Iran Oil Embargo: Russia and The Baltic Dry Index Benefit

Albert's Animation I really love macroeconomics, especially when it's about political themes. This Sunday 1 July 2012 Europe is starting a full oil embargo against Iran. It will not import oil from Iran.Iran will lose 30% of its exports, while Europe loses 6% of its oil imports. This means tight supply of oil and a rising oil price (8%) as a consequence.Chart 1: Crude Oil PriceOil imports into Europe can be found here: http://ec.europa.eu/energy/observatory/oil/import_export_en.htmTable1:...

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Gazprom: Betting on Russian Natural Gas

Gazprom is the world’s largest gas business engaged in natural gas, gas condensate and oil prospecting, production, transmission, processing and marketing both inside and outside Russia. I have been very bullish on Gazprom (OGZPY.PK) in January 2012 because the fundamentals of this company were very positive. You can read my previous analysis here. I noted that Gazprom was severely undervalued and had a P/E of 3.5, handed out a dividend...

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Euro Strength Finally Manifested

I have been monitoring the euro versus U.S. bonds versus S&P.U.S. bonds have been very volatile, one day they go up and the other day they go down. There is no consistency whatsoever in U.S. bonds (green triangles). The euro has been relatively flat against the U.S. dollar, but it posted the biggest increase since I started monitoring it the previous month (blue dots). I hope this will be the first sign of euro strength, which means commodities...

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Silver Net Short Positions Lowest in a Decade

Today, as I navigated on GoldMoney's website, I learned a little bit about swaps and net short positions in silver. So I searched for keywords like swap and net short position and came to a very interesting website named Gotgoldreport.com. I wanted to summarize in short what I read there.Apparently physical silver is headed higher and this can be deducted by the net long swaps, which are at their highest point from at least 2006 onwards. You can...

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Copper Turns Back to Contango: Bearish for Copper Price

In a previous article I pointed out how copper contango/backwardation correlates with the copper price. Since June 11th 2012, copper went back into contango which isn't boding well for copper prices (Chart 1). The China PMI is also going down lately, which means demand for commodities from China will be sluggish.As copper correlates with the S&P, I would imagine that stock markets will go down as well in the future. So investors should act accordingly...

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China Increases U.S. Treasury Holdings in April 2012

China has been increasing its U.S. bond holdings in April 2012 (Chart 1). Not much news here.What's very important to know is that China has actually decreased its short term U.S. bond holdings by 5.1%. China holds $US 3.7 billion short term U.S. paper. On June 2011 China held $US 4.9 billion of short term U.S. paper. So basically all the debt that China holds are long term treasuries now. Interesting to know, China had $US 200 billion in short term...

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Marc Faber: Gold Has Bottomed Out

According to Marc Faber, it's better to invest in corporate bonds than treasuries. Even equities in Asia will do better because of the high dividends, which are around 5-7%.He also believes that gold has bottomed out at these leve...

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CME: Silver Stock Growing, Gold Stock Flat

Time for a gold and silver stock update at the COMEX.In a previous article I noted that silver stocks were historically low. But recently silver stocks have been rising at the CME, which isn't bullish for the silver price. It means that silver isn't being used as much as a month ago, indicating a slowdown in the economy (Chart 1). Silver has been stocked up in the warehouses.Chart 1: CME/COMEX silver stock (Troy ounces) (red eligible, blue registered,...

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How do we know when it's time to sell our gold?

I have pointed out previously how James Turk uses his Gold Money Index to estimate the fair value of gold. You can read it in this article. In that article we estimate that gold should be at $US 10000/ounce in 2011 if we compare the gold price to the amount of foreign currency reserves held by the central banks around the world. To read the full analysis go to: HERE.Chart 1: Gold Price Estima...

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An Analysis on the Oil Price

Since May, the price of crude oil (OIL) has fallen from $US 106/barrel to $US 78/barrel (Chart 1). It is very likely that the price of crude oil will continue to decline because for the first time in a decade, supply is exceeding demand.In this article I will give advice to investors on how to play the oil price and I will give critical information on when to buy the dip in crude oil based on a fundamental analysis of crude oil production costs.Chart...

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China Buys Out London's Crown Jewel

As China becomes more and more a leader in the global economy it is not only purchasing the largest amounts of commodities, but is also starting to buy up strategic assets. This time China bought a legacy of 135 year, right in the heart of London.Over this weekend (16 June 2012), China bought out the London Metal Exchange (LME) for 1.38 billion pounds. This means that J.P. Morgan, Goldman Sachs and Metdist are giving up on their shares of the LME. The LME is now part of the Hong Kong Exchange (HKEx).This event will increase China's monetary flexibility...

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Capacity Utilization Rate May 2012 Flatlined at 79%

The newest number on capacity utilization is 79 % for the total industry in May 2012. This is basically the same as the previous month.Interestingly, the capacity utilization for the mining industry is much higher at 89.2 %, up from 88.5 % the previous month. This is positive for the mining shares. Utilities inched up to 76.5 % from 76 % the previous month.Chart 1: Capacity Utilization R...

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The Effect of Government on the Economy of a Country

I believe government is an important institution to keep order in a society of a country. It should focus mainly on the country's defense and should obey the constitution of the country. By no means it should involve with the economy of a country as the government is always less efficient as free market capitalism. Governments should be as small as possible, in order to let the private economy flourish. Today, governments are standing in the way of free market capitalism through taxation, regulations and counterproductive measures. What governments...

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An Analysis of U.S. Treasury Maturities

While many investors want to believe that U.S. treasuries (TLT, DTYL) are a safe haven, I will use this article to debunk that myth with plain hard evidence. I believe holding U.S. bonds is the worst investment going forward.I will make an in depth analysis on debt maturities in this article. I think all investors need to be aware of this trend that indicates looming default in U.S. bon...

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Gold Reserves: When Will China Catch Up With The US?

Let's see how long it will take for China to be number one in gold reserves.The latest data (end of 2011) on gold reserves is given below (CNBC):1. United States: 8,965.6 tonnes2. Germany: 3,743.7 tonnes3. IMF: 3,101 tonnes4. Italy: 2,702.6 tonnes 5. France: 2,684.6 tonnes6. SPDR Gold ETF GLD: 1,213.9 tonnes7. China: 1,161.9 tonnes 8. Switzerland: 1,146.5 tonnes 9. Russia: 960.1 tonnes10. Japan: 843.5 tonnes We already know China bought approximately 240 tonnes gold since 2012 started. This puts China's gold reserves at 1400 tonnes. If China were...

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Peter Schiff Interviews CEO Bradford Cooke (Endeavour Silver) at the Euro Pacific Global Investor Conference (31-May-2012)

Peter Schiff Interviews Brad Cooke of Endeavour Silver at the Euro Pacific Global Investor Conference:The highlights of that interview are summarized as follows. According to Bradford Cooke, the company has been growing reserves over the years, and production has almost tripled since the economic crisis hit in 2008. In February 2009, Endeavour Silver went to the market through Euro Pacific Capital (Peter Schiff's company), and equity dilution was less than 10%. The company has also built its employees over the years, growing from a small company...

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Silver Rally Expected in Second Half of 2012

The silver price is closing in on a critical wedge pattern (Chart 1). I expect the silver price to rally in the second half of this year. If you haven't bought yet, I suggest this is the right time to do so.Chart 1: Silver PriceTo add even more rumors to the silver price, on King World News, a London trader reported that there was a huge Eastern buyer of silver three weeks ago. He bought a staggering amount of silver around $US 27/ounce. So everything...

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Peter Schiff Testifies Before Congress

Peter Schiff testifies for a second time in front of Congress. This time it's about housing. You can cut the first 50 minutes if you want to hear Peter.I was a little disappointed by the fact that there were so many speakers this time, so there was less time for real discussion. Additionally, it became boring at a point. They were just reading their speech, which is available on the internet itself. So you could just go to the Financial Services Committee site and read the letters. But still, it was a very interesting speech by Peter, who...

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Real Deflation Confirmed by Mike Maloney

In this video, Mike Maloney confirms that deflation has already set in. If we subtract base money (balance sheet fed) from M2, we get a 25% contraction. This has never happened before since the Great Depression and it evidences the fact that quantitative easing doesn't work. It just stays on the balance sheets of the banks.And we all know what comes after real deflation, hint: it starts with an "...

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Who is Holding the U.S. Bonds?

These days, we hear much talk about how low the interest rates are on U.S. government bonds (TLT, DTYL). Many say that this is because the Federal Reserve is printing money to buy up its own bonds. But actually, it's the foreigners that are buying up all the treasury debt.In this analysis I will go through the most recent facts about U.S. government bonds and we will see that one of the most important charts to follow is this one. It will tell you...

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Peter Schiff: Fraser Institute Vancouver 5 June 2012

Peter Schiff at the Fraser Institute in Vancouver on 5 June 20...

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The Status on China

We already know China is slowing down, because their imports of key commodities have been going down lately. I summarized this already in this article. We saw that industrial commodity imports were declining, while gold imports and U.S. treasury buying skyrocketed. I believe China has enough tools to keep their real estate and stock markets from falling. To find out how, go to my analysis he...

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China U.S. Treasury Holdings March 2012

Time for a China U.S. treasury holdings update. Apparently the February release of China's holdings of U.S. bonds was revised downward from $US 1.17 trillion to $US 1.155 trillion. But in March, China recorded the highest amount of treasury holdings, namely $US 1.17 trillion (Chart 1).So China isn't only buying record amounts of gold, but at the same time is continuing to buy U.S. treasuries. Where on earth does China get all this money from... Right,...

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China is Buying Record Amounts of Gold

As I already feared, China is scooping up all the gold in the world and is becoming the foremost gold buyer in the world. Trying to get more and more exposure to the reserve currency status.Today it was released that China imported approximately 104 tonnes, a staggering amount of gold!The chart looks something like this:Chart 1: China Gold ImportsFrom Shanghai Daily:GOLD imports by China's mainland from Hong Kong rose 65 percent to a record in April,...

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World Market Window: New Tool to Monitor the Global Economy at A Glance

Look at the new tool I got:=> World Market WindowVery interesting tool to monitor commodities, bonds and equity markets. Just like a real brokerage scre...

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USD VS. S&P VS. 10 Yr U.S. Bonds: Decoupling Monitoring Experiment

Peter Schiff told us that when the USD and the stock markets decouple (meaning U.S. dollar goes down and stock markets go down), U.S. bonds will plunge. I will now start to monitor this coming event.Today we have the first day of the experiment and we already see that such event is happening.- U.S. dollar declined against the euro: down 0.5%.- Stock markets are down: S&P down 0.4%.=> Resulting in a bond market plunge of: 3.5% to a 1.5% yield...

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Another Correlation: Case-Shiller Index VS. Housing Market Index

Recently, we saw bullish indicators for housing demand. At the same time we saw bearish indicators for housing prices. Let's take a deeper look at the overall trend of the two indices HMI and Case-Shiller Index and see which correlation can be found.You can read the analysis here: Case-Shiller Index VS. Housing Market Ind...

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Peter Schiff: When Will It Hit The Fan?

Here's an update from Peter. The most important sentence in this video was about decoupling of the U.S. dollar and stock markets.Normally, stocks go lower and the U.S. dollar goes higher. But once the decoupling of this correlation occurs, then the *you know what* will hit the fan. After that event, U.S. bond markets will plun...

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Is China Slowing Down?

These days, many commodity investors are living in uncertainty because they read on the internet that China, the largest consumer of commodities in the world, is slowing down. In this article I will take a look at the most important commodities consumed by China. We will see if our concern about China slowing down is validated.China is already the world's largest consumer of the main industrial metals copper, nickel and zinc. In the energy space, China is the largest consumer of coal in the world. In construction, China is the largest cement (+...

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How Gold Mines Will Benefit From the Second Great Depression

During the Great Depression in 1932, gold went up while utilities (energy, oil) went down. Oil companies were almost all going bankrupt. What happened to gold mines then?Every company has revenue and costs. Revenue from a gold mine comes from the gold they mine and sell. This asset was very precious to people, so gold mines benefitted from the gold price going up. Costs were going down as oil went down due to the worsening economic outlook during the Great Depression.So, when revenue goes up and costs go down, margins start to increase a lot. This...

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