Good morning to you all. If you have any belief/hope/wishful thinking that the worst is over for the US sub-prime mortgage market and its effects on the US financial sector – forget about it. This past July and August were a picnic compared to what is coming next March – October. This Bank of America chart says it all:
Hat tip to Paul Kedrosky for finding it.
Regards,
George
(Click On The Image At Any Time To See A Clearer Version)
If actions speak louder than words, then the search actions of Washington are speaking several decibels above the party line “don’t worry be happy”. Specifically, using Google Trends, I compared the 2007 trends of two specific search terms (which are graphically displayed above):
I ran the trend for searches strictly taking place in the United States. The results clearly tell us two things:
First, fear of a recession amongst Americans is clearly rising – and rising fast. After calming down in July, “recession” has rapidly become a matter on the minds of Americans. You don’t search for recession unless you are worried about it, so clearly Americans are worried.
On that note, look at the hockey stick growth in searches for gold price. After remaining relatively flat for the entire year, it took off beginning in September. You can argue this is strictly a function of the higher price of gold but gold has made several moves in the past year without little more than a blip in increased searches. Why now?
Second, when you look at the cities most responsible for these searches, Washington ranks #1. Here is what is even more telling, when looking at these searches by region, 3 of the top 5 regions are:
Unless these regions have become the financial powerhouses of the country, it is clear as day that the US government (politicians, aides, committees, etc.) have rapidly become interested in both a recession and the price of gold.
Conclusion – The US government is telling us not to worry, then heading back to their computers and singing searching a different tune.
Actions speak louder than words.
Regards,
George
p.s. You have to love the power of the web and it’s ability to pull powerful data that was once never thought possible. In this case, Google trends pretty much gives us the ability to sit behind the closed doors of Washington and find out what they’re actually thinking. Scary – but sweet!
<And Then There Were 2>
On Friday, November 9, we posted the following AGORACOM Exclusive interview with JF Tardif (read the post for his superior credentials) in which he unequivocally called for $200 oil. That was a pretty big call to make but given JF’s track record, you have to give him serious consideration – even if it is was a lone wolf call (not including threats by Iran and Venezuela). I struck out “is” because JF is no longer alone when it comes to acclaimed Hedge Fund Managers.
Jim Rogers, co-founder of the Quantum Fund along with billionaire investor George Soros, made the call for $200 oil on Monday from Singapore.
“Over the course of the bull market, oil has to go to $150 (U.S.), it has to go to $200, because nobody’s been discovering oil.”
We haven’t even cracked the magic $100 mark yet but that now seems to be a foregone conclusion – at least according to pretty damn smart guys. Like JF, Rogers didn’t stop at $200 oil. He also stated the following:
What is important to note hear is that neither JF, nor Rogers are sitting on the fence. Neither are making the annoying “this could happen but it also might not” proclamations. These are two very successful hedge fund managers that don’t appear to be hedging their bets. Oil up, commodities up, US economy down, US dollar down.
Is it that obvious? If so, you’ve been given a treasure map that leads straight to a pot of gold … and a barrel of oil. Time to find real small and micro-cap companies that will benefit from this.
Regards,
George
It wasn’t long ago that calls for $100 oil were looked upon as simply “wild” predictions of analysts looking to garner attention. Maybe we should have paid closer attention and profited from those crazy turned reality predictions. In case you didn’t, you have a chance to redeem yourself because oil – according to Jean-Francois (AKA “JF”) Tardif – is going to $200.
Now, before you go making the same mistake all over again and call JF another analyst looking for attention, you might first want to consider the fact that Barron’s just ranked his Sprott Opportunities Fund as the #18 Hedge Fund on the planet.
In addition, he was recently awarded “Best Canada Based Manager” at the HFM US Performance Awards.
JF is a renowned and very successful Senior Fund Manager with Sprott Asset Management. He achieved his prestigious ranking and award thanks to his performance with the Sprott Opportunities Hedge Fund where he posted average annual cumulative returns of more than 33% over the past 3 years. As such, when Jean-Francois Tardif speaks, you probably want to hear what he has to say.
Fortunately, you can listen to our interview with him via our newly launched content partnership with GlobeInvestor.com – the AGORACOM Small-Cap Energy and Resources HUB. (I know, that’s a doozy unto itself but I’ll talk about that later). In the interview, he discussed the global supply squeeze taking place in both oil and gold, as well as, why he sees even more sub-prime pain for the US in 2008 (Hint: You may not want to be walking on Wall Street in May 2008).
In case you are reading this post well after November 9th, 2007, you can also find the interview archived on our industry leading Podcast site – SmallCapPodcast.com
See you at $200.
Regards,
George
Good morning to you all. First, let me apologize for the hiatus. It hasn’t been a complete hiatus because I’ve seen most of you at the two large conferences we sponsored (and I delivered speeches at) over the last couple of weeks PIPEs Conference and Toronto Resource Investment Conference.
In addition, our “Investor Controlled Discussion Forums” launch continues to shake the world of small-cap discussion forums, as we broke through 400,000 page views on Thursday – and climbing. Most of you have been in daily contact with me via e-mail and posts around the site as I chose to personally get involved in tech support for the last 10 days.
I’m back now and I’ve got a great article for you to read, especially those of you that are investing in gold as a hedge against a US economic collapse. The gist of the article may not come as a surprise to you – but the underlying support for the article is compelling.
Moreover, the source of the article is Roger Ehrenberg, an ex–Wall Streeter and author of the financial blog Information Arbitrage – a blog I read religiously. In short, this guy knows what he is talking about. He isn’t fringe, he isn’t an extremist. He knows the game and he is spotting some real cracks in the system that, according to him, will result in significant market pain.
I can try and point out the highlights but this is a story worth reading. It can best be summarized by his opening paragraph:
Trust in our government. Trust in our financial institutions. Trust in those who play the role of “trusted adviser,” regardless of whether or not they are considered fiduciaries by law. After taking a big step back and asking the question “Why are the markets trading so poorly, and why are financial institutions in particular getting crushed?” the answer boiled down to one word: trust. Or the lack thereof, as seems to be the case today.
Great Saturday afternoon reading – and even better Monday morning investing.
Regards,
George
If the market turmoil of late has you nervous, take 15 minutes to listen to our interview with Peter Grandich on the Yahoo Finance Small-Cap Show – a guy that I’ve personally witness call market movements with precision on several occasions in the past. What I really like is the fact he usually makes these calls against the crowd. It’s easy to run with a crowd but running through it takes guts and brains.
Best,
George
While stock markets around the world tremble in the wake of the fallout from the sub-prime loan market, Europe’s #1 ranked natural resources fund managers says you ain’t seen nothing yet.
Evy Hambro manages BlackRock’s $10 billion World Mining Fund and says – despite the gains in natural resources such as gold, copper, nickel and others over the past couple of years – says sky-high metal prices will defy the sceptics for years to come in an interview with the Telegraph.
Likewise, Graham Birch, who oversees the global resources team in BlackRock’s London office stated “the markets are in a commodity super cycle” in an interview with the Int’l Herald Tribune earlier this month.
As you can imagine, Blackrock points to demand out of China and India as a major contributor to rising prices. However, where they differ from most is the call that we are in the very early stages of this bullish cycle and that prices will climb and stay higher for many years to come.
I strongly agree and have stated on several occasions that minerals and metals are the place to be for the very long term. Unlike the bull run in the mid-90’s that was driven primarily by the possibility of repeating Bre-X’s 30,000,000 oz discovery – and crashed when it turned out to be a scam – this run is being fueled by very real demand.
To add fuel to the fire, the severe depression in minerals and metals from 1995 – 2003 meant that veeeerrrrry little money went into exploration. As such, supply is significantly trailing the freight train demand coming out of Asia and other developing regions.
Want more fuel? Despite the billions that are now flooding into exploration in an effort to play catch-up, boring but necessary components of the exploration process can’t keep up and are putting the brakes on any effort to catch up to demand. Specifically, Evy Hambro points to an acute shortage of tires, trucks and power generators.
“Rio Tinto has warned that it is now forced to wait for up to two years for delivery of essentials like power generators which, until recently, were available in half the time. Tires, which used to be delivered within three months, take two years too. The waiting list for grinding mills can be more than three and a half years.”
Throw in the fact that the US Dollar is in free-fall and the real estate market is facing “home price depreciation at levels not seen since the Great Depression” (Conference Call – Countrywide Financial – the largest U.S. mortgage underwriter. July 25th 2007) and it may be more accurate to say we are in the midst of a perfect bullish storm for metals commodities.
Regards,
George
Good morning to you all. Technorati has a brand new feature called “WTF?”, which stand for “Where’s The Fire”. In a nutshell, members get to post about items that people are searching for – so I contributed a post called Junior Gold and Uranium Stocks Making Dot-Com Gains Thanks To Metals Prices . It is more of an overview but I used the opportunity to help spread the word about this sector and link readers to our clients here on AGORACOM.
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With gold and uranium prices sitting at or near all-time highs, junior gold and uranium stocks are showing gains we have not seen since the dot-com days.The difference? Whereas the dot-com boom was built on companies that had no real products and revenues, there is no arguing the demand for gold and uranium in this world. As such, the higher the prices, the higher the underlying stocks go.
To find out more, here are some good sources of information.
http://www.uraniumceoblog.com
http://www.agoracom.com/market… (use the filter to only see metals and mining co’s)
Hope this was helpful. If so, please drop by my blog which just went live a few days ago.
Regards, George
