Energy & Commodities

Campbell Sept. 11th Business Comment

Posted by Michael Campbell

on Wednesday, 11 September 2013 16:08

mcimageMicheal comments on 2 new studies that chronicle the impact that 2 new drilling techniques, especially Fracking, has had on consumers in general and the poor in particular. 

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One of the Most Important Financial Events Is Taking Place Before Our Very Eyes

Posted by Financial Sense

on Wednesday, 11 September 2013 14:14

One of the most significant financial events is taking place before our very eyes, and yet not many are paying attention to it, says Louis Gave, CEO of the well-respected GaveKal Research.

picture-691After the Lehman collapse in 2008, firms around the world suddenly canceled orders to China, causing Chinese exports to collapse by 30%. With the US dollar acting as the world’s reserve currency, greasing the gears of international trade, suddenly those dollars became scarce as the US banking system paralyzed credit around the globe. This led China to ask, “Why should badly managed banks in the US affect our trade with other countries?”

Not wanting to suffer the same consequences again, China has since responded by conducting trade agreements with its partners to trade not in the world’s reserve currency, the US dollar, but with its own currency: the renminbi. As a result, “In the past five years, China has moved from 0% renminbi and 100% US dollars to, now, 18% denominated in renminbi. That’s a massive, massive change,” says Gave.

“The internationalization of the renminbi, the creation of the RMB bond market, is one of the most important financial developments of the past decade,” he says.

…..read more HERE

Gold Bull & Debt Bear Market In 50 Amazing Charts

Posted by GoldSilverWorlds

on Wednesday, 11 September 2013 14:08

In an excellent collection of 50 charts, Ronald Stoeferle presents all fundamental data related to gold’s bull market and the too-big-to-fail debt bubble. Stoeferle is Managing Director at Incrementum Liechtenstein and writer of the famous In Gold We Trust reports.

The charts cover three major themes: gold, debt and economy, currency debasement. In this article, we highlight the ten most powerful charts. They tell the complete fundamental story and lay out the most likely scenario going forward. The full presentation is mandatory study material.

The debt bubble keeps on growing. The nominal amounts are beyond imagination. The key take-away here is the diminishing rate of return of a marginal unit of debt. In other words, central planners need to create increasingly more debt for less economic growth. That is worrisome, to say the least. By the way, did you know how much debt has been created per citizen (on average)? Please don’t try to imagine this figure also applies to yourself. It is no information for the faint-hearted.

credit market debt vs gdp vs monetary base 1971 2013

 

 

Today one of the top CEO’s in the world told King World News that big money and large fund managers are now positioning themselves aggressively in the gold market, and, astonishingly, just 3 sources are now buying the entire annualized world gold production.  This interview is tremendous, and it will let KWN readers around the world see the gold market through the eyes of one of the greatest and well-respected veterans in the business. Below is what Sean Boyd, CEO of $5.2 billion Agnico Eagle, had to say.

…..read it all HERE

A Private Letter from Warren Buffett

on Wednesday, 11 September 2013 13:51

UnknownIn the mid-1970s, an investor with tremendous business experience, Warren Buffett, became the business “coach” and confidant of the Washington Post‘s Katharine Graham. Graham became chairman and CEO of the newspaper company unexpectedly when her husband committed suicide. She leaned heavily on Buffett’s business judgment – especially when it came to the question of how to manage the business fund. Buffett addressed that critical question in a private letter to Graham.

 
Fortunately… I was sent a copy of that letter late last month. Here’s what Buffett told one of his closest friends about how to manage her company’s pension account…
 
The directors and officers of the company consider themselves to be quite capable of making business decisions, including decisions regarding the long-term attractiveness of specific business operations purchased at specific prices. We have made decisions to purchase several television businesses, a newspaper business, etc. And in other relationships, we have made such judgments covering a much wider spectrum of business operations.
 
Negotiated prices for such purchases of entire businesses often are dramatically higher than stock market valuations attributable to well-managed similar operations. Longer term, rewards to owners in both cases will flow from such investments proportional to the economic results of the business. By buying small pieces of businesses through the stock market rather than entire businesses through negotiation, several disadvantages occur: a) the right to manage, or select managers, is forfeited; b) the right to determine dividend policy or direct the areas of internal reinvestment is absent; c) ability to borrow long-term against the business assets (versus against the stock position) is greatly reduced; and d) the opportunity to sell the businesses on a full-value, private-owner basis is forfeited.
 
[These disadvantages are offset by] the periodic tendency of stock markets to experience excesses, which cause businesses – when changing hands in small pieces through stock transactions – to sell at prices significantly above privately determined negotiated values. At such times, holdings may be liquidated at better prices than if the whole business were owned – and, due to the impersonal nature of securities markets, no moral stigma need be attached to dealing with such unwitting buyers.
 
Stock market prices may bounce wildly and irrationally, but if decisions regarding internal rates of return of the business are reasonably correct – and a small portion of the business is bought at a fraction of its private-owner value – a good return for the fund should be assured over the time span against which pension fund results should be measured.
 
[Success] in large part, is a matter of attitude, whereby the results of the business become the standard against which measurements are made rather than quarterly stock prices. It embodies a long time span for judgment confirmation, just as does an investment by a corporation in a major new division, plant, or product. It treats stock ownership as business ownership with corresponding adjustment in mental set. And it demands an excess of value of price paid, not merely a favorable short-term earnings or stock market outlook. General stock market considerations simply don’t enter into the purchase decisions.
 
Finally, [success] rests on a belief, which both seems logical and which has been borne out historically in securities markets, that intrinsic value is the eventual prime determinant of stock prices. In the words of my former boss: ‘In the short run the market is a voting machine, but in the long run it is a weighing machine.'”
…..read more HERE

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