Wednesday, 16 February 2011

The Super-Duper Super Cycle.

Baltic Dry Index. 1236 +30

LIR Gold Target by 2019: $30,000. Revised due to QE.

"If you bet on a horse that's gambling. If you bet you can make three spades, that's entertainment. If you bet cotton will go up three points, that's business. See the difference."

Blackie Sherrod, gambler.

According to the Gospel at Rio Tinto, the metals and minerals industry is in a super cycle unlike any other ever seen on planet earth before. The Super-Duper Super Cycle. Who am I to disagree. Stay long precious metals because they, thanks to the Bernank and Co. electronically printing up immense quantities of new dollars, are in one too.

"If you can count your money, you don't have a billion dollars."

J. Paul Getty

More mining demand in next 20 years than in past 10 000 – Rio

By: Martin Creamer 14th February 2011

JOHANNESBURG ( – Global demand will require the mining industry to mine, process and move more materials and minerals in the next 20 years than it has in the past 10 000 years, says Rio Tinto CE diamonds and minerals Harry Kenyon-Slaney.

“We expect consumption trends to lead to a doubling in the demand for iron-ore, copper and aluminium over the next 15 to 20 years,” says Kenyon-Slaney, who spoke to Mining Weekly Online on the sidelines of the Mining Indaba.

He says that the 21st century offers great opportunities for Africa and for mining companies to do business on the continent.

“Rio Tinto has a global head, but a local heart, and we will play a important part in responsible development in Africa.

LONDON, Feb 14 (Reuters) - Once again China's preliminary copper imports figures have surprised on the upside.

Aggregated imports of refined metal, alloy, anode and products were 364,240 tonnes in January, up 5.7 percent from December and up 24.7 percent from January 2010. Based on recent ratios between categories, that would imply an equally robust number of around 240,000 tonnes for imports of refined metal.

Analysis - China the wild card for commodity prices

By Pratima Desai LONDON Tue Feb 15, 2011 1:26pm GMT

----"Commodities are benefiting from the global recovery. The emerging world is still growing very strongly, and its demand for metals is still very strong," said Robert Talbut, chief investment officer at Royal London Asset Management.

Copper prices have surged on signs of strong manufacturing growth in the United States, the world's largest economy, and in China, which has accounted for a high proportion of growth in demand for commodities in recent years.

The metal, used widely in the power and construction industries, shot through the key $10,000 a tonne barrier earlier this month and on Tuesday hit a record high of $10,190 a tonne after below-consensus Chinese inflation data.

Corn prices have vaulted to 2-1/2 year highs above $7 a bushel, and Brent crude oil at above $100 a barrel is near its highest levels since September 2008.

"What we have clearly seen since the end of last year is economic improvement, specifically in developed economies," said Koen Straetmans, senior strategist at ING Investment Management.

-----But others say that price declines such as those seen after China raised interest rates on February 8 are buying opportunities.

"We don't think there is going to be significant global monetary tightening this year," Talbut said.

Accelerating food price inflation has been driven by surging prices for commodities such as U.S. wheat near 2-1/2 year highs, Arabica coffee reaching a 13-1/2 year peak and raw sugar its highest levels in more than three decades.

Staying with food price inflation, the private British weather forecasting service that got Europe’s and the UK’s winter forecast correct last October, thinks that China’s spring rains will come too late for most of China’s winter wheat crop. If they’re right, China faces the dilemma of going for massive imports to head off social disorder, or attempting to prioritize internal usage. My guess is that China will use some of its massive FX reserves to buy wheat, and that means sharply higher prices for the rest of us through at least mid year.

Rains May be `Too Late' for China's Wheat Areas, Forecaster Says

By Luzi Ann Javier - Feb 16, 2011 6:50 AM GMT

Drought in wheat-growing regions in China, the world’s largest producer, may persist for a further month and rain may come “too late” to avert damage to crops, pushing prices higher, British Weather Services said.

“We’re not looking at anything other than cold and mostly dry” weather, said Jim Dale, senior risk meteorologist at British Weather Services. “It’s probably going to do further damage, at least to the price in the short-term, because of the anxiety and the risks,” said Dale, who correctly predicted the U.K.’s coldest December on record and Argentina’s drought.

----“As we move into March, particularly the second part of March, we will see a break then,” Dale said in a phone interview from London, referring to a change in weather in China. “That may well be too late. The damage may have been done already, if not already now.”

British Weather Services is a London-based meteorological company that provides weather-related risk analysis to agriculture production, sports events and businesses.

Longer-term forecasts are not that reliable, said Yin Changwen, director of drought relief at Shandong’s department of water resources.

We end with the US real estate sector still acting for now, as a drag on the US economy. But eventually even this sector will bottom out and inch back into a economic positive. At that point in time, probably still a couple of years ahead, the real scramble for global resources will begin. The world economy will start firing on all cylinders again, awash in all the fiat currency created out of nothing thanks to all the QE programs. Stay long precious metals. After a rocky start, if we can manage to avoid “another Lehman”, this decade ahead will likely go down as the most inflationary decade of all time.

We're in the Midst of the Worst Housing Collapse in US History

By Michael Snyder, The Economic Collapse
Posted on February 7, 2011, Printed on February 15, 2011

We are officially in the middle of the worst housing collapse in U.S. history - and unfortunately it is going to get even worse. Already, U.S. housing prices have fallen further during this economic downturn (26 percent), then they did during the Great Depression (25.9 percent). Approximately 11 percent of all homes in the United States are currently standing empty. In fact, there are many new housing developments across the U.S. that resemble little more than ghost towns because foreclosures have wiped them out. Mortgage delinquencies and foreclosures reached new highs in 2010, and it is being projected that banks and financial institutions will repossess at least a million more U.S. homes during 2011. Meanwhile, unemployment is absolutely rampant and wage levels are going down at a time when mortgage lending standards have been significantly tightened. That means that there are very few qualified buyers running around out there and that is going to continue to be the case for quite some time to come. When you add all of those factors up, it leads to one inescapable conclusion. The "housing Armageddon" that we have been experiencing since 2007 is going to get even worse in 2011


"All of the government's monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold - but in the absence of any fundamental change in the nation's monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity."

Irwin A. Schiff

At the Comex silver depositories Tuesday, final figures were: Registered 41.92 Moz, Eligible 60.91 Moz, Total 102.83 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Today we cover a scare story in the WSJ. "Regulate our derivatives gambling contracts that nearly wrecked the whole global financial system and yet might”, say America’s too big to fail Wall Street degenerate gamblers and we’ll fire thousands of innocent American workers. Watch what will happen if they do. Tea Party anyone? Plus an added bonus, Ponzi fraudster Bernie Madoff says what most outside objective observers think, the banks had to know.

"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009

FEBRUARY 14, 2011, 10:24 A.M. ET

Corporate Lobbying Groups Attack Unintended Consequences Of Dodd-Frank Act

NEW YORK (Dow Jones)--Corporate groups lobbying to limit the sweep of new regulation on swaps users claimed Monday that the Dodd-Frank financial overhaul law enacted last summer could cut corporate spending by $5.1 billion to $6.7 billion and could threaten as many as 130,000 U.S. jobs.


But why pay the great Australian/British/American media moghoul good hard earned money to read his summary of the report. The whole report is available free here.

Derivatives Regs Could Bring 130,000 U.S. Job Losses


Key Findings

 Nearly 61% of survey participants report that proposed regulations would have a moderate (28%) to significant (33%) impact on the level of working capital required to operate their business; 18% say the new rule would have minimal impact; and 18% of firms remain uncertain about the impacts of Dodd-Frank.

 Of the 74 survey respondents, 66 provided data on the notional amounts of their derivative exposure. For these companies, the total gross notional amount was $422.2 billion, or $6.4 billion per company (median: $730.0 million)

 For the 66 firms that provided detailed derivatives data, a 3% margin requirement, assuming no exemptions, would result in aggregate collateral of $12.7 billion. On average this would be equal to $191.9 million per firm, or roughly 1% of revenue.

 Extending the analysis to the S&P 500 companies, this analytical note estimates that a 3% margin requirement on OTC derivatives could be expected to reduce capital spending by

$5.1 to $6.7 billion per year, leading to a loss of 100,000 to 130,000 jobs, including both direct and indirect effects.


From Prison, Madoff Says Banks ‘Had to Know’ of Fraud

By DIANA B. HENRIQUES Published: February 15, 2011

-----In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking noticeably thinner and rumpled in khaki prison garb — maintained that family members knew nothing about his crimes.

But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved.

-----“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail written on Jan. 13, he observed that many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere. “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market,” he wrote.

Mr. Madoff said he was startled to learn about some of the e-mails and messages raising doubts about his results — now emerging in lawsuits — that bankers were passing around before his scheme collapsed.

“I’m reading more now about how suspicious they were than I ever realized at the time,” he said with a faint smile.


“We have reason to believe you have committed an offence."

City of London. 1960s parking ticket.

The monthly Coppock Indicators finished January:

DJIA: +161 Down 10. NASDAQ: +228 Down 10. SP500: +161 Down 4.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. December is the seventh down month, but the downward momentum has virtually stopped. I would put on (purchased) synthetic double options here for a breakout in either direction. Professional traders would adopt much more risky granted option strategies.

No comments:

Post a Comment