on Tuesday, 30 October 2012 15:14
- Written by Alex Daley, Chief Technology Investment Strategist
"Your credit card may soon be worthless."
That's the notion being promoted by many in the investment industry these days. They are referring to a new technology that is supposedly Visa's worst nightmare and a threat to the status quo of the credit-card industry worth billions. And they are positioning one small company as the holder of the secret keys to cash in on what is promised to be a multibillion-dollar shift in the way we pay for everything from a candy bar to an oil change. But is it really true? Will this technology really turn the credit-card industry on its head?Add a comment
- Published on Friday, 19 October 2012 20:57
- Written by Frank Holmes CEO and Chief Investment Officer U.S. Global Investors
With negative sentiment toward China reaching an extreme in recent months, patient investors have been rewarded with this week’s news of improving data from the Asian giant.
CLSA Sinology’s Andy Rothman reported that in September, retail sales growth rose 13.2 percent, which was the fastest pace of the year. Real urban disposable income grew nearly 10 percent and real rural disposable income rose more than 12 percent during the first three quarters of the year. And, while export numbers are weak, China has “so far avoided the large-scale export-sector layoffs that led to 2009’s massive stimulus,” says Andy.
There was strength in commodity imports, too. Copper imports into China increased 11 percent compared to the previous month due to increased demand from power infrastructure, white goods restocking and auto production. Iron ore rose a modest 4 percent compared to the previous month, which is encouraging. There was also a sharp rebound in oil imports most likely due to holiday restocking and lower international prices. In fact, Pareto Securities found that Chinese implied oil demand came in at an all-time high of 9.8 million barrels per day in September.
The markets also saw an increase in fixed asset investment (FAI), a measure of capital spending, which grew at “the fastest pace since October 2011,” says CLSA. According to Credit Suisse, “a surge in transportation spending in the month of September [is] starting to reflect the project approvals for highway, rail, airport, and metropolitan transport projects announced in May and June.”
While Credit Suisse says FAI growth was boosted by government investment stimulus, CLSA also notes that fixed asset investment and capital spending by private firms has been rising faster than state-owned firms for 30 of the last 31 months.
Money supply, a key lubricant of the economy and markets, also continued to increase, and this has historically driven Chinese equities. Take a look at the chart below, which shows the year-over-year money supply compared to the MSCI China Index over the past decade. Over the past 10 years, after the supply in money bottomed, stocks soon rebounded.
On January 31, 2012, money supply hit a near decade low of 12.4 percent year-over-year growth. Since then, the number has been creeping higher, rising sharply to 14.8 percent in September, and shortly thereafter, equities responded.
The Wall Street Journal recognized the improvement in Asian stocks and investor sentiment this week, suggesting that the “region’s economy could be nearing the end of a slowdown.” I’ve been trying to temper investors’ expectations of China as weak economic data caused investors to be skittish, telling Investor Alert readers that it wasn’t the time to be bearish. Now, “if the Chinese economy shows sustained signs of stabilizing, it would remove a major overhang of worry for investors in Asia, and may spur more capital raising and other deals as investors become confident enough to switch money out of bonds and back into equity markets,” says The Journal.
This appears to be a good time to be investing in China, as stocks are historically cheap. At the beginning of October, BCA noted that there was a “prevailing pessimism” around China and that the stocks were “currently trading at hefty discounts to world averages and even to euro zone stocks.” The firm indicated that Chinese shares had a forward price-to-earnings ratio of below 9 times; the world and U.S. benchmarks traded at 12 and 13 times, respectively.
Chinese stocks are also cheap compared to emerging markets. In 2007, China traded at a 75 percent premium to emerging markets. Today, Chinese stocks trade at a 20 percent discount. If you look at a comparison of price-to-earnings in China to those in emerging markets, you have to go back to 2006 to find that ratio as low as it is today.
The low price-to-earnings indicates to me that the negativity pendulum has swung too far. “Investors have turned from euphoria at the height of the ‘China mania’ five years ago to extreme pessimism,” says BCA.
Back in April, I listed three trends that global investors should watch in China: A rebound in the liquidity cycle signaling a rally in equity prices, a new leadership with an incentive to maintain growth, and Chinese stocks reverting to their mean, as history appears to favor Chinese stocks landing in the top half of emerging markets. Time will tell.
Disclaimer: Nothing in this commentary should be construed as investment advice or guidance or any recommendation to buy or sell any financial instrument. It is not intended as investment advice or guidance, nor is it offered as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional. All content of this commentary is solely an expression of his personal interests and is posted as free-of-charge commentary and is subject to error and change without notice. Please do your own due diligence before investing in ANYTHING. The presence of a link to a website does not indicate approval or endorsement of that website or any services, products or opinions that may be offered by them.
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- Published on Friday, 19 October 2012 14:04
- Written by Doug Hornig, Casey Research
In Mike Judge's wicked 1999 satire of corporate culture, Office Space, there's a delightful character named Milton. Poor Milton. He's all but invisible. No one likes him, no one talks to him, and coworkers are forever stealing his stapler. Management doesn't notice him enough to fire him. Instead, Milton is shunted from desk to desk, each time losing more of that precious commodity denoted by the film's title, until he finally winds up alone in the basement, where he plots the delicious revenge he'll take on the company.Add a comment
- Published on Thursday, 18 October 2012 20:18
- Written by Hard Asset Alliance
Well, duh, of course not.
That might be your response to the question, and you would be quite right. Yet millions of investors are behaving as if a piece of paper – or, more accurately, the electronic representation of same – is the equivalent of a bullion bar. Such is the enormous popularity of the SPDR Gold Trust shares (GLD) traded on the NYSE Arca exchange.
- Published on Wednesday, 17 October 2012 13:01
- Written by Jim Trippon
Although China is currently and has been dealing with the global economic slowdown, as have Europe, the US and every other world economy, one of China’s main concerns is inflation. This has always been on the minds of China’s policymakers, as it was fighting any possibility of inflation in its economy as recently as a year and a half ago with interest rate increases.Add a comment
- Published on Tuesday, 16 October 2012 13:15
- Written by Jeff Clark, Casey Research
While many of us at Casey Research don't like making price predictions, and certainly ones accompanied by a specific date, it's hard to ignore the correlation between the US monetary base and the gold price.
That correlation says we'll see $2,300 gold by January 2014.Add a comment
- Published on Monday, 15 October 2012 17:33
- Written by Ryan Detrick, Senior Technical Strategist, Schaeffers Research
Editor's Note: We thank the Senior Technical Strategist at Schaeffer's Research for this dynamite chart and outstanding analysis. Every serious investor and trader ought to carefully study all 11 reasons and understand their significance.
- Published on Tuesday, 09 October 2012 15:36
- Written by Frank Holmes CEO and Chief Investment Officer U.S. Global Investors
The world’s central bank leaders continue to spike the monetary punch bowl, with investors imbibing on gold once again. This flurry of gold buying prompts many curious investors and doubting media to ask me two questions: 1) How can demand for gold and gold stocks continue; and 2) How high can the precious metal go?Add a comment
- Published on Tuesday, 09 October 2012 15:03
- Written by Dan Steinhart, Casey Research
US corporations are sitting on more cash than at any point since World War 2.
That's without including banks. I'm only talking about nonfinancial corporations – the ones that sell goods and services and make the economy go.
Those businesses hold $1.4 trillion. In absolute terms, that's the most ever. In relative terms, it's the most since World War II.
(Click on image to enlarge)
As investors, we can infer quite a bit from corporations' inability (or unwillingness) to deploy their cash.Add a comment