Energy & Commodities

This Natural Resource Uptrend Is Unstoppable

Posted by Matt Badiali - Real Wealth Strategist

on Friday, 20 April 2018 06:17


There is a huge problem in the Copper Market. Despite strong demand growth from electric cars and battery production about 40% of the world’s current copper production will close over the next 10 to 20 years. In other words demand is going up while supply is scheduled to shrink. Check out The world’s top 10 highest-grade copper mines for investment opportunities after reading this analysis - R. Zurrer for Money Talks

The next big commodity story isn’t some exotic metal like cobalt or palladium…

It’s much more simple and important. The next boom in natural resources is copper.

Copper demand is soaring. You know the story. Electric carsmunicipal-scale batteries and millions of other electronics out there. They all need copper.

While we know the story, the numbers are incredible. The price of copper is up 44% in the last two years.

If you don’t have a position in copper mining, you should buy right now.

A Huge Problem for the Copper Market

Monthly demand for copper rose 82% since January 2000, as you can see from the chart below:

Natural Resource Bull Market

As you can see, the trend works out to about 3.4% annual growth in copper demand. That’s setting up a huge problem for the copper market in the next 10 years.

According to a mining analyst with CRU, around 220 mines — about 40% of the world’s current copper production — will close over the next 10 to 20 years. In addition, mines that continue to produce will do so with lower grades — less metal per ton of rock moved.



Wealth Building Strategies

How the Experts Turn Small Investments Into Huge Winners

Posted by Rick Pendergraft - Investing, Trading Strategies

on Friday, 20 April 2018 06:11

kingOne of the most common investing mistakes people make is in their trade allocations. This is especially true when they are going for home run type trades. Instead of investing a small amount and trying to turn it into a large amount, many investors invest a large amount, and it ends up turning into a small amount.

Just last week I got a call from an old high school friend named Brian. He was asking me about a penny stock that was rumored to be a takeover target.

He was talking about putting half of his trading account into this trade. I told him I would never put half of my account in one trade. I also told him I would look at it for him.

After I looked at the company and analyzed the trade, I told him that I personally wouldn’t make the trade in my own account. Brian said: “If you wouldn’t make the trade, I won’t make the trade.”

A few days after that conversation, I was talking with Paul Mampilly. We were talking about trade allocations, and how many hedge funds take small allocations and have them turn into a large part of the portfolio. On the other hand, many individual investors, like my friend Brian, take a large allocation and let it become a small part of the portfolio.

Which would you rather do: Take a big investment and have it become small, or take a small investment and have it become big?

Small Investments Can Make a Huge Difference

The obvious answer to the question above is the first option. No one wants one of their large investments to become a small one.

I can show you how an allocation of as little as 2% can still have a big impact on the total return of a portfolio. But you have to have patience and discipline. You also have to be willing to take some total losses if you are going to have really big winners.

I am not just talking about 100% and 200% winners. I am talking about investments that go up 10, 12, 15-fold and more.

To show you how this can work, I put together the following table. The table shows how you can take 2% allocations from a $50,000 portfolio and make a great return. You can even have three 100% losses and two 50% losses, and still enjoy great overall returns.

$10 Million Portfolio



Energy & Commodities

Late-Cycle Commodity Surge Under Way

Posted by Frank Barbera - Financial Sense

on Thursday, 19 April 2018 07:08

According to the Game Plan for Late-Cycle Investing, as the economy moves towards its latter stages, commodities tend to outperform equities and other asset classes. Frank Barbera—market technician & portfolio manager believes we're likely in that process right now & if Gold pushes through $1,365 the first push up will take it to $1,480 to $1,525 - R. Zurrer for Money Talks

Listen to this podcast on our site by clicking here or subscribe on iTunes here.

Volatility Is a Return to Normal

Stock market volatility has picked up this year, though in percentage terms this really just a return to historical norms, Barbera explained.

The real anomaly occurred over the last 2 years where the market was moving straight up in parabolic fashion before culminating in a blow-off top late-January.

“Think of this more as a return to normal than anything else,” Barbera said. “Comparatively speaking, it is a rise in volatility, but at least so far we really haven't seen the stock market averages breakdown below major key levels.”

Possible Topping Process

One disquieting point is that after the big break we saw in early February, we swung from very high momentum to deep oversold conditions without anything in between, Barbera noted.

“We had this abrupt break in the market,” he said. “That's very historically unusual. Usually, when you have high momentum, you'll get a pullback, getting a push to new highs or maybe two pushes to new highs before you get a decent-sized break, and this just flipped on a dime.”


Larger Chart - Source: Bloomberg, Financial Sense Wealth Management



Timing & trends

2018's 'Short' of the Year

Posted by Michael Ballanger- Streetwise Reports

on Thursday, 19 April 2018 06:47

In this very detailed proposal Michael Ballanger outlines what he thinks is a superb shorting opportunity. He provides the rationale, and the specific size and nature of the trade using ETF's. In one scenario he expects a return on investment of 50.35%, another scenario yields 1.08% - R. Zurrer for Money Talks

Precious metals expert Michael Ballanger discusses the gold and silver ratio. 


There is a famous quote about short-selling that comes from Olde English business folklore that goes something like this: 

"He who sells what isn't his'n. 
Must deliver or goes to prison!"

That old horse chestnut was used to frighten the Rothchildian short-sellers that used to hang out on the old New York "curb" back before governments and influence- peddling lobbyists conspired to change the rules. I used to love to find overvalued stocks or commodities and get our trading desk to call over to the loan post to see what it would cost to borrow a few thousand shares of some pumped up bowser of a stock and then attempt to catch it on an uptick in order to sell it. The entire concept was rather civilized because everyone would know that there was a highly visible bear out there trying to get short something and invariably, the principals like the CEO or CFO would find out and then the ancient game of cat-and-mouse would begin.

It would begin with the phone calls from someone at the target company introducing themselves and asking you out for coffee or a beer if you were borrowing a puny 2,000 shares with the venue morphing decidedly if the number was north of 100,000 shares. (If it was a MILLION, it was a weekend in Vegas.) I would put on my most gracious persona as the rep from the overvalued company tried in vain to change my intention of hammering his pig of a stock into the ground, but what made it a study in human behavior was that the higher the gratuity, the more maniacally I wanted to sell the stock.

Needless to say, short-selling is not the fun it used to be because everyone and their uncle are "hip" to the notion of shorting overvalued garbage thanks to terrific books and movies like "The Big Short" that really showed the world how extremely difficult it can be and how the market-makers can artificially create a squeeze on a short player by simply fiddling with the "marks" at the end of every month. I, for one, long for the old days of finding some piece of Vancouver garbage that had a $500,000 annual travel and entertainment budget and a $500 annual exploration budget and a property "next door to Friedland" (!) whose founders held all the one-cent stock that was coming out of escrow next week. Adding insult to injury and turning the ridiculous to the sublime, the CEO has just paid out an egregious amount of money and stock to the telephone room owners whose job it was to "pump up the volume." Alas, the Elon Musks of theorld learned how to magnificently "manage" their stocks by way of social media and sweetheart deals with all the top 50 hedge fund managers that conspire daily to monitor the share price so that nothing "untoward" can ever happen to threaten the uptrend line, despite being the most over-priced, money-losing auto manufacturer in world history.

The same thing goes for gold and silver with massive quantities of paper gold being traded as if in a virtual reality pit of digital outcry. To say that being long the gold and silver markets since 2013 has been "interesting" is like saying that having root canal surgery without Novocain is "interesting," when we both know that the proper descriptive should be "agony" or "maddening" but one adjective to most-accurately describe these past five years of shenanigans is "costly" for many people and for all the wrong reasons. Banks cannot sanction gold or silver because there is no counterparty to the transaction. Once it leaves the bank, it is gone.

I have one idea for all of you that is, in my humble opinion, one of the greatest "short" set-ups that I have seen in over 40 years trading markets. Because I am leery of interventions and manipulations carried out constantly under the blinded eyes of regulators, I need to short something that would not be exposed to directional risk. The best example of being right about something and wrong at the same time was mid-2017 when I took one look at Bitcoin and determined that it was a bubble of the highest order. That was at $10,000 per coin. It went to $19,891 and then got bombed to under $7,000 and had we shorted it in mid-year, we still would have made money but had we shorted it on December 19, we would have made a fortune. What I knew from my short-selling experiences on the Nikkei in the late 1980s was that the most difficult part of shorting is execution (TIMING) because the biggest move on a chart comes in the last 10% of its journey along the x-axis. (Classic "bubble" chart pattern).



Real Estate

Where Real Estate is Coiling for a Boom

Posted by Brian Ripley - Canadian Housing Price Charts

on Thursday, 19 April 2018 05:17

The end is in sight for "fire sale" mortgage rates as Banks begin to push their rates up. In the meantime BC's & Toronto's unaffordable mania now leaves only one rational market left in play, where the last 4 years prices have been sideways and winding up for an eventual advance  - R. Zurrer for Money Talks



Larger Chart

The chart above shows the "real price" of Vancouver, Toronto & Calgary SFDs when looked at from the point of view of the BoC Canadian Commodity Index (CCI) and Borrowing Costs (retail 5yr Mortgage) which are the main input costs apart from operating expenses and tax.

REAL PRICE of HOUSING of Vancouver, Toronto and Calgary Single Family Detached and the Bank of Canada $CAD Commodity Index & 5 Year Fixed Mortgage

In March 2018 commodity prices are still rising and have added to the recent mortgage rate rise in keeping real prices on a downtrend. In Calgary, although prices look rational, the pending seasonal slowdown in the energy sector should limit the nominal purchasing power of weak hands in Alberta but will lift real prices as the cost of energy drops.

​The CCI train wreck into the March 2009 Pit of Gloom saw a 44% crash in just 7 months. Oil is slippery, CMHC is worried, and so is the Department of Finance Canada (DEC 2016). The oil majors are moving out of Alberta.

There should be no more surprise BoC rate cuts if the federal government mandate plan is to use their fiscal powers, but as we know, the government can surprise us at any time, eg: the new Mortgage Stress Test, the CMHC credit tightening and offloading of risk onto the retail lenders; the threat of new chilling tax and CRA penalties and of course policy flip flops by the federal government like its reversal on electoral reform. ​​​

The last 9 years of ZIRP & NIRP monetary policy combined with CMHC's out-of-control insurance scheme (also add in the BC Gov't Sub Prime Cash give-away) has been a terrible social experiment in the service of political power and it has replaced affordable housing with indentured mania. Is there a better way?​​​

In a commodity crash, producers lose pricing power as international competitors drop finished prices neutralizing any gains for Canadian exporters from a withering CAD/USD  while the +/- 70% of Canadian employees working in the consumer and service sectors look for ways to leverage their deflating earnings at the supermarket and or job fair.

​​The other major cost input, the retail 5 year fixed mortgage rate (aqua dotted plot line) and last July it moved up off its outstanding record low of 4.64% to 4.84%. This month the Bank of Canada rate remains at 5.14% although street vendors are still pushing sub 3% short term mortgages while the stress test weeds out the weak hands.

The end is in site for fire sale mortgage rates as the major banks push their rates up which forces the real cost of housing (dotted city plot lines) relative to those rates to turn down.

Calgarians are wary of the Trumpster who vows to unleash energy supply 2.0. And when credit is a lifestyle employer as it continues to be in Canada, appraisers will eventually be in demand again.​​




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