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  • Pioneering English Channel Test Flight Reveals Take off for This Resource

    Pioneering English Channel Test Flight Reveals Take off for This Resource

    Business man hand drawing graph

    Ever since the 1950s humans happen to be flying over the world in planes with jet engines.

    That might be coming to an end sooner than you think. Electrical flight is now so sophisticated that a plane powered electrically is less than three years away from production.

    The technology behind this is going to run for years…and will almost certainly take one key resource with it.

    In case a person didn’t see the story, large European manufacturer Airbus has a 2 seat airplane called the At the Fan. A test pilot travelled it over the English Channel in July.

    It’s a model, but already Airbus has the day for production and commercialization after 2017.

    Here’s why this matters…

    Lithium-ion electric batteries allow the plane to travel. Admittedly, not far yet. However the Economist had this to say last week…

    ‘Lithium-ion ones allow the E-Fan to fly for about an hour with a 30-minute reserve. That may be fine for a flying training, but not for a passenger airliner. Electric batteries, though, are steadily enhancing and, because aircraft possess long service lives (the Boeing 747 first flew in 1969), aerospace engineers work on projects set nicely into the future.’

    Lithium ion battery usage is expected to increase dramatically with the electrification of transport. There is a good chance you already use lithium batteries in your mobile phone, laptop and many other devices.

    But the monumental demand for more lithium will come from electric transport and residential batteries for solar panels. Which has lithium on the brink of a boom that supply can no longer keep up with need.

    Tesla’s gigafactory has plans for lithium electric battery production on an astonishing scale. Tesla is planning to produce more lithium-ion batteries in this one factory than the entire world combined.

    Chris Reed, managing director of Neometals [ASX: NMT], sees the electrification associated with transport as a megatrend, and made the next decision:

    He’s divested his company of other commodities to focus only on lithium and titanium production.

    Neometals includes a market cap of $95 zillion and trades for 20 cents. It’s an explorer focusing on becoming a producer of lithium battery supplies. The company is forecasting lithium electric battery production to almost triple over the next 5-7 years.

    The most common lithium compound used in making lithium batteries is lithium carbonate. However lithium hydroxide is replacing this. It results in a far better battery.

    The US and Canadian government authorities are spending millions toward lithium hydroxide plants. Premium electric vehicle manufacturer TESLA motors has opted to use lithium hydroxide for their batteries.

    This offers Neometals well placed as it has trademarked a low cost technology for lithium hydroxide digesting. That sounds exotic and strange. It simply enables the company to produce the high quality lithium hydroxide which batteries require.

    That should provide the company an edge. It’s all area of the incredible tech breakthroughs we keep reminding our Cycles, Developments and Forecasts readers about as frequently as possible. There’s opportunities as well as development happening all over the world. You can see how to take advantage of that here.

    Even better for Neometals, the US dollar lithium prices are strong and the low Aussie dollar is helping them tremendously.

    But what is the chart telling you?

    Neometals Limited daily chart


    Source: STEX

    This company listed in Dec last year.

    You can you see how it trades below 4 pennies and just goes sideways through January through to March. Then in early April it broke over four cents and quickly made a run to a top of 11 and a half pennies.

    It’s possible as an independent investor to catch breaks like that in stocks like these. Again, are you able to see from the chart that from early August a person already knew good news was coming?

    It broke over the higher it made April. Begin to see the line we’ve put in the chart.

    They say you can’t forecast markets, but you can broadly know what’s coming for a stock, if you can read a chart that is. The market understood good news was coming.

    The stock price did make a significant low on August 25. This had little to do with NMT as a company along with a business.

    It was the 12.5 % plunge of the Dow jones Jones in the US.

    That’s history right now. What now?

    Well the company launched news on September 21.

    A new resource estimate on their Mount Marion Project reveals the 60% increase in contained Lithium.

    You can see the price has run up into the announcement.

    This is where charting analysis gets important. The fundamentals for Neometals as well as lithium looked good.

    But we industry the charts, not the story.

    And you just have to be just a little bit cautious now in terms of buying.

    If you are already holding NMT shares, you could do this your own risk analysis and choose if you should sell.

    That is not to point out that NMT won’t go higher. It’utes just that the high of 22 and a 1/2 cents is likely to a short term top.

    The market may at times move quickly, and increases don’t mean a thing until they’re in the pocket.

    Good buying and selling.

    Regards

    Terence Duffy and Callum Newman

    From the Port Phillip Publishing Library

    Special Statement: The End of Australia Vern Gowdie’s new book is called The End of Australia: The actual Story Behind Australia’s Economic Fall and What You Can do to Survive It. We are mailing free copies of this book to anyone who requests one online. It does not make for pleasant reading. But the idea is that you’ll be safer (and much wealthier) in 10 years’ time from receiving a more sober and realistic analysis of what’s happening…what happens next…and what you ought to be doing about it now… (more)

  • Investors Can’t Ignore This Worrying New Trend

    Investors Can’t Ignore This Worrying New Trend

    MM20150912a

    There has been a stunning rally within US stock prices.

    The US S&P 500 index is up 12.5% since the September low.

    Thats a good thing, right?

    Everyone wants stocks to go up.

    Thats true. In a way. But not things are as clear as it appears.

    Its great when stocks go upbut only if its for the right reason. And right now, stocks arent going up for the right reason.

    That makes this rally a dangerous rally. Well explain why

    As weve explained many times before, two things move stock prices: earnings and rates of interest.

    Everything in the market stems from that.

    In an ideal world, you should be able to look at a particular company and forecast its earnings potential. At the same time, you should be able to forecast future interest rate levels.

    You could connect those numbers into a fundamental spreadsheet, and it would give you a good idea about the value of a regular.

    But its not a perfect world. A person cant just look at company earnings. And its almost impossible to predict long term interest rate levels.

    But investors arent basing buying decisions on future earnings or interest rates. Theyre basing their buying decisions on what they think the US Federal Reserve will do next.

    Thats what makes this current stock rally so harmful. Because if the Fed says something the market doesnt like, stock prices can soon shift the other way

    Confusion from latest market action

    For evidence, take this headline through Bloomberg, Yellen Rate Remarks Halt U.S. Stock Rally as Dollar Strengthens.

    The Dow Jones Commercial Average closed down 0.28%. The S&P 500 catalog closed down 0.35%.

    It doesnt consider much to move the market these days.

    However, heres something that muddies the waters.

    The marketplace fell last night, supposedly on the prospect of a US interest rate rise in December.

    But, heres an example of traders reacting one way one day, and the other way another day.

    Below is a chart showing the probability of a US rate of interest change at the December meeting:


    Source: Bloomberg

    The probability of an interest rate change has climbed from below 30% within mid-October to 58% today.

    And what has happened to US stocks over the same timeframe? Check out this chart:


    Source: Bloomberg

    The S&P 500 index has continued to climb.

    This may all sound confusing. How can stocks fall upon news of a potential rate of interest rise after spending the previous fourteen days risingon the potential for an interest rate rise?

    It all comes down to different investor perceptionand a dose of reality for which an interest rate rise would really imply.

    Investors cant look past this chart

    Most people think that stock markets fall as soon as a central bank begins raising interest rates.

    The reality is frequently different. In most instances, stock prices rise. Thats because the central bank is actually raising interest rates due to a booming economy and a stock market thats already rising.

    In that scenario, traders are willing to look past the higher cost to service debt because they figure businesses can still grow income and profits.

    But heres a chart that should have bullish investors at least pausing for believed, if not outright ducking for cover:


    Source: Bloomberg

    The graph shows actual earnings per share with regard to stocks in the S&P Five hundred index. The chart dates back to 2006.

    What should difficulty investors the most is what seems to be a new downward trend with regard to earnings. Its a reasonably subtle alternation in the trend, but its definitely presently there.

    In the past investors were pleased to overlook rate rises due to growing earnings. But based on this chart, if traders try to look past an interest rate rise, they wont see rising earnings. Theyll see lower earnings.

    Will traders and traders still be therefore keen to buy stocks?

    Well see.

    Regards,

    Kris

  • The One ‘Resource’ the World Doesn’t Need from Australia

    The One ‘Resource’ the World Doesn’t Need from Australia

    Australia High Resolution Economy Concept

    Here we go again.

    It appears like only last week that A holiday in greece was in the headlines regarding elections and its debt problem.

    Now it is back.

    Alexis Tsipras is back as Greece’s pm.

    What will happen this time? It’s something otherwise for investors to worry about. However in truth, it’s just a sideshow. The actual worry for Aussie investors is right right here… in Australia.

    And there’s no sign it’ll get better anytime soon…

    From a report in the Age:

    ‘Foreign investors have turned particularly bearish on the Australian economy, with one describing it as “toast”, the National Australia Bank statement says.

    ‘Chief economist Ivan Colhoun said a recent visit to clients in Britain, continental Europe and the Middle East revealed “uniformly negative view on Australia’s prospects”.‘

    This is why we took the controversial decision to publish Vern Gowdie’s new book, The Finish of Australia.

    You can find out how to get your hands on a copy here.

    Cue the next recession

    Now, even though we see bad news ahead for the Aussie economy, seeing the actual mainstream take the same look at gives us pause for believed.

    But not for too long.

    It’s true that the actual mainstream usually arrives past due on the scene with things like this.

    But it’s not true to say that the actual mainstream is a counter indicator.

    Typically, the mainstream will grab hold of a story once the effect is already underway.

    Then, as the message (positive or negative) filters through to the actual mass public, you’ll understand the biggest reaction in the market.

    That’s simply because, until that point, the mainstream is either ignorant of what’s going on, or hasn’t taken it seriously.

    That’s where we are using the Aussie economy right now.

    Remember, it is a long time since the last Aussie recession. It’s a shame Joe Hockey won’t be around to determine the next one…


    Source: Bloomberg

    Also remember that foreign investors still see Australia as a resources economy. Foreign traders also see the Aussie dollar as a commodities currency.

    When the commodities sector was powerful, the Aussie dollar had been strong. When commodities weakened, so did the Aussie dollar.

    An undeniable link

    Today, the iron ore price is US$57.30 per tonne.

    That’s an extended fall from the giddy heights above US$180 per tonne in 2011.

    Here, we’ll show you another chart. If you need much more evidence of the link between the worth of the Aussie dollar and the price of commodities, this is it.

    Below is a chart of the Aussie dollar (yellow line) against the cost of iron ore (white line):


    Source: Bloomberg

    You don’t need to be Columbo to interpret which chart.

    Of course, some will state that the Aussie economy is evolving. Mr Colhoun, from National Sydney Bank, told Bloomberg:

    ‘At the present time, the improvement in the non-mining economy is more than outweighing the drag from mining, particularly in an employment feeling.‘

    That may be true. But how about in an ‘export sense’?

    That doesn’t seem therefore clear. Look, we’re not saying that the Aussie economy is just good for digging things from the ground and selling these to China.

    As someone who has followed small-cap as well as microcap stocks on the Aussie marketplace for more than a decade, we know there’s plenty of innovation in Australia.

    But digging up resources and selling them to China is different to innovating in technology as well as selling that technology to the world.

    The world doesn’t need Australia for this ‘resource’

    When it comes to resources, Australia is among the world’s leaders. If The far east wants iron ore, it has 2 options — Australia or South america.

    But when China (or any other country) wants a different kind of resource — technology — Australia isn’t the first place that springs to mind.

    China includes a home-grown technology industry. If it can’t get what it wants in your own home, it can get it from the US, Singapore, Hong Kong, Europe…and elsewhere.

    For years investors, commentators, and economists worried if China might adjust its economy towards the future. They may well possess a cause for concern. But here in Australia, folks need to worry about Australia’s ability to adjust.

    It may do so. However even if it does, it will take quite a long time. It’s why we recommend investors get hold of Vern Gowdie’s new book right now.

    It has the details on how things will pan out for the Aussie economy, and what investors (and non-investors) can do to prepare for it. Go here for details.

    Cheers,

    Kris

  • Why Adding China to the SDR Basket is Part of the Currency War

    Why Adding China to the SDR Basket is Part of the Currency War

    China stock market abstract

    China cut the central financial institution interest rate last week.

    For the 6th time this year.

    In addition, the center Kingdom lowered the amount of money banks must keep in reserves.

    The Peoples Bank of China (PBoC) is attempting to jump start their slowing economy.

    To put this in perspective, these are the most intense monetary policy measures through China since 2008. During the financial crisis, China pumped a massive 4 trillion yuan (AU$867 billion) into its economy.

    As an Aussie, you remember the benefits of which.

    The thing is, the rate reduce isnt the news you should be paying attention to.

    This is the in your face information that many mainstream analysts will crow regarding over the next week or two.

    However the real news for China, is hardly getting a mention.

    As the investing world was digesting the rate cut, Bloomberg dropped this nugget of information:

    International Monetary Fund representatives have told China that the yuan is likely to join the actual funds basket of reserve currencies soon, according to Chinese officials with knowledge of the matter, a move that may make more countries comfortable using the unit or even including it in their foreign-exchange holdings.

    The IMF has given Chinese officials powerful signals in meetings that the yuan is likely to win inclusion in the present review of the Special Sketching Rights, the funds unit associated with account, said three individuals who asked not to be recognized because the talks were private. Chinese officials are so assured of winning approval that they have begun preparing statements to celebrate the decision, according to two people.

    If you havent heard of Special Sketching Rights before, let me explain.

    Special Drawing Rights (SDRs), are a global form of money created by the actual International Monetary Fund. SDRs derive their value from a weighted average of a basket of major currencies.

    With SDRs, its important to remember they arent an actual currency. Rather theyre the claim on freely useable currencies for members of the International Monetary Fund (IMF).

    The idea of SDRs would be to supplement currencies reserves of a particular country. Or they can be used to provide additional liquidity if needed.

    But there are two key things you need to know about SDRs.

    First, they were created by the IMF in 1969, as a direct response to the limitations of gold as well as US dollar when having to pay international accounts.

    And second, they’re backed by nothing. Absolutely no bullion, no assets and no promise of the first born.

    SDRs are nothing more than a creation of powerful elites wanting to prop up the monetary program.

    Including the yuan in the SDR basket, means the yuans become a credible, international currency.

    And China, desperately really wants to be invited to sit in the grown-ups table.

    Even though its just a rumour right now, Bank of America Merrill Lynch estimates the actual yuan could have a potential weighting of 13%.

    At the final IMF review in December This year, the weighting share was split unevenly between four major foreign currencies: euro 37.4%, Japanese pound 9.4%, pound sterling 11.3% as well as US dollar 41.9%.

    The possible 13% yuan weighting would likely mean both the US dollar and the pound sterling lose a significant portion of their reveal.

    China tried to have the yuan included in the last IMF meeting. But the IMF knocked them back, explaining the yuan didnt satisfy the test of being freely useable.

    Freely useable can have two meanings. To some, freely useable means fully convertible. That is, a currency which is highly liquid and free from state controls. Based on that definition, the actual yuan isnt freely useable.

    China places tight controls on how its citizens use their money. Theres caps how much citizens can take out of the country. International companies must total extensive paperwork before getting any cash in. And people from other countries are restricted, or restricted to strict quotas when it comes to the countrys capital markets.

    These factors havent changed within much five years.

    But theres another meaning of freely usable. The IMF consider freely useable based on the utilization of a currency in worldwide transactions. And whether its broadly traded on global marketplaces. So broadly speaking, the yuan now meets the criteria. Being a completely convertible currency is only an advantage to be considered for SDRs.

    The thing is actually, the use of the yuan and state regulates over the currency havent changed much in five years.

    Adding the yuan to the SDR basket gives the currency the credibility its leaders so desperately want.

    Earlier in this year, there was some noise about China being added to the SDR basket. But the talk disappeared. After which China spent the better a part of 2015 devaluing its yuan against the US dollar.

    Jim Rickards the strategist of Currency Wars Trader stated many in the markets mistook this action as retaliation for not being added to the SDR basket.

    According to Jim thats not the case.

    Its a matter of when China will be allowed in the SDR basket. He reckons the process has been elongated. Telling subscribers:

    Chinas devaluation was not retaliation, however a necessary adjustment to the Feds disastrous strong dollar policy. These policy moves are of the most importance to the functioning of the international monetary system.

    They dont happen out of spite. These moves may surprise markets, but they are carefully worked out behind the scenes. The actual elites see it coming; the everyday investor does not.

    Jim says investors must be aware China will be included to the SDR basket at the IMFs Dec meeting this year.

    For investors, the end result is this:

    The implications for investors are profound. From right now until next March, China has a free hand in order to weaken the yuan somewhat further. That will put more deflationary pressure on the US, make the US dollar stronger, and result in added turmoil in US equity markets as earnings suffer due to the strong dollar.

    The move to add the yuan into the SDR container will create more market disturbance in the US. Dont think Australia is immune from this either. These types of behind the scenes movements are all area of the currency wars Jim analyses on a weekly basis. To discover how to capitalise on it, go here.

    Regards,

    Shae Russell

    Editor, Strategic Intelligence

    From the Port Phillip Posting Library

    Special Report: If you want to get ahead nowadays, it pays to have powerful buddies in high places. With this new advisory, youll make one. A portfolio manager at the West Shore Group, and adviser on international economics and financial threats to the US Department of Defense. Jim Rickards is no ordinary financial newsletter writer.?And Strategic Intelligence is no ordinary newsletter (more)

  • The Myth About Money, Credit and Gold

    The standard version of how money came to be goes like this: First, there was negotiate. (A handful of nails for a pint of ale!) Then, together came various forms of money. An evolutionary derby eventually crowned gold and silver as the supreme money.

    And finally, credit (or debt) was born. This is the pinnacle of man’s ascent from knuckle-dragging barterer to tie-wearing mortgage holder.

    It’utes a nice little story…except it’s completely wrong.

    Busting the ‘Founding Myth’ of Economics 

    ‘Our regular account of monetary history is actually precisely backward,‘ writes David Graeber in Debt: The First 5,Thousand Years. ‘We did not begin with barter, discover money and then eventually develop credit systems. It happened precisely the other way around.‘

    Graeber’s book Debt came out in 2011. I didn’t pay much attention to it then. After all, who needs to study another book about debt? But Graeber is an original thinker and offers a perspective you’ve probably not really seen, since Graeber is not an economist. So he draws from unfamiliar wells on the topic of money and credit.

    David Graeber is an anthropologist. He’s studied the record associated with human civilisations. It’s nothing like the actual economists imagine it. Graeber quotes from numerous economic textbooks to show how economists perpetuate the mythic progression of barter, money and then credit.

     (My very own favourite, The Mystery of Banking through Murray Rothbard, also opens with the same story.) But anthropologists have long known that the historical evidence does not assistance this view. It’s just that economists seem to have ignored this.

    Graeber calls the barter-money-credit story ‘the beginning myth’ of economics. Instead, what truly happened first was credit score. In small villages and communities, trade happened on credit. Graeber presents a lot of evidence about this, which I’ll skip in the interest of space.

    I’ll simply say it is convincing. And when you think about it, it’s hard to picture it happening any other way. ‘It’utes not as if anyone actually strolled into the local pub,‘ Graeber creates, ‘plunked down a roofing nail and asked for a pint associated with beer.‘

    No. What happened was a person ran up a tabs. When the occasion permitted, a person settled the debt in some way – perhaps with a bag of fingernails or tobacco or a chicken. All across the village, there would be numerous such ‘tabs’ or even, essentially, credits (debts) for all kinds of goods and services. People settled these debts in broadly agreed-upon methods.

    The Real Truth

    ‘To this day,‘ Graeber writes, ‘no one has been able to locate a area of the world where the ordinary mode of economic transaction between neighbors takes the form of ‘I’ll give you Twenty chickens for that cow.’‘

    When people resorted to barter, Graeber says, it was usually to conduct trade with strangers, or even with enemies. Negotiate is not even particularly ancient, but found more in modern times within societies familiar with the use of money but lacking actual currency or mintage.

    ‘Elaborate barter systems often appear in the wake of the fall of national economies,‘ Graeber creates. Russia in the 1990s is an example, when rubles disappeared. And often a kind of currency will emerge instead of the old, such as cigarettes within POW camps and prisons. But all of these are cases when people were already familiar with one form of money and learned to make do without it.

    Not all economists overlooked the historical record associated with anthropology. Graeber gives a tip of the limit to one Alfred Mitchell-Innes (1864-1950). He was a Uk diplomat, economist and author.

    While serving in the Uk Embassy in Washington, DC, through 1908-1913, he wrote two essays concerning the origin of money and credit for The Banking Law Journal. (I’ve read these essays, which you’ll find online. The first is ‘What is Cash?’ and the second is ‘The loan Theory of Money’.)

    Mitchell-Innes laid out the fallacies in the popular story. He relied on numismatics and the commercial history of ancient and medieval societies. He showed how credit came first. The sanctity of financial debt spun the wheels associated with commerce. Coins (and money) came later.

    ‘At this point,‘ Graeber writes of the time of Mitchell-Innes, ‘just about every aspect of the conventional story of the roots of money lay in rubble. Rarely has a historical concept been so absolutely and systematically refuted.‘ Yet the myth endured.

    Here, I am barely out of Chapter 2 in my summary of Debt. The book is actually 500-plus pages. I can’t do it justice here, but I’michael going to go to one conclusion that may alter how you think about cash. Graeber, though acknowledging that we can’t know definitely how money came into being, writes approvingly of one historical theory that says states created money to finance wars. As Graeber writes:

    ‘Say the king wishes to support the standing army of 50,000 men. Under ancient or medieval conditions, feeding such a force was an enormous problem… On the other hand, if one simply hands out coins to soldiers and then needs that every family in the kingdom was obliged to pay one of those coins back to you [to pay taxes], one would, in one blow, turn one’utes entire national economy into a vast machine for the provisioning of soldiers, since now every family, so as to get their hands on the coins, must find some way to contribute to the actual general effort to provide soldiers with the things they want.‘

    Admittedly a ‘cartoon’ version, Graeber says that cash markets do spring up around ancient armies. The creation of a national financial debt, then, is essentially a battle debt. A central bank is merely the institutionalisation of the needs from the state and the interests associated with financiers to keep the whole device going.

    When Nixon took the US off the defacto standard in 1971, it was in part to help finance the war within Vietnam. (Think, too, about what this means for gold. It is no more ‘real money’ compared to ink-stained paper governments turn out. If this sounds like right, gold became money just because states once placed it and made it money and accepted it to settle financial obligations and taxes. Otherwise, it’s just another commodity.) The US financial debt made possible a huge military-industrial complex.

    ‘The financial debt crisis was a direct result of the need to pay for bombs,‘ Graeber writes, ‘or, to be more precise, the vast military infrastructure necessary to deliver them.‘ Nixon ordered more than Four million tons of explosives dropped on Indochina. In a sense, the US military had been the only thing backing the US dollar – after that and now.

    ‘The U.S. financial debt remains,‘ Graeber writes, ‘as it has been because 1790, a war debt.‘ It is a debt that cannot, and will not, ever be repaid. It is simply rolled over indefinitely, until the day arrives when something else supplants the US dollar.

    In the last chapter (‘The Beginning of Something…’) Graeber concludes that people live in a new financial age, ‘one that no-one completely understands.‘ It is an age of credit score. But unlike the credit associated with old – dependent on trust as well as honour – it is one according to military power and financial debt servitude. It is one held with each other by the threat of physical violence.

    How this latest phase ends – as government debts continue to pile up – is the great financial question of our times. Graeber’s book is a thoughtful (and well-written) addition to the actual discussion. I enjoyed this. It challenges long-cherished assumptions as well as makes you think – the mark of the good book!

    Chris Mayer
    Contributing Editor, Money Morning

  • Should You Buy BHP Billiton At This Share Price?

    Should You Buy BHP Billiton At This Share Price?

    A promotional sign adorns a stage at a BHP Billiton function in central Sydney

    What happened to the BHP share price?

    BHP Billiton [ASX:BHP] was once one of the safest bets on the Australian market. Long term investors prided themselves for holding a business this size and with such diversification.

    Looking back, that perception was false. BHP is a diversified company, but it’s still concentrated in the mining sector. Simply because commodity prices move together, the fact that BHP is diversified throughout different commodities doesn’t really help.

    The problem with the mining sector

    The trouble with the mining sector is actually commodity deflation. It’s been the problem for several years now. That deflation stemmed from China’s structural challenges, which has been overcapacity at a time of weakening global need.

    The western media is all more than China lately. They have helped to spread overly bearish emotions. They’ve successfully scared traders into believing China and emerging markets are collapsing.

    First of, the media and the market are completely behind the curve upon China. I was attending strategy conferences in China in as early as 2011-2012, listening to government authorities talking about structural reforms.

    The fact that China would slow down would be a well-known fact. I was an economist within the commodity sector in China at the time and commodities were already in deflation.
    Nothing you’re hearing now is new knowledge. In fact, it’s are deceptive.

    What should you do with BHP shares now?

    There is a government-engineered structural slowdown within China. While that is happening, the actual overcapacity situation is slowly becoming digested. Also, we have a demand side problem. This unpleasant adjustment will continue. But I may already see the end from the tunnel.

    There is no doubt BHP is at a cyclically low level. That means you will see opportunities in rebounds. It will be an opportunity for short term investors/traders.

    For long term traders, the ongoing structural change is painful but we are not far from the bottom. Why? Because the commodity basket will complete its repeating adjustment soon. This can sound contentious, but I visit a slow but certain reflation in commodity prices after the present slump.

    Ken Wangdong+
    Emerging Market Expert, New Frontier Investor

  • How to Profit from the Currency Wars

    How to Profit from the Currency Wars

    canada_money

    On 14th January this year, one of the greatest battles in the long running worldwide currency wars broke out.

    It took most investors by surprise.

    And for many investors, not only made it happen take them by surprise, but it ended up costing them millions, and perhaps, billions of dollars in losses.

    That event, that major battle, was when the Swiss National Bank ended its peg to the euro in January this season.

    The Swiss had maintained a peg to the euro for three many years. Why would they do that? It had been all due to the European Main Banks (ECB) policy of devaluing the dinar through money printing.

    The ECB desired to devalue the euro in order to help boost exports. Its the same reason why the US wanted to devalue the united states dollar by printing more.

    The trouble for Switzerland is that a devalued euro would mean an increase in value for the Swiss franc. The Swiss feared that would result in a drop in exports and harm the Swiss economy.

    So the SNB pegged the actual Swiss franc to the euro. This meant that as the ECB printed pounds to devalue its currency, the SNB would have to actively sell Swiss francs in the foreign exchange market, to push down the value of the franc.

    That too would involve printing money.

    But suddenly, in The month of january this year, the SNB gave up. The actual ECB announced that it planned to open up a new money printing program, and the SNB realised it simply couldnt keep pace.

    So they decided to unpeg the Swiss franc from the dinar. The impact on the currency markets had been huge. As Business Insider reported at that time:

    Hedge fund manager Marko Dimitrijevic is shutting his largest hedge account, Everest Capitals Global Fund, having lost almost all its money following the Swiss National Bank (SNB) scrapped its three-year-old cap on the Swiss franc against eh euro, Bloomberg news documented on Saturday.

    Citing a person acquainted with the firm, Bloomberg said the actual fund had been betting that the Swiss franc would decline. The actual fund had about $US830 million in asset at the end of 2014, according to a client report cited by Bloomberg.

    The chart below gives you an idea to when the SNB abandoned the peg. See if you can spot it


    Source: Bloomberg

    The Swiss franc appreciated by 23% over the euro within 24 hours.

    It was a stunning move. As the report above illustrates, some funds lost a bundle on it.

    But, not everyone lost. There were plenty of savvy investors as well as institutions that made a eliminating on the SNB move.

    As Fortune noted simply two weeks later:

    Banks are finding their own way around the Volcker Rule in some unexpected ways. JPMorgans recent windfall off the Swiss franc and Citis loss is testament to that fact.

    Earlier this month, traders at the nations biggest financial institution made $300 million in one day time, following news that the Switzerland central bank was taking its cap off the franc. Which caused the currency in order to soar, and JPMorgan traders took the move, literally, to the bank.

    Why did the Switzerland franc move this way? Because of the global currency wars.

    Now, events of this particular extreme nature are abnormal. They dont happen all the time. However other events, mostly of a smaller nature, do happenand these people happen more often than you may think.

    And not only to the currency markets either.

    Look in the following chart. Its of the precious metal price in US dollars.

    From past due December to mid-January, it moved nearly 11%.


    Source: Bloomberg

    Why did gold proceed ballistic like this? Because of the global currency wars.

    Cop a look at another graph, this time of the Brazilian actual. It moved 27.8% in only two months:


    Source: Bloomberg

    Why did this occur? Because of the global currency conflicts.

    From March to April this year, Brazils IBovespa index gained 20.2%.


    Source: Bloomberg

    Why did it do that? Because of the global currency wars.

    In 2013, Indonesias main stock index fell 23.6% within three months. Why? Because of the global currency wars.


    Source: Bloomberg

    Look at any of the charts Ive shown you and youll see big price movements more than relatively short periods of time. A number of these are a result of the global currency wars.

    Its these price movements, related to the currency wars, which were targeting with a brand new trading consultant, Currency Wars Trader.

    Just note one thing. Even if this service aims to help folks profit from (or protect their own wealth from) the global currency wars, it doesnt involve forex trading.

    This new service aims to help investors and traders profit from the actual currency wars without actually trading in currencies themselves.

    Its a distinctive trading service. It doesnt involve technical analysis. And if you so choose, it doesnt have to involve leverage either (although if you want to sensibly employ influence, well show you how).

    And its not fundamental analysis in the traditional method either. Our strategist and experts arent looking at company balance sheets and profit and loss statements as youd expect.

    This is what I call macro-fundamental analysis. Its exploring the big economic news and events, looking for hidden triggers within the market, using our strategists unique approach.

    After the strategist offers identified these triggers and signals, its then up to the analysts to apply that to some specific investment idea.

    That calls for buying or selling a particular type of investment that they believe is best positioned to profit the most from an expected move.

    Its sure to be controversial. This is a strategy that until now has been unavailable to the ordinary investor. But now, as the global currency wars gain maintain, and have an ever greater influence on the markets, its only right that we make this strategy available to you now.

    Cheers,

    Kris

  • This is What it Takes to Make Light-Speed Stock Profits

    This is What it Takes to Make Light-Speed Stock Profits

    Business man hand drawing graph

    Blue chip stocks are loved by the masses. Almost every extremely fund in Australia will have a large selection of — if they’re not completely comprised of — blue-chip stocks.

    These companies are reliable-ish. They’re usually predictable, they get a large amount of coverage in the mainstream press, and over time they perform pretty well.

    Investing in blue chip Stocks you’d hope to obtain returns per year like 8-9% perhaps if they’ve had a great year you might get 12-13% for example.

    The table below shows the overall performance of the 10 biggest stocks on the ASX for the 2013/2014 financial 12 months.

     

    Company Sector Share price growth
    Westpac (WBC) Financials 17.6%
    Woodside Petroleum (WPL) Energy 17.3%
    Commonwealth Bank (CBA) Financials 16.9%
    ANZ Financial institution (ANZ) Financials 16.7%
    BHP Billiton (BHP) Materials 14.4%
    Rio Tinto (RIO) Materials 13.3%
    ASX 200 INDEX 12.3%
    NAB (NAB) Financials 10.4%
    Telstra (TLS) Telecoms 9.2%
    CSL (CSL) Healthcare 8.1%
    Woolworths (WOW) Retail 7.3%

     

    This table was put together by the Commonwealth Bank within their ‘MyWealth’ section of their website. In this particular article they also included this little gem of a quote:

    ‘The ‘Blue Chip’ companies in the table above tend to be popular among investors because they’re known to them, often pay dividends and are generally perceived to be more steady than smaller companies.‘

    Interestingly they throw in the word, ‘perceived’. The reality is azure chips also come with a reasonable degree of risk. All purchase of stocks does.

    And it forces to you think about where your own risk/reward trade off point exists. How much risk are you willing to accept with regard to return? Perhaps more importantly, are you happy to accept boring returns with an element of risk?

    Or would you like life a little more around the wild side? A little more exciting? A lot more opportunity for light-speed stock increases?

    The facts don’t lie when it comes to multiple digit returns

    The CBA article continues to explain that the ‘best performing company around the ASX 200 during the 2013/14 financial year was…Northern Star Resources‘.

    Their overall performance over the period was 116%.

    That’s great. That’s really good.

    And you’d be pretty happy if you had Northern Star Sources [ASX:NST] shares.

    But of the 200 firms that make up the ASX200, Northern Star was the only company to have triple figure gains within the year.

    That’s right, for that financial year your chances of an ASX stock within the top 200 companies achieving over 100% gains was one in 200.

    More recently there have been Fifty-one companies make over 100% gains in the last 12 months. I’m not making this upward. This is fact. Indisputable fact.

    For example as of 31 This summer, Hansen Technologies [ASX:HSN] was up 108%. Impedimed Ltd [ASX:IPD] was up 286%. Aeris Environmental [ASX:AEI] had been up 328%. And Alexium International Group [ASX:AJX] was up 702%.

    There are 47 others but I won’t lose interest you with them all. So that as I’m sure you’re well aware, past performance is certainly no sign of future performance.

    Of these 51 though, there are a few azure chips. Well two to be precise. Blackmores [ASX:BKL] and Qantas [ASX:QAN].

    Now you’d never have thought Qantas would be up 180% to 31 July this year. But falling fuel prices certainly possess helped the embattled airline.

    Anyway, that’s two blue chip businesses of 51. In other words, the bulk of the companies making turbo charged returns in a short space of time aren’t blue chip businesses at all.

    Many of them have market caps of tens and hundreds of millions. Not billions, much like your typical ‘safe’ Blue Chip stock.

    Here’s the thing. You might like azure chip companies. The single number growth or at best low double digit growth companies that from the ASX 200, ASX100 or ASX50 might be right up your alley.

    You might such as the slow and steady approach to things. Dull, simple, reliable, sluggish. That might be your game. And credit to you, if that’s what works for you that’s absolutely fine.

    But sluggish and boring isn’t everyone’s game.

    Small-cap stocks make for a thrilling ride

    For some people, fast, exciting, foot-to-the-floor may be the way they want to live their life, and make their money. Of course there’s no such thing being an overnight success. And making a million dollars overnight is the stuff of 2am tele-sales ads.

    But the proof is there that you can invest in companies that can make triple digit returns in 12 months. Longer term, two, three years later on those triple digit returns can turn into quadruple digit returns.

    And in the right companies, using the right strategy and the correct products and technologies perhaps one day just a few of them will turn into quintuple digit gains.

    You might say that’s impossible. But people thought that about Cisco, Amazon, Apple and Oracle during the ’80s and ’90s.

    Now when it comes to Aussie stocks, the fun, the excitement, the Nitro power stocks tend to be small-cap stocks. These are the companies that would be the real up and comers on the ASX. They’re often the kinds of companies that you’ll never hear about from CBA research. You’re mainstream broker often won’t go near these simply because they come with a high level of risk.

    That’s the trade-off you have to make when you start to think about small-cap stocks. You might be in collection for some unbelievable gains. The type of gains it takes most blue chip stocks five, Ten years to make (some will never help to make triple digit returns). But they’re also in line for some crazy fluctuations.

    That means a stock could shoot up 20% in a day. It can also imply the stock sheds 20% in a day. And then bounces back. And then goes up, down, up again and then it could shoot off. It is a genuine rollercoaster ride.

    I’ve observed one company in my expense advisory service rise 16% in a week, in order to fall 11.5% the week later on. It then fell another 22% in the next two months. And in the last month it’s gained 128%.

    That’s the kind of face-melting pace these small-cap nitro stocks can move in.

    If you ignore the potential associated with small-cap stocks on the ASX you’re potentially missing out on some of the biggest and finest investment opportunities there are in Australia.

    But as I said earlier, it’s not for everyone. Simply, you’ve either obtained the intestinal fortitude for this, or you don’t.

    Regards,

    Sam

  • The COMEX Gold Shortage

    The COMEX Gold Shortage

    ‘Remember, remember the fifth of The fall of.’

    Earlier this week, November Fifth, was Guy Fawkes Day in England, which commemorates when Guy Fawkes (who else?) tried to inflate Parliament in 1605. More on that in a moment, because right now that’utes the least of our worries!

    Today we have larger fish to fry….

    There’utes a stunning development in the world of precious metal buying and selling. In fact, there’s a huge gold shortage across conventional markets. This shortage may be a precursor for a cost melt-up. Let’s look at some charts.


    Click to enlarge

    What’s going on? What do these graphs mean?

    Above you’ll see ten years’ worth of visual data concerning gold trades on COMEX, which is a good exchange that offers warehouse services for clients who trade metals. That is, COMEX stores precious metal at designated sites, on behalf of its clients. When you read about ‘gold trading’, this is the gold that will get traded.

    Let’s back up for a moment. COMEX holds metal on deposit to settle futures contracts, in order to back-up buy/sell deals and to secure exchanges between parties. On occasion, gold gets withdrawn from COMEX warehouses. (Too many occasions in current months, as we’ll observe below.)

    As part of its ‘exchange’ service, COMEX problems daily reports that detail its stock of gold, silver, copper, platinum, palladium and more. That is, COMEX states exactly how much metal is stored in its industrial environments ., and how much metal is available for trades.

    In general, the idea behind daily COMEX reports is perfect for traders to know how much metal is there to support futures agreements. The data also give understanding of what large gold (along with other metal) owners are doing in terms of trades and settlements, also as how much metal has been drawn out for delivery. So far, so good.

    Take a look at the top chart where it shows the price of gold (in yellow) and also the ‘open interest’ in gold agreements (in dark blue) through 2003 to the present. This reflects more and more players getting into gold commodity during a decade-long price rise.

    The open interest designation reflects the number of choice and/or future contracts that are not closed out – thus leftover ‘open’. Note a general rise in open interest between 2003 and Next year, and the decline over the past 12 months. Makes sense, right?

    Now take a look at the second graph. It shows how much gold is represented by the open interest. That is, how much precious metal it would take to satisfy all the contracts out there, if people really demanded delivery.

    Back in 2011, the number was north of 60 million ounces, or about 1,700 tonnes (metric tons). Today, it’s just less than 39 zillion ounces, or about 1,100 tonnes. One way or another, it’s a lot of gold, to be certain.

    Then again, most traders just offer ‘paper gold’ and not the real thing. Many people trade gold for the dollar-side of the deal, not because they want to take delivery and hoard gold in their vaults, let alone bury it in a treasure chest in the back yard. Still, the graph shows how much gold is in play just via COMEX.

    Big Physical Gold Shortage Developing

    Now look at the bottom two graphs. Note the second in order to last graph. It displays an abrupt drop in ‘registered’ gold stocks over the past six months. That’s gold eligible for COMEX delivery. The graph distinctly shows quantities shrinking fast, to about 660,Thousand ounces – which is the point of drying up, certainly as compared with average levels over the past ten years approximately.

    Finally, take a look at that bottom graph. It reflects the number of ‘precious metal contract’ investors with a claim on each potential COMEX ounce. Looking back in order to 2003, COMEX data reflect between 10 and 20 possible ‘owners’ for each ounce, with an excursion as much as the 30-range in 2011.

    But look what occurred in the past few months. The number of ‘proprietors per ounce’ has spiked up to an unprecedented 55! In other words, in the event that fewer than 2% of COMEX gold agreement owners hold their jobs to expiration, and then ask for delivery, COMEX warehouses would be cleaned out. The other 98% of gold contract players would be left holding a clear bag.

    What does this mean? COMEX numbers clearly show a severe squeeze on physical gold. The gold that backs ‘trades’ is at an all-time low! The registered gold inventory is at crucial shortage, unprecedented since the times of $300 gold back in the early 2000s.

    Where’s the Gold?

    Meanwhile, the well-publicized, ongoing disgorgement through ETF plays, such as SPDR Precious metal Shares (GLD) is NOT going into stockroom inventories, certainly not at COMEX. Actually, the evidence is that this gold will refiners in Europe, and thence to China and other gold-buying locales. The actual GLD outflow is no longer available to Traditional western investors – not at current costs.

    Here’s a trend that is NOT your own friend.

    The gold is disappearing, and I strongly suspect that it won’t come back in our lifetimes. National wealth – in the form of gold – that required generations to accumulate is leaving our economy. It’s migrating east.

    Should we be worried? Well…it will only take a small change in ‘gold psychology’ for more and more Traditional western investors to figure out what’s happening. The smart ones will demand delivery of physical metal, and the sooner the better. Only then do we could see a price melt-up for gold unlike anything in modern history.

    What should you do? Should you own physical gold, smile and hang on. If you don’t own physical gold – or silver, platinum or palladium – acquire some.

    If you own mining shares, hang on too. We’re in a bottom stage of the past year’s share price melt-down. Long term, valuations will rise.

    Don’capital t Be Misled by the Laying Liars of the ‘News’

    Meanwhile, watch the news. You’ll observe and hear ‘big names’ in politics, economics, monetary policy, the actual mainstream media and big banks continue to bad-mouth gold. At root, they lie! They are lying liars! Oh, they lie such as dirty rugs! These lying honchos tend to be desperate not to let the news of a physical gold shortage become too well-known. They cannot afford – in almost any sense of the word – for large amounts of investors to understand how poor things are with gold inventories.

    This physical COMEX gold shortage could quickly change into a widespread run on precious metal. When more and more people figure out how risky is the situation with physical gold, the metal markets can come afire like Yellowstone Park, burning to the ground back in 1988.

    Back to Man Fawkes

    One last point, concerning the Fifth of November. Guy Fawkes had been one of the central players in the Uk ‘Gunpowder Plot’ of 1605. Fawkes was an British Catholic who joined a plot in order to assassinate King James I (of Bible-fame), and then restore a Catholic monarch to the Uk throne.

    Fawkes and his co-conspirators placed barrels of gunpowder beneath the House of Lords, intending to take out much of the British management in an explosion. However, someone tipped-off the king’s inner circle, and government bodies searched Westminster Palace during the early hours of Nov. 5, 1605.

    The constables discovered Fawkes guarding explosives. Fawkes was arrested, questioned and tortured until he broke as well as spilled the beans about his plot. Fawkes was sentenced to be hung, dragged behind the horse and cut into four pieces on Jan. 31, 1606 – speedy justice, back then – however jumped from the gallows rather than give their English captors the pleasure of torturing him to death.

    Today the actual name of Fawkes is synonymous with the actual Gunpowder Plot. In Britain, they commemorate Guy Fawkes Day by burning the man’s image in effigy as well as setting off spectacular fireworks.

    But when COMEX gold runs out, we’lmost all have bigger things to be worried about than plotters wanting to blow up the homes of Parliament. Beware, beware…

    That’s just about all for now. Thanks for reading.

    Byron King
    Contributing Editor, Money Morning

  • This Big Myth is Set to Destroy the Australian Economy

    This Big Myth is Set to Destroy the Australian Economy

    Currency appreciation concept

    There’s a big myth in the market.

    It’s the myth most central banking institutions believe.

    Governments believe it too.

    Heck, even most investors can’t help but believe it’s true.

    It’s a misconception that’s helping push the Aussie economy towards an inevitable recession…

    Perhaps you’ve noticed. A war has raged for the past six years.

    It was not a conventional war.

    No one’s shooting, and no one’s being shot.

    It’s not that kind of war. This is a different war. It’s a currency war. And after six many years of being mostly on the outside, Australia is now at the centre of the next battle in these currency wars.

    The Currency Wars hit Australia

    The US deliberately started the global forex wars when it decided to cut interest rates to zero and print trillions of dollars.

    The plan was to make it’s products cheaper for international buyers.

    But others soon realised what game the US was playing. So they started their very own ‘race to the bottom’.

    Each nation has determined that if they can devalue their currency enough, they’ll export much more, and it will see them on the path to success.

    The latest nation to fire a shot (more like a bazooka) was The far east.

    It devalued the yuan in August. Many analysts blame this devaluation for sending the world’s marketplaces into a tailspin.

    The result of all this is the fact that, as other currencies possess weakened, the US dollar has strengthened. That has forced down the prices of all US-dollar priced goods.

    And that’s forcing down the worth of the Aussie dollar as well.

    It’s that action which is getting the biggest impact on the Foreign economy. And unfortunately, many in the mainstream believe it will be good news for Australia. However it won’t be. Here’s why…

    Why a lesser Aussie dollar won’t save Australia

    The biggest problem for Sydney is that, aside from resources as well as agricultural products, the country does not export much.

    And because commodities prices have fallen so much more than the Aussie dollar has fallen, a lower Australian dollar won’t help Australia’s exports.

    Even a 5% increase in iron ore export volumes (a new record), isn’t enough to make upward for the sharply lower price associated with iron ore.

    Here, this table explains what we mean:

    Iron ore export (tonnes) Iron ore price (USD per tonne) Exchange rate Australian buck value
    July 2014 37.4 million $86 0.93 $3.5 billion
    July 2015 39.2 million $52 0.73 $2.8 billion
    Change +1.8 million -$34 -0.20 -$700 million

     

    You see, iron ore exports improve by 5%…and the Aussie dollar falls by 21%…but it nevertheless isn’t enough to counterbalance the 40% drop in the iron ore cost over the past year.

    It means the Australian dollar value of iron ore exports is down by $700 zillion over the past year.

    That’s a heck of a big difference. That’s $700 million less dollars entering the Foreign economy.

    That’s less money deposited within Aussie banks. If the banking institutions miss out on these deposits, this potentially means the banks cannot lend as much to debtors.

    $700 million fewer dollars coming into Australia potentially means fewer jobs or lower wages. And it’s no coincidence that Australia’s jobless rate has risen after the commodities boom led to 2011.

    End of boom means end of jobs

    The chart beneath shows the Aussie joblessness rate since then:


    Source: Bloomberg

    Whatever the popular dopes say, the Aussie economic climate is in trouble. Business expense is falling, and during the final quarter, the Aussie economic climate grew at a slower rate than the Greek economy!

    That ain’t good.

    That’s why it’s well-timed we’ve published Vern Gowdie’s new book, The End of Australia. You can find out how to get a copy of it here.

    Vern lays out in precise detail how Australia got into this chaos, what the consequences will be, and the opportunities it will provide later on.

    It’s a must-read, written in simple plain English that any investor from a complete novice to a seasoned veteran can understand.

    The Aussie economy is in trouble. This is the time to find out why, and to observe what you can do to protect your wealth. Go here.

    Cheers,
    Kris

  • Optimists Make MORE Money

    Optimists Make MORE Money

    Let me start with a question.

    Your vehicle has been working without any sign of trouble for any year. Do you expect it to keep running smoothly…or would you worry about a breakdown?

    Most people most likely wouldn’t give it a second believed. Chances are the car will keep working for a lot longer. Something could go amiss tomorrow. But odds are it’s not going to.

    Many things in life are the same. There’s a natural tendency for events to follow a steady course.

    Sure, the cycle will change — life has its ups and downs. But a change in fortune can take a while.

    The stock market is no different. It can remain bullish or even bearish for lengthy periods. Also can individual stocks. The company’s share price can rise for years.

    Think about this. Suppose a regular has been on the rise. It’s just hit a three year high. What’s more, the share price is up at least 300%. Would you consider buying this particular stock?

    People typically view this in one of two methods. Some will look at the past as well as project it forward. Other people will think the shock has run too far as well as believe it’s about to fall.

    Which do you thinking is the better option for making money?

    I’ll answer this in a moment. But first have a read of this. It’s an email I obtained last week.

    ‘I have been reading the Quant Trader for two weeks now. To be honest, it is not what I thought. So far each of the buy indicators I have received have been in a record high on the day of the signal.

    ‘From reading the lead up to purchasing, I was of the opinion the actual Quant Trading computer was picking up trading type stocks in a low, not at a record high.

    ‘I have paid a lot of money for what I feel is high risk buying at record highs. I am more comfortable buying at a more speculative level then this danger level.‘

    Member, Tony

    Let me start by stating this. Quant Trader identifies stocks from various stages of a pattern. Some will be at all-time highs while some will be just beginning the recovery process.

    Quant Trader is also a medium phrase strategy. It’s not aiming for increases over one or two days. The aim is to capture trends that last many months.

    That said, this is a great question. I think the reasoning would make sense to many people. It seems prudent to avoid stocks after a big run.

    But there’s a problem. Doing this filters out many of the best performers.

    Here’s the one thing. A stock trading at a multi-year high is clearly a strong stock. But strength isn’t a good indicator of approaching weak point.

    Sure, all bull markets finish. A well performing stock might break down tomorrow — but it probably will not. The path of least resistance is up.

    Let’s go back to my earlier question. Who’s more suitable for making money? The person that can project forward, or the one who thinks the market has run too far?

    Well, it’s the former. This type of mindset makes it easier to ‘jump aboard’.

    You see, the odds favour a trend continuing. And some continue for a very long time. Actually, trends often run beyond almost anyone thinks possible.

    Now allow me to ask this question again.

    Suppose a regular has been on the rise. It’s just strike a three year high. What’s more, the share price is up at least 300%. Would you consider buying this particular stock?

    Think about this for a moment. What’s your natural tendency?

    I suspect many people would think they have missed it. Some might even be thinking about shorting opportunities.

    Rather than speculating what might happen, I’ve done some back-testing. It’s always good to pull a few statistics into a discussion.

    What Used to do was modify Quant Trader‘s algorithms. I set two new criteria for a buy signal:

    1. A stock must be at a three year high (or greater)
    2. It must be at least 300% above its 3 year low

    So what do you think happens?

    It’s actually quite interesting. Have a look at the graph below.



    This shows the hypothetical profit from the strategy. The date range is 1 January Two thousand to 24 April 2015. This assumes putting $1,000 on every buy signal.

    Buying stocks at a multi-year high is a effective strategy. You’ll also notice the strategy’s earnings are near an all-time-high — something that can’t be said for the All Ordinaries.

    So don’t be concerned about buying at a multi-year high — the trend is on your side. You’ll find it often pays to be positive when others are nervous.

    Next 7 days I’ll show you what happens when you only buy stocks buying and selling at a three year reduced. I think you’ll find the results fascinating.

    Until then,

    Jason, McIntosh,

    Editor, Quant Trader

    Editor’s note: Quant Trader’s algorithms have detected a number of new opportunities. They are all trending higher, and have the potential to run a long way. You’ll be acquainted with a few of the companies. But many tend to be less well known. These are often the ones with the greatest upside. Find out more here.

  • China has the USA in its Crosshairs – Buy Gold and Silver Now

    China has the USA in its Crosshairs – Buy Gold and Silver Now

    You should stock up on gold as well as silver while you can – in particular, physical precious metals and high-end mining gives.

    In the short and medium terms, prices of precious metals will do anything they do. Up a little, lower some and sideways for a while. Day to day, you just never know. The price chart bounces around. But long term? Hold gold. Hold silver.

    In fact, today there’s more reason to hold precious metals…

    Why buy silver and gold, especially after the sell-down of the past couple of years? Start with the fact that Chinese are purchasing lots of gold. Lots! Here’s the latest chart of Chinese gold imports from Hong Kong, showing strong, steady build up over the past two years:


    Click to enlarge

    Since September 2011, China brought in 2,116 tonnes of gold. Therefore in just two years, China has imported just under the equivalent of the entire gold reserves of France (Two,435 tonnes) or Italy (Two,451 tonnes).

    Or look at it this way. While Western buyers and monetary players disdain gold and sell it – for example, while big Western stakes like SPDR Precious metal Shares (GLD) are liquidating gold holdings – the Chinese are buying gold, and more.

    Evidently, the People’s Bank of China (PBOC) is making great on its quietly mentioned long-term goal of creating a gold-backed national currency. That, and China is actually making all manner of bilateral trade deals with a number of nations, in which nations trade with China using their own national foreign currencies and the Chinese renminbi. This slashes the US dollar out of the cycle.

    So why are the Chinese so wanting to buy and import gold? Why make bilateral trade deals? Why don’t the Chinese want to use the dollar? Don’t china know that yellow metal is just a so-called ‘barbarous relic’ in the eyes of many Western economists and political gurus?

    Recently, we had a stunning glimpse of how the highest amounts of policymakers think in China. Basically, top echelons in China are worried about the overall security of america dollar and, by extension, China’s vast holdings of dollar-based assets.

    Strong Rhetoric to ‘De-Americanize’ the actual World

    We live in ‘alarming days,‘ according to articles this week in Xinhua, China’s complete news agency of report – in that it represents the views of the ruling Communist Party.

    Apparently, the Chinese language chose an opportune time to drift a trial balloon that we’ve been awaiting for quite some time. Communist Party management wants to get a sense of exactly what the world thinks about taking on the US – and the almighty dollar – several notches. As I said, buy silver and gold. Beat the rush.

    Indeed, Xinhua minces no words: ‘The destinies of others are in both your hands of a hypocritical nation,‘ meaning the US, of course. And that’s just the start. There’s more, also it plays out like a barbed-wire back rub.

    Chinese editors at Xinhua come down hard on ‘cyclical stagnation in Washington‘ over the federal budget. The US government has repeatedly failed to bring spending and debt under control. This has, according to Xinhua, ‘left numerous nations’ tremendous dollar assets [China’s, certainly] in jeopardy and the international community highly agonized.‘

    Overall, states Xinhua, the earth has an American-made financial problem that must ‘be terminated‘. Wow. When Chinese communists use the word ‘terminated’, my instinct is to drop what I’m performing and clean my collection of assault rifles. That, and maintain stocks of precious metals like gold, silver and…brass, if you know what I mean.

    This China thing isn’t heading in a good path for the US. Don’t take my word on it. Here are plenty of other excerpts to ponder from Xinhua:

    ‘As U.S. politicians of both political parties are still auto shuffling back and forth between the White Home and the Capitol Hill without impressive a viable deal to bring normality to the body politic they brag regarding, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.‘

    *****

    ‘With its apparently unrivaled [sic] economic and military might, the actual United States has declared that it’s vital national interests to protect in nearly every corner from the globe, and been habituated in order to meddling in the business of other countries as well as regions far away from its shores.‘

    *****

    ‘Meanwhile, the U.S. federal government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly performing things that are as audacious as torturing prisoners of battle, slaying civilians in drone attacks and spying on globe leaders.‘

    *****

    ‘A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests highly regarded and protected on an equal footing… For starters, all nations need to hew to the basics of the international law, including respect for sovereignty and keeping hands off domestic affairs associated with others.‘

    *****

    ‘Furthermore, the authority from the United Nations in handling global hot-spot issues has to be recognized. Which means no one has the right to salary any form of military action against others without a U.D. mandate.‘

    *****

    ‘Apart from that, the actual world’s financial system also has to embrace some substantial reforms.‘

    *****

    ‘What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.Utes. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.‘

    *****

    ‘Of program, the purpose of promoting these changes is not to completely toss the Usa aside, which is also impossible. Instead, it is to encourage Washington to experience a much more constructive role within addressing global affairs.‘

    Refuting the Pillars of US Policy

    Note that last item, about not ‘completely’ tossing the united states aside. Gee, thanks…I think. On the other hand, the Chinese have reason to worry about US finances. China may be the biggest foreign holder of US Treasury ties, worth a total of $1.28 billion according to public American information.

    And note that second-to-last item about ‘a new international reserve currency‘ to replace the buck.

    In general, a commentary such as this within Xinhua means that powerful political factions in Beijing – Communist Party and/or army – hold the expressed opinions. Oft-times, a strong Xinhua piece means that the entire Chinese leadership holds the opinion as well as seeks to determine how it performs out around the world. (The news article went viral.)

    Looking back, Chinese leadership has never been bashful about criticising the course and wisdom of US policy. Still, over many years, top Chinese language echelons have usually limited severe critique of the US to lower-level players – academics, midlevel ministers, retired military officers or even well-regarded business people.

    No senior Chinese agent has ever made a comprehensive, point-by-point refutation of the pillars of US policy, accompanied by the suggestion to rebuild the entire system of global trade and relations in between nations. Until now.

    This new ‘official’ Chinese language commentary – from the top level – utterly deconstructs US policy in ways which go back to the end of the Chilly War. Reading between the lines, one can see jabs from US policy as far back as Leave Shield and Desert Storm of 1990 and 1991. Or All of us intervention in the Balkans, and certainly bombing Serbia within 1999. The Middle East conflicts of the past decade – to include the Arab-speaking Spring coups and Libya takedown – are doubtless in the Chinese crosshairs as well.

    US policymakers love to change labels on what they do from time to time, because it supports the misconception that the nation is doing things differently under new presidents with ‘new ideas’, implemented by brand new stables of diplomats, generals and admirals. For example, the idea of so-called ‘nation building’ (at the point of a gun, some say) is now branded ‘responsibility to protect’ (R2P). Either way, in Chinese eyes, it’s simply garden-variety old US imperialism.

    The Xinhua article criticizes how the US stakes out moral high ground to justify illegal detentions, summary executions by drones and torture of prisoners. At an additional point, the author claims that the so-called ‘Pax Americana’ is a subterfuge to foment instability, American meddling, wars and worldwide chaos justified by lies. No sugarcoating here.

    Also implicit in the article may be the idea that Chinese leaders are galled at the uncertainty of return on their trillion dollars and more of US bonds. Apparently, Chinese frontrunners are uncertain about the financial security of US bonds, and they fear a massive loss of value over time.

    The Big Takeaways

    There are several critical items to note here. The actual Xinhua article is the first in which senior Chinese players have dared go public with a bitter, sharp-edged denunciation of the US-managed international system.

    The Xinhua article does not ‘just’ hold on there, either. The authors label American policies as destructive ethical failures. The article openly phone calls on other nations throughout the globe to restructure politics and economics. The next version of global economy will be a remarkable reduction in the role of the US and its dollar as the world book medium of exchange as well as measure of value.

    The Chinese are clear that their eventual aim would be to topple the US from its placement of global leadership in most values. The rhetoric betrays intense Chinese frustration with the US. Things have reached the boiling point. From the Chinese perspective, the US government is poisonous for world business, while American military power is unleashed at political whim to promote global instability.

    Looking Ahead…

    Now what? Nicely, we wait. Chinese leadership will let the Xinhua article have its day in the sunlight and then gauge whether other national leaders share these types of views. Stand by to see a flood of proposals through across the world about alternatives to US hegemony.

    We’re looking at tough times ahead for the US position in the world. We’re fortunate to possess the shale energy revolution going on along with a rebirth in technology as well as manufacturing. But can this counter the chronic mismanagement of the country that comes out of Washington, DC? We’lmost all likely all live of sufficient length to find out.

    These are interesting times. Or as Xinhua says, ‘alarming days‘. Meanwhile, buy gold and silver.

    Byron King
    Contributing Editor, Money Morning