Marc Faber is Right Again! Bernanke learns from Mugabe

The prediction by Marc Faber that the prospect of easy money from the Fed would lift stocks and commodities has been spot on! Commodities, gold and silver, stocks and anything that trades in U.S dollars soared yesterday.

The second half of Faber’s prediction that stocks and commodities will undergo a sell off before the month of November is out is still in limbo.

Faber has repeatedly warned the bears that market valuations may not be of any consequence if the Fed prints enough money to support lofty valuations. However, in an environment where many analysts can make a strong case for cheap S&P valuations, it appears Faber was assured of his prediction.

According to technicians, a break above the April 26 intraday high of 11,258.01 is very bullish for stocks. Yesterday’s rally cut through this level like a hot knife through butter. Further buying is expected following the breakout.

The inflation trade is on!

Abbey Joseph Cohen’s target for 1,250 and 1,300 range for the S&P doesn’t seem so far out after all. Maybe Cohen subscribes to Faber’s Gloom, Boom, Doom Report for some hints to the market’s likely direction and timing. She could use it.

And if there’s any doubt of Faber’s suggestion that money printing to affect higher stock prices is one of the goals of the Fed by deploying QE2, just read a statement by Fed chairman Ben Bernanke regarding the FOMC’s objectives following the deployment of QE1:

“Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

And the stock market could just be starting to roar higher. Faber says that the more the Fed prints money the higher stocks will climb. After all, we have the Zimbabwe model to point to if stocks show signs of faltering in the future.

From Business Weekly, published Oct. 22, 2008:

“While markets across the world have been crashing, the Zimbabwe Stock Exchange has being seeing record gains as citizens turn to equities to protect their money from the country’s hyperinflation.

“The benchmark Industrial Index soared 257% on Tuesday up from a previous one-day record of 241% on Monday with some companies seeing share prices increase by up to 3,500%.”

Faber expects a Von Mises “crack up boom” phase in the markets next year when we could see further record commodities prices, higher equities prices, and a significant loss in confidence in the U.S. dollar.

But if Bernanke doesn’t get his way and asset prices begin to slump again, we can expect more money printing from the Fed, says Faber, who also said in May that no one should fear a crash in the S&P because “Zimbabwe’s Mugabe is Ben Bernanke’s mentor.”

Right again.

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10x Bigger than the Bakken: The Paris Basin Shale Oil Play – read it all HERE

also:

The Bakken Play the Oil Majors Are Watching Closely

The best new shale oil play you’ve never heard of is getting ready to explode onto investors’ radar early in 2011 – the Alberta Bakken.

Located on either side of the Alberta/Montana border, the key land packages in this play have been assembled with very little news or fanfare – but by some very smart and successful companies, like Crescent Point (CPG-TSX) in Canada, and Rosetta Resources (ROSE-NASD) , Newfield Exploration (NFX-NYSE) and Murphy Oil (MUR-NYSE).

But these larger companies have been very tightlipped about their plans, and aside from Crescent Point’s one press release this fall, it’s not easy to get information – because everybody is still trying to buy more land. To date, there are only a handful of juniors involved in the Alberta Bakken, but juniors and the bigger intermediate producers are all putting a lot of money into this play hoping it will be just like the Saskatchewan and North Dakota Bakken play to the east – which created tens of billions of dollars in shareholder wealth and many buyouts – corporate takeovers – over the last 5 years. Recent reports by Canadian brokerage firms agree.

So the play is gaining momentum but hasn’t become mainstream yet. That will change in the coming months. The historical geological evidence is intriguing, even compelling.  But there is still only one well that has been publicly reported in the whole play – though several have been drilled.  And despite the fact that the Alberta and North Dakota/Saskatchewan Bakken plays have completely different geological settings, huge land prices have been paid for big parcels of Alberta Bakken land in areas where truly, very little is known about the oil formations (yes this will likely be a multi-zone play if it works).

This play was discovered on the US side of the border, in Montana.   And while there has actually been a lot more activity on the US side, but you have to look hard to find mention of it. Rosetta, Newfield, Murphy and Quicksilver (KWK-NYSE) have each acquired roughly 300,000 acres in northern Montana in this play – a material land position even for companies this size – but you won’t find that information anywhere except in a couple lines buried deep in their quarterly statements.  Rosetta said in its quarterly released just last week they had acquired more ground.  Rarely do any of them include even one slide on this play on their corporate powerpoint. Rosetta and Newfield have each publicly said they are drilling 8 wells, though most of them now are vertical test wells, which the industry calls “strat” wells, which is short for stratigraphy.

Basically they’re trying to gather geological information and determine the best place to drill a more expensive horizontal well.  No results have been released to date. But I can tell by reading the research reports on these companies that the analysts down in the US are watching this play. So are the majors, which did not participate much in the shale gas or shale oil boom in North America.

On the Canadian side, land prices around the Montana border edged up consistently this year – going from a low of $83 per hectare ($33.20/acre; 2.5 acres in a hectare) to $1535/ha, or $614 per acre – taking a lot of industry people by surprise at the time.  The highest price paid for one small block was over $4500/ha, or $1800/acre. Crescent Point came clean in September when they announced they had acquired over 1,000,000 acres in the play, mostly via an acquisition of a private company, Darian, which had a substantial land position, but also through some freehold staking on their own. Most of the land in the area was bought up by land brokers, a whole sub-industry in the oilpatch that acts as front-men for the oil producers. That is not unusual. 

It is unusual to see a well licensed in the name of a land broker, which is what has happened with the one well in the Alberta Bakken that everyone is watching – here is a quick quote from BMO Nesbitt on this well: “In Alberta, one horizontal well has been drilled and completed targeting the Alberta Bakken (drilled under broker: Antelope Land Services 14-7-1-21W4: TD – Wabamum; results confidential). A second horizontal well is presently drilling (Antelope Land Services 16-24-2-25W4, licensed to the Exshaw, spudded August 17, 2010), and a third horizontal well licensed by Antelope Land Services located at 3-8-1-18W4 has also been drilled and rig released on October 3, 2010, to the Exshaw. It is believed that Crescent Point Energy is the operator of these three wells.”

The few juniors in the Alberta Bakken play stand to be richly rewarded if it works out as well as the early movers hope. This will also be good news for their shareholders – here is how Macquarie Capital sees the Alberta Bakken playing out for them: “Junior companies with meaningful, strategically situated lands will be purchased outright by mid/large cap producers who seek to bolt on additional acreage to already established positions. The potential exists that players who were late to the game may try to establish a position in the play via a small corporate acquisition, once some of the associated risks have been mitigated by the early-comers.” In my next two stories on this fast emerging play, I will compare what is known about it to the Saskatchewan/North Dakota Bakken, and list the junior companies involved on both sides of the border.

Be sure to read:

10x Bigger than the Bakken: The Paris Basin Shale Oil Play

…..read it all HERE

Subscribe to Keith’s Service HERE

Hello, this is Keith Schaefer, editor and publisher of The Oil & Gas Investments Bulletin.  I started my subscription service in mid-2009 because I could see there was no place where retail investors could go to easily find which oil and gas companies were creating huge shareholder wealth by using exciting new technologies, such as horizontal drilling, fracing and 3D seismic.

Publisher

The Fed crossed the Rubicon last week with its announcement of another massive tranche of QE (Quantitative Easing or in common parlance money printing), known as QE2. It is thus clear that what is now known as QE1, which was portrayed at the time as “one off rescue of the financial system” was nothing of the kind, but represented instead the bursting of a dam that can never be put back together again. The junkie has graduated to another level, from that of being merely a chronic debtor, unable to live within its means and sponging on the rest of the world, to selling its own future down the river in order to maintain its voracious consumption habits in the present.

One thing we can be sure of is that the rest of the world is “not going to take this lying down” – what is sauce for the goose is sauce for the gander, so we can expect this new fashion for massively ballooning the money supply to catch on increasingly around the world, as various countries seek to maintain adequate liquidity and remain competitive in global trade by taking the same proactive hands on approach to manipulating their currencies in a downward direction as the US.

So let’s now be crystal clear about what we are talking about and looking at here – we face the prospect of massive global across the board currency debasement and inflation resulting from same. Where does hot money go in such circumstances? – it goes into tangibles, commodities, collectibles and the like – and especially into the Precious Metals – anything which provides a bulwark against the ravages of inflation.

…read more and view dramatic charts HERE

Thank You Ben Bernanke!

Ben Bernanke has unleashed the most powerful forces on the planet.

More powerful than any government. More powerful than any other central bank. More powerful than even the President of the United States.

He has ramped up the printing presses and will now print at least $600 billion of new money — and reinvest the interest the Fed is already receiving on money it printed previously (used to buy bonds) — to buy even more bonds (and print even more money).

All told, the Fed will be printing as much as $100 billion of new fiat money, per month. And that’s just for QEII!

Why do I say just for QEII? Because I have no doubt in my mind whatsoever that in the not too distant future — the Fed will find that it must print even more money, and up the ante yet again.

Make no mistake about this: As I told you from the get-go of this great financial crisis, Bernanke’s ultimate agenda is to massively devalue the U.S. dollar to inflate away debts … push up asset prices … and spark a major round of inflation.

Bernanke, more than any other central banker, is deathly afraid of a deflationary spiral. He will do anything he deems necessary to avoid it. He has virtually unlimited powers at his disposal.

Already, the markets are on fire!

As I write this issue …

• Gold has hit a fresh new record high at $1,393, including a nearly $60 move up in the 24 hours after Bernanke’s announcement.

• Silver has exploded to over $26 an ounce, with a single day rally of almost $2, or nearly 6% — I repeat, in a single day!

• Copper is also soaring, now trading at nearly $4 a pound and up more than 8% just since the first of this month.

• Platinum, soaring more than $100 an ounce on November 4, to near $1,800! Palladium is also on fire, now fetching $678.97.

It’s not just metal prices that are exploding higher on Bernanke’s deliberate attempt to create inflation … to devalue the dollar … to inflate away the massive mountain of bad debts in this country.

• Oil is now trading at nearly $87 a barrel, up almost $7 — more than 8% — in just over a week.

• Coffee was up an amazing 6.7% in a single day!

• Wheat is flying, now at more than $7.20 a bushel — up 5.8% on Bernanke’s announcement.

• Soybeans, at $12.83 a bushel, up 5% since the announcement.

• Sugar at 31.74 cents per pound, up 5.7% in a single day!

Your average gold mining share — up more than 5% the day after Bernanke’s announcement — is now up more than 83% since the first of this year!

Emerging markets are also on fire, throughout Asia and even Latin America. Why?

The answers simple: As the dollar gets devalued, savvy capital is seeking out the high economic growth of emerging market economies, which have hardly skipped a beat throughout this entire financial crisis.

Am I excited? You bet I am! This is ALL precisely what I have been predicting from the start of the crisis … and it is unfolding exactly as I said it would.

But more importantly, for those of you who have been following my recommendations here and in Real Wealth Report — you’re making money hand over fist!

All this is why I say “Thank you Ben Bernanke!” For savvy investors who see through his actions, it is a watershed of humongous profit potential.

In the weeks and months ahead you will see the following …

A. The underlying U.S. economy will NOT improve, and will instead, sink further. Unemployment, sadly, will worsen.

B. The U.S. dollar will come under further attack, by sovereign wealth funds exiting dollar investments and seeking out the safety of their home currencies, gold and other natural resources, tangible assets.

C. A new round of the just started currency wars, where countries that are experiencing huge capital inflows (due to the falling dollar) will take measures to try and prevent their currencies from rising too much.

D. New trade friction between the U.S. and China. And within one year I predict that China will abandon its peg to the dollar and revalue its currency higher.

E. One new record high after another in gold. Yes, there will be inevitable, and often sharp, pullbacks in the yellow metal.

But I have absolutely no doubt whatsoever that gold is now on its way to at least $2,300 an ounce, and far more likely $5,000 an ounce by late 2015.

F. Oil prices march back over $100 a barrel, likely hitting $125 a barrel next year, and then, by 2015 — well over $200 a barrel.

G. Prices of virtually every natural resource on the planet soar to new record highs, leap-frogging each other higher in the weeks and months ahead — all the way through to 2016 — when final highs are due.

H. The demise of the U.S. dollar as the world’s reserve currency. By 2016 you will see a new world currency emerge for international trade and finance, replacing the dollar.

And more, lots more.

My advice: Doing nothing with your savings and your investments is just about the worst mistake you could make.

Keeping it in a bank, a money market, or even under your mattress will doom what savings you do have to rapid devaluation.

Please don’t be one of those investors. Please don’t listen to the typical advice on how to keep your money safe.

It won’t work this time around. Not when the very basic cornerstone of your wealth — the dollar, your medium of exchange for goods and services — is being devalued right before your very eyes.

Stay tuned, and hold any and all investment recommendations I have made in this column!

Best wishes,

Larry

P.S. There has never, I repeat NEVER, been a better time to become one of the savvy members of my Real Wealth Report. Join now for a mere $99 a year — the single best purchase you can make for your investment funds. I guarantee it. Click here now to join.

FX Trading – Ganging Up Against the Euro Gang

The euro is getting pummeled again this morning, after a pitiful performance following the better than expected US Nonfarm Payrolls report on Friday. And while the QE2 implementation is only just beginning, the QE2 hoopla is waning. Coming into focus now – again – are the Sovereign debt issues of the eurozone. 

We asked on Friday if something changed, warranting this renewed concern from the markets over whether or not the eurozone can keep it together. We didn’t have an answer, and still don’t – but we have some things worth considering that will eventually give us the answer:

The potential for an improving US growth differential, relative to Europe, may be the catalyst. No doubt the attention has been stuck on the US for most of the second half of this year. Unemployment in the US has been the thorn in the side of US economic recovery efforts. Friday’s US Nonfarm Payrolls report puts the pressure on Europe – will the economic data (specifically unemployment numbers in eurozone countries) improve enough to keep the region and the euro in the market’s favor?

….read more HERE