Timing & trends

Rogers: Farmers will make 'huge' amounts of money…

Posted by JIm Rogers via Porter Stansberry & The S&A Digest

on Tuesday, 10 April 2012 00:00

Jim Rogers: Farmers will make 'huge' amounts of money… An aging workforce… China pushes agriculture… 
  •  In an interview with China's national English-language newspaper China Daily, legendary investor and commodities bull Jim Rogers sang the praises of farming. Rogers said you'll "make a huge amount of money" if you buy a farm and become a farmer today… "The price of your products is going to go up. You're going to make more and more money every year… The price of your land is going to become more and more valuable."
  • Rogers, ever the contrarian, believes farmers will be some of the most successful people in the world over the next 20 to 30 years. (He noted how terrible the business has been for the past 20 or 30 years.) 
  • Today, farmers are dying out. The average age of a farmer in America is 58. It's 66 in Japan. But the world still needs food (more and more, in fact). Still, farming will have to become more profitable in order to attract labor and capital.
  • We expect the situation in farming will develop a lot like the mining sector… We discussed the global shortage of mining employees in the November 16, 2011 Digest. As demand and prices for metals increased, the normally low-margin business of mining improved. But the workers weren't there:

According to Sigurd Mareels, director of global mining for McKinsey & Co., there's a "historical shortage" of mine workers around the world. Australia, the world's largest source of iron ore and the second-largest gold producer, needs an additional 86,000 workers by 2020, according to the Minerals Council of Australia. That's on top of the current work force of 216,000. Miners in Australia – some of whom commute from the Philippines and New Zealand – make between $100,000 and $200,000 a year.

"It's a tight labor market and difficult cost environment," said Ian Ashby, president of the iron-ore division at BHP Billiton, the world's largest miner. To attract workers, BHP and other miners are building recreation centers, sports facilities, and art galleries in mining towns. Costs to attract and pay new talent decreased earnings by $1.2 billion in the first half of 2011. (BHP Billiton still earned $11.2 billion over that period.)

In farming (as with mining), we expect capital will be pulled into the sector as the products become more attractively priced and the return on that capital gets better.

  • If you don't want to become a farmer, don't worry… There are still ways to profit from the boom. For example… Rogers suggests you can sell seeds, fertilizer, and tractors.
  •  The biggest driver of food demand is China. Food is one of the first things people spend their money on as they get a little bit wealthier. As China's economy modernizes, its gigantic population is growing wealthier and will spend some of that money on eating better.

The Chinese government knows the country needs food… It's already giving incentives to farmers. As we noted during our time in Hong Kong…

Jing Ulrich, the JPMorgan managing director who spoke at the Hong Kong conference, said the Chinese central bank cut the reserve ratio by two percentage points (in addition to the two previous cuts) for several hundred branches of the Agricultural Bank of China earlier this month. Lower reserve ratios mean the bank may hold less of its deposits in reserve, freeing capital for lending.

"It's March," she said. "Planting season is coming." The move will allow the Agricultural Bank to lend more money to the Chinese agricultural sector. The central bank wants to specifically support local agriculture with its latest stimulus efforts.

Jim Rogers also just gave an interview to our own Frank Curzio, editor of Phase 1 Investor and Small Stock Specialist. On the latest installment of Frank's S&A Investor Radio podcast (now available), Rogers – whose bullish view of gold is well-known – explains why he expects a pullback in the precious metal… and what might lead him to short it. To listen for free to all of Frank's podcasts, click HERE.



Gold & Precious Metals

Dennis Gartman - 'Gold's Decade-Long Bull Run is Dead'

Posted by Gary Tanashian via SilverStrategies.com

on Monday, 09 April 2012 08:11

Bernanke delivered the fatal blow to gold’s ten year bull market, according to Dennis Gartman.   Gold has been in bear territory since the summer of 2011, when it topped out above $1,900 an ounce, with the latest post-FOMC sell-off inflicting irreparable technical damage, he says.

Well close Dennis.  But let's fine tune a little:  Unbridled panic-fueled momentum drove gold unsustainably higher as it took a mini blow off and very predictable correction.  Gold is not broken in its secular bull market (and not necessarily even the cyclical one out of 2008) by any rational technical parameters.  Not as of this writing and thus, not as of your little Forbes piece with the alarmist headline.  'Irreparable technical damage' Dennis?  Where?

Technical damage could come about but here's the thing, it has not yet come about.  Why the haste to make such a call good sir?  And you Forbes; why pile on now when everyone from Buffett to Bernanke himself is mowing down the poor, under-armed gold bugs?  If gold is so marginalized, why the big and seemingly coordinated negative ad campaign?

The time to have negative feelings was late last summer.  The time to think like a capitalist is now.

UBS’ Edel Tully adds that markets’ no-QE-for-now realization will push gold even lower, probably down to $1,550 an ounce over the next month.

Oh my... all the way down to 1550?  While that's a little under my initial support parameter, it does not break the bull market.  Next...

....read more HERE



Not If But When....

Posted by David McWilliams via Peter Grandich

on Monday, 09 April 2012 08:06

Is there anything else driving up the price of petrol at the pumps that could be closer to home?

The answer is yes. At the moment, the central banks of the world are responding to this mega-debt crisis and huge de-leveraging everywhere with lower and lower interest rates. Earlier this month, a report from the US Federal Reserve (www.federalreserve.gov) on the flow of funds in the US made for quite shocking reading if you are someone who worries about what central banks all around the world are doing.

The report reveals that the Fed bought 61 per cent of the net new debt the US government issued last year. Before the financial crisis, the Federal Reserve used to buy small amounts, but not the lion’s share of the US government’s debt. This is quantitative easing like we have never seen before.

One way of putting all this into context is to examine how much this is in terms of US total income. This is particularly important right now in order to ascertain whether the US recovery is real or temporary.

Net treasury debt amounts to 8.6 per cent of GDP. If 61 per cent of that figure is caused by printing money, it means that about 5.3 per cent of US economic output is now being driven by the Federal Reserve’s printing presses. This is reminiscent of Argentina in its 1980s heyday, and is extremely worrying.

....read more HERE



Stocks & Equities

The Buying Opportunity of a Lifetime is Coming…

Posted by Larry Edelson - Uncommon Wisdom

on Monday, 09 April 2012 07:31

A few months ago, I started warning that …

  • We’d see a short-term rally in the dollar, mainly against the euro.
  • Europe would kick the sovereign debt can down the road a bit with money-printing (thereby weakening its currency).
  • The U.S. economy would start to look a bit better.
  • China would largely engineer a soft landing, and the yuan would appreciate.
  • Commodities would enter a short-term period of disinflation.
  • Let’s see how things have panned out so far.
  •  Since the first of the year, the U.S. dollar, judging by the U.S. Dollar Index that’s traded on the New York Board of Trade, is essentially flat. In the last few days, however, it’s started a renewed uptrend — and the euro has started to sink.

Given the dollar’s rally last week, I think the trend will continue, as Europe’s economy — due to the extreme austerity measures being taken — sinks into a depression and the euro suffers from it.

The European Central Bank (ECB), meanwhile, has indeed printed a lot of money — over $1 trillion. This is doing nothing but keeping the banks alive, kicking the debt crisis down the road, and threatening to further pressure the euro lower.

  • At the same time, we’ve seen noticeable improvements in the U.S. economy — mainly in employment. Don’t get too used to it, though. I don’t think the U.S. economy is going to do much better in the short run. It’s only looking better because Europe is in such bad shape.
  • China’s economy also has indeed softened, even a bit more than I expected. Nevertheless, all the stats I study tell me China has indeed engineered a soft landing — with GDP running at 8.4% for this year’s first quarter … industrial production is already starting to rebound … retail sales are still pretty vibrant at 14.7% annualized growth … and property prices are starting to stabilize.

As I told you in a recent column, there will be no implosions in China, no disasters. Mind you, Beijing has engineered this soft landing with plenty of ammo left. Which means they have plenty of options available to boost growth, should they need to.

Meanwhile …

  •  Commodities have indeed entered a disinflationary period. One that won’t last long, but one that could be very sharp indeed.

Already …

•  Coffee prices have fallen 23.8% from their high earlier this year.

•  Cocoa prices are down 16.4%.

•  Cotton prices are down 10.25%.

•  Wheat’s down 7.4%.

•  Corn’s down more than 15% from its high last June.

•  Platinum’s down 8.6% since early March.

•  Crude oil’s fallen more than 8% since early March (and 13.3% since last May).

•  Cattle prices are down more than 10%, just since February.

•  Natural gas prices have plunged almost 36% since the first of the year.

I say this not to boast, but to prove to you one major point: There can be big disinflationary waves in commodities, even when there’s money-printing going on.

Why’s that important? Because nine out of 10 investors (and analysts) think all too linearly about the markets.

They think that, if there’s money-printing going on, in any part of the developed world, it’s inflationary. And that commodity prices must therefore go up.

Not true. The markets are dynamic, complex systems. If you’re to get the big picture right, you simply have to throw out all the old rules you’ve been taught or told — and stop thinking about the markets linearly.

Instead, you have to realize that markets can do anything at any time. They can defy linear logic … they can defy the fundamentals … they can defy the news. They can also defy the authorities. The biggest traders and investors in the world. And more.

Just consider gold. It’s down more than $300, or 15.6%, since its record high of last year … and upward of $151, or 8.4%, since its high at the end of February. This, despite massive European money-printing … continual bad news out of Europe … alleged buying of gold by Beijing … and an improvement in the U.S. economy, which should be a tad inflationary for gold.

Silver’s down even more — a whopping 38.1% since its record high last year and 16.4% since its high just six weeks ago.

The markets also take no prisoners. John Paulson’s main hedge fund was down a whopping 51% in 2011 … and a reported 13% so far this year. Yet he’s one of the biggest and savviest money managers in the world.

The thing is, the disinflation you’re seeing in commodity prices is bound to continue. Through September of this year, according to my models. By then, we will likely see the majority of investors throw in the towel on the commodity sector — which will then make it an optimal time to go back in and back up the truck and buy.

What about the U.S. stock markets? A reader recently wrote in questioning me on my long-term forecast, wondering how in the heck the Dow Industrials could ever run to substantial record new highs (my forecast) if the U.S. economy is never going to fully recover and instead, slip to No. 2 in the world, with China rising to No. 1.

Defies logic, right? On the surface, yes. But it’s happened before. Just go back to the 1932 to 1937 period. The U.S. economy sank deeper and deeper into depression, yet the Dow Industrials soared 287%.

Why? Because even though the U.S. economy was sinking, Europe’s economy was sinking even more. Capital fled the European stock and bond markets in droves, pushing the Dow substantially higher.

The same thing will happen again. Only this time, it will push both U.S. and Chinese stock markets substantially higher. Gold will soar to more than $5,000 an ounce as well.

But we’re not there just yet. More pullbacks are coming in the commodity sector, and in stocks.

When those pullbacks are finished, it will, in my opinion, represent the buying opportunity of a lifetime, in commodities and stocks.

What about the recent talk of the Fed abandoning a third round of quantitative easing and not printing any more money? That’s temporary.

As sure as I know my name, the Fed will come back in and print record amounts of money. We’re not there yet either, though. Expect it later this year, when commodities and stocks look terrible.

Stay tuned …

Best wishes,


P.S. The sad state of affairs in the euro zone may be helping the dollar now. But as the Chinese yuan makes big strides, it’s trampling the greenback in the process.

Even worse, the U.S. government is not only letting it happen, but it’s playing a big role in helping to devalue our currency! This gives Washington a chance to inflate away the burden of its unpayable debt mountain.

Don’t let your wealth be left in the dust — watch my free video for proof of this conspiracy, and learn the steps you need to take to protect yourself and even prosper. Just click here to watch it now.

Larry Edelson has nearly 33 years of investing experience with a focus in the precious metals and natural resources markets. His Real Wealth Report (a monthly publication) and Resource Windfall Trader (weekly) provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management.

For more information on Real Wealth Reportclick here.
For more information on Resource Windfall Traderclick here.

images 07-45-16



Timing & trends

The Bottom Line: Buy When it Snows, Sell When it Goes

Posted by Don Vialoux - Timing the Market

on Monday, 09 April 2012 02:10

The transition stage for equity markets (Buy when it snows, sell when it goes) has started earlier than usual this year. Protective strategies and profit taking for investors with a 3-6 month time horizon is appropriate given the current fundamental, technical and seasonal influences.

The S&P 500 Index fell 10.39 points (0.74%) last week and another 15 points following release of the job report on Friday. Intermediate trend is up. However, the Index broke below its uptrend line on Thursday and its 20 day moving average on Wednesday to complete a bearish rising wedge pattern. The Index likely will test its 50 day moving average at 1,370.05 shortly. Short term momentum indicators have rolled over from overbought levels.

image thumb3

The TSX Composite Index plunged 289.07 points (2.33%) last week. Intermediate trend is down. The Index has completed a modified head and shoulders pattern. The Index remains below its 20 and 50 day moving average and fell below its 200 day moving average last week. Short term momentum indicators are trending down, but have yet to show signs of bottoming. Strength relative to the S&P 500 Index remains negative. A loss of another 130 points or more is likely at the opening today.

image thumb8

View more Equity Trends, Currencies, Gold/Commodities, Interest Rates, 50 charts and other factors HERE


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