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Energy & Commodities

Buy Commodities? Why? Well, because the stocks/commodities ratio says so…

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Posted by Jack Crooks - Currency Currents

on Thursday, 06 July 2017 07:22

Quotable 

“The most difficult thing in markets is knowing how to wait for a big move that you know is going to come.”

--Woody Dorsey

Commentary & Analysis

Buy Commodities?  Why? Well, because the stocks/commodities ratio says so…

Based on the Stocks/Commodities ratio chart we have been following and sharing for the last several years, it’s now time to start buying commodities; at least in a greater proportion to stocks. Why? Well, because the Stocks/Commodities ration just made a round trip and interestingly even the timing is symmetrical. The visuals below should help explain....

It is rarely this simple and no-one rings a bell at the top or bottom. 

Screen Shot 2017-07-06 at 6.46.01 AM

click image for larger chart



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Energy & Commodities

The Coming Battery Bonanza

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Posted by James Dines via Streetwise Reports

on Thursday, 29 June 2017 06:36

James Dines, author of The Dines Letter, discusses the importance of graphite in the manufacture of lithium-ion batteries and highlights one graphite company he expects to have an edge.

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Lithium Batteries for Autos and Home Storage

Someday, as sneaky years whisper past, batteries will be seen to have been a crucial wave of the investing future. Uses for lithium ion batteries (LIB) are expanding and will be the main technology for mobility and stationary storage for many years to come. LIB's have been improved over the last 25 years, but it might take that long for any new battery design to pass through the development process to ensure they are safe for consumer use. Electrification of vehicles and the storage of green energy is driving massive growth in LIB cell manufacturing, forecast to increase 170% from today's current capacity of 103 GwH to 278 GwH by 2021 to meet the demands of electrification of automotive vehicles. Also, lithium batteries will be used for stationary storage in houses; they would charge with wind or sunlight present, to be consumed later. Many will buy rooftop solar along with batteries. The 2015 world market value of lithium ion batteries was $18 billion and is forecast to double to $36 billion by 2025—which we personally believe will be much larger.



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Energy & Commodities

Crude Oil in a New Bear Market?

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Posted by Chris Vermeulen - The Gold & Oil GuyGuy

on Tuesday, 27 June 2017 07:14

The newest bear market is in crude oil. The definition of a bear market is when an ‘asset class’ is down more than 20% from its recent high: (Bear Market Rally Definition Investopedia).  It has been more than five years since the market fell so hard so fast from its’ high. Two months later, it was even lower. During the past 20 years, the SPX has struggled when oil fell into a bear market!

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Oil prices broke to a fresh seven-month low on June 21st, 2017, with WTI Crude Oil dropping to $42 per barrel. The renewed and heightened pessimism over the pace of rebalancing has sunk in as O.P.E.C., is struggling to reduce its’ inventory. U.S. shale continues to grow production. There are large volumes of supply back in the market at the worst possible time!

WTI Crude Oil Now Technically Bearish



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Energy & Commodities

Strength in Mining Stocks and Its Implications

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Posted by Przemyslaw Radomski - Sunshine Profits Profits

on Wednesday, 21 June 2017 06:35

Yesterday’s session was not like the previous ones – in the previous days, the precious metals sector moved lower together and mining stocks were leading the way. Yesterday, gold and silver declined, but miners were barely affected. Does this strength indicate a likely turnaround?

Miner’s Outperformance

In short, that’s not likely. Miners had a very good reason to rally. The general stock market soared yesterday and mining stocks, being stocks themselves were positively affected by this development. This is something that happens quite often, but let’s keep in mind that this effect is usually temporary. Ultimately, the gold stocks’ profits depend on the price of gold and thus this is the key driver of the miners’ prices. Let’s see exactly how much the mentioned markets moved (chart courtesy of http://stockcharts.com).

1 O0ZV8bP

The GDX ETF was down by 13 cents which is next to nothing. The volume was rather average and the entire session was yet another day of a post-decline pause.



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Energy & Commodities

PetroDollar System In Trouble As Saudi Arabia Continues To Liquidate Foreign Exchange Reserves

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Posted by Steve St. Angelo - SRSrocco Report

on Monday, 19 June 2017 07:36

Petro-Dollar-FIMAGE2The U.S. PetroDollar system is in serious trouble as the Middle East’s largest oil producer continues to suffer as the low oil price devastates its financial bottom line.  Saudi Arabia, the key player in the PetroDollar system, continues to liquidate its foreign exchange reserves as the current price of oil is not covering the cost to produce oil as well as finance its national budget.

The PetroDollar system was started in the early 1970’s, after Nixon dropped the Gold-Dollar peg, by exchanging Saudi Oil for U.S. Dollars.  The agreement was for the Saudi’s only to take U.S. Dollars for their oil and reinvest the surpluses in U.S. Treasuries.  Thus, this allowed the U.S. Empire to continue for another 46 years, as it ran up its ENERGY CREDIT CARD. 

And run up its Energy Credit Card it most certainly did.  According to the most recent statistics, the total cumulative U.S. Trade Deficit since 1971, is approximately $10.5 trillion.  Now, considering the amount of U.S. net oil imports since 1971, I calculated that a little less than half of that $10.5 trillion cumulative trade deficit was for oil.  So, that is one heck of a large ENERGY CREDIT CARD BALANCE.

Regardless… the PetroDollar system works when an oil exporting country has a “SURPLUS” to reinvest into U.S. Treasuries.  And this is exactly what Saudi Arabia has done up until 2014, when it was forced to liquidate its foreign exchange reserves (mostly U.S. Treasuries) when the price of oil fell below $100:

So, as the price of oil continued to decline from the mid 2014 to the latter part of 2016, Saudi Arabia sold off 27% of its foreign exchange reserves.  However, as the oil price recovered at the end of 2016 and into 2017, this wasn’t enough to curtail the continued selling of Saudi’s foreign exchange reserves.  The Kingdom liquidated another $36 billion of its foreign exchange reserves in 2017:



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