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Energy & Commodities

Water is the new gold, a big commodity bet


Posted by Paul B. Farrell via MarketWatch

on Friday, 27 July 2012 07:24

water art-4

“Is water the gold of the 21st century?” asks Fortune. Answer: Yes, water is the New Gold for investors this century.

In 2010 global water generated over a half trillion dollars of revenue. Global world population will explode from 7 billion today to 10 billion by 2050, predicts the United Nations. And over one billion “lack access to clean drinking water.”

Climate and weather patterns are changing natural water patterns. And industrial pollution is making water a scarce commodity. So the good news is that huge “opportunities exist for businesses that can figure out how to keep the pipes flowing.”

Yes, it’s a hot market.

....read more analysis of the following topics HERE

  • Population, the explosive driver in the demand for ever-scarcer water
  • China’s mining “new gold,” for agriculture, industry, economic leadership
  • New Gold hidden in steaks, auto tires, chickens, designer jeans
  • Get your feet wet in wet stocks and watery ETFs

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Personal Finance

QE3 -It’s different this time....Here's 2 Reasons Why


Posted by David Schwel via Economic Musings & Peter Grandich

on Friday, 27 July 2012 00:00

Late in the afternoon today (July 24th) word came via Bernanke pal Jon Hilsenrath that the Fed could be moving closer to taking additional actions to spur growth.  There’s little doubt in my mind that this is indeed the case.  In a recent note Bridgewater estimated that in the past few months global growth has slowed from a 3.3% rate down to 1.9%.  This lower global growth should inevitably also cause lower inflation, leading developed market central banks to loosen policy via Quantitative Easing while emerging market central banks choose rate cuts.  Whether you agree with these policies or not, I believe recent economic developments will cause the Fed to act.

Astute observers have noted that the recent plunge in US Treasury yields has primarily been a decline in real yields.  Ten year break-evens, as an example, have declined only ~20bps since May down to 2%.  Ten year nominal yields have dropped over 50bps in the same time period falling under 1.40% as of today’s close.  Despite Chairman Bernanke profession that “additional tools” remain in play, I believe we will see additional large scale asset purchases “LSAP’s” in the form of Agency Mortgage Backed Securities.  What will this accomplish and how is it different than last time?

Just as the repeated usage of an anti-biotic can have diminishing benefits, I believe that the impact of QE too will see a diminished impact.  Here’s two reasons why:

1.)  Little impact will flow through to mortgage borrowers 


2.) Other fixed income “risk asset” yields are substantially lower today:

Click HERE to read the full analysis of point 1 &2 HERE

QE3 3




Energy & Commodities

Kicking and Screaming...."Bottoms in Place"


Posted by Eric Coffin - Hard Rock Analyst

on Thursday, 26 July 2012 11:21

"With summer doldrums well and truly upon us markets have been drifting lower on low volume and trying to hold their May lows.  Most metals and certainly gold have performed better and seem to have bottoms in place. As we note in the updates there are three companies on the HRA list that have been getting a lot more attention from traders and several others that are getting traction based on results to com.".

"Major markets have not been cooperating thanks to debt issues that won’t go away soon. There are plenty
of headwinds still but commodity prices, though lower, are all at levels that makes them hard to pin the
blame on for weak markets."

"Gold has defended its recent lows well, though not without a couple of scares along the way. Whatever the day to day comments of central bankers, few can see a way out of the current crises that doesn’t involve massive money printing. The US may have the lowest yields but it’s done the least about controlling expenditures so Washington will be printing right along with everyone else. Gold will benefit."

"The Dollar continues to be helped by its safe haven status. Every disappointment out of Europe has
generated upticks in the US Dollar Index which is now trading near a two year high".

.... read the entire 5 page analysis HERE

US Dollar Chart

USDollarIndexICEFuturesweekly



Gold & Precious Metals

US T- Bonds False Safe Haven - Official 0% Rate Policy is the Calling Card of the Gold Bull Market


Posted by Jim Willie via The Market Oracle

on Thursday, 26 July 2012 09:15

The USTreasury 10-year yield went below 1.4% this week. Some unenlightened celebrate the asset appreciation and point to a successful asset in performance in an otherwise dismal financial market. The Jackass said in the June 6th public article "USTBonds: Black Hole Dynamics" that such a success is a marquee billboard message of economic meltdown and systemic failure. As the rally continues, possibly the onliest rally outside of corn and soybeans in yet another disaster, people should focus on whether the systemic collapse will occur before the 10-yield hits 1.0% in my warning. Focus on four major points:

  • The unspoken effect of ZIRP (0%) is the powerful ongoing destruction of capital, as the entire cost structure rises
  • As equipment goes off line further, the USEconomy will weaken further, in a powerful vicious cycle
  • The official Zero Percent Interest Policy is the calling card of the Gold Bull Market, powered by negative inflation adjusted returns on savings
  • The USTBonds will fail from their own success, unleashing the Gold Price when the investment community and global creditors realize no further potential appreciation in the most massive asset bubble in modern history, supported by Interest Rate Swap derivative machinery. Money will eventually fly out of bonds and seek true safe haven.

Fear not. The USTBond 10-year yield (TNX) will not and cannot reach below 1.0% as all ponderings of a world with 0% on 10-year yield are divorced from reality. The Black Hole is working hard, gathering force, amplifying the gravitational field. It is happening right on schedule, no surprise here, a very easy correct forecast. The original supposed Flight to Safety in the USTBonds was totally fabricated and phony. As mentioned at least a dozen times by the Jackass, the last half of year 2010 saw the dutiful Wall Street outpost Morgan Stanley devote a fresh $8 trillion in interest rate derivatives, fully documented by the Office of the Comptroller to the Currency. Their reports never make the headlines, since they are so chock full of rancid fetid scum. As the TNX  marches down the swirling pathways within the vast USGovt debt sewer-like cisterns, their energy will be derived from the massive recession that has engulfed the USEconomy. Not only is the flight to safety in the USTBond complex a total fabrication falsehood, but the USEconomic recovery is also a fiction written on political propaganda posters. The followon flight to the bubble ridden USTBond is based upon economic wreckage and broad disintegration of the entire periphery and surrounding core to the bond market. The great sucking sound can be heard, much like during the non-earthquake in Virginia in September 2011. Experienced traders are looking at each other, in full recognition that the TNX rally is indeed an endgame signal.

Gold Is The True Sanctuary 

 

The concept of solutions for the global monetary system, the global currency system, and the global banking system, have become outright laughable and an insult to the intelligence of observers. The paper system has become weighed down by toxic assets to the point of rendering the entire system insolvent and sinking its future prospects. No new debt can repair and provide remedy for the fatally sick and current overly indebted dying system. The new trade settlement facilities are ready to put in place, based upon a Gold & Silver core. That word has come from a source directly involved in the preparation process for the Eastern Fortress. The trade notes will provide the lubrication to complete trade, which will have a hard asset core. The USDollar will gradually fade away from trade settlement, except for the United States, Canada, the United Kingdom, and possibly Southern Europe. The great tipping point approaches, whereby over half of global trade will be settled outside the domain of the crippled toxic USDollar. The foreign participants can no longer tolerate the bank bond fraud, the central bank debasement, and the usage of bank devices as weapons.

us-bonds-26 image004

Major changes are coming. A return to a certain type of Gold Standard is right around the corner, awaiting the Western collapse that is in a late stage of pathogenesis. The jumping brush fires that the London, New York, and Western European bankers must contend with will eventually envelop them, doling out massive smoke inhalation. Worst of all, the jumps will expose new areas of corruption every few weeks, sufficient to bring down the system. After all, it is a fiat faith based system. The faith has long ago vanished. All that remains is power politics, arrogance, and corruption. The new system will force the Gold price above $5000 per ounce on a conservative basis. It is all part of the plan not yet revealed. The Gold/Silver Ratio will revert to 20:1 in time. That translates for the math impaired to a $250 per ounce Silver price. These are conservative figures.

...read more about the Libor Scandal, Gold, Isolvent Banks, Interest Rates HERE

From THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.



Timing & trends

What's Going To Happen Next: Deflation Now. Inflation Later


Posted by Bill Bonner - The Daily Reckoning

on Thursday, 26 July 2012 08:30

Stocks down another 104 points yesterday…measured by the Dow.

What’s going on…? What’s going on?

That was a song by Marvin Gaye. It was also the question the interviewer asked. Followed by, what’s going to happen next?

But those are questions no one can answer. All we can do is guess…speculate…and wonder.

“Deflation now. Inflation later” is what we’ve been saying for the last 4 years.

The interviewer seemed happy with the answer. And the elaboration:

“Japan now…but don’t be surprised when we end up in Argentina.”

What do Japan…Argentina…and the US all have in common? They can print money. And when their backs are to the wall, that is what they will do.

But that’s later, remember. Right now, investors are lending money to governments at the lowest rates in history. They do not ask anything more than to get the money back. Eventually. And since the US and Japan can print, they are confident that they’ll paid.

But what about Argentina? Turns out, Argentina borrowed in dollars too…and pledges to repay, in dollars. So, you might think you’d get the same interest yield in an Argentine bond as an American one.

But what’s this? The yield on the ‘Boden,’ which is what they call Argentina’s dollar bonds, is over 17% — which is more than 10 times what you get from a 10-year US note. What gives? Simple. Argentina can print pesos. It can’t print dollars. So investors are afraid that when time comes for repayment, the Argentines won’t have enough dollars on hand.

No such problem in the US. And as long as this recession or ‘contained depression’ continues…investors will probably continue to treat US debt like a mattress. You put your money in. You can get it out when you want. You don’t make anything. But you don’t lose anything either.

But how long will this Japan-like slowdown continue, our interviewer wanted to know?

“Hard to say,” was the reply. In terms of private sector debt, the downturn is taking out an amount equal to about 10% of GDP every year. But there’s still the equivalent of 100% of GDP of excess debt left to go before we’re down to ’70s levels.

If that’s where it is going, we’ve got another 10 years of travel — at this rate.

Meanwhile, in the near term, it looks like the US economy is headed into another recession. That’s what usually happens when retail sales go down for 3 months in a row.

Seventy percent of the US economy is consumption. So, when the consumers stop buying, the economy goes down. Lakshman Achuthan, who runs Economic Cycle Research Institution, says he thinks a recession has already begun.

And when the economy goes down, generally, stocks go down. The little sell-off we’ve seen so far is nothing. The Dow hit 13,000 in 1999. It has gone nowhere since. And now, it should begin to sink.

As mentioned, retail sales are falling…
Corporate profit estimates are going down…
The Chinese growth rate has dropped 6 quarters in a row…
America’s corn and soybean crops have failed…
Family income is in decline; never before has it gone down over such a long period (12 years)…
US bond yields are at their lowest ever, with the 10-year at 1.39%.

Came the question: “Well, what should our viewers do?”

“Sell stocks,” was the answer.

Regards,

Bill Bonner
for The Daily Reckoning

275 inflation_deflation

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily ReckoningDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010. 

Special Report: Forget QE3 - America’s Going Bust, on the Road to Bankrupt Hell- If America had a credit card, it would get mercilessly cut up and thrown back in her face. The country’s basically broke and isn’t paying its debts. Harsh, but true. All of that - and how it could affect your family and your retirement - is revealed in this urgent video report. Don’t wait, watch now.



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Notes From Michael - June 28th The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety)...

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