Category: Financial Times

I’m the most bearish resources analyst you’ll read.

But don’t get me wrong. I don’t enjoy being bearish.

For starters, being bearish doesn’t advantage my newsletter — Resource Speculator. Punters usually like to read stuff that reinforces their own views. For example, if they’re bullish on gold and own gold stocks, they will look for information that confirms they’re correct.

It’s called confirmation bias. Punters do this because nobody likes to sell baffled.

So when I say that gold may head to US$931 per ounce the coming year, I’m shutting out lots of potential subscribers. Many investors don’t want to believe I’m appropriate, because that means admitting they will lose money. Instead, they listen to other, more positive forecasts, and dismiss my views because wrong.

But they’re ignoring a simple fact: gold has rejected for four straight years. Something must be wrong. Yet rather than admitting they’re wrong, they’ll keep holding their own gold stocks. That is, before the gold price drops to levels that they can’t warrant anymore. Then they’ll sell the lot.

Be smart, not naive

I’ve made this mistake myself during the monetary meltdown of 2008/09.

You may have also.

It’s an expensive lesson. But a vital lesson for becoming a better investor.

The simple fact is, if you truly want to make big money within the stock market, you must remove all of your emotions from the game. This means thinking outside the box and also trying to prove that you’re wrong.

Looking at the hard facts is why I’m bearish on resources. Even though there have been multiple bear market rallies in all sectors seeing a short term bounce in prices, commodity prices continue to head reduce. This is a trend that’s established to continue in the months ahead.

But that’s about to change. Many, though not all, resources may return to a bull marketplace next year.

The reason why is as simple as it’s disturbing. Across the world we’re dealing with rising geopolitical conflict.

You can see it everywhere you look.

NATO putting soldiers on the border of Ukraine. Washington sailing war ships round the South China Seas. Obama’s bombing campaign to dethrone Syrian President Bashar Hafez al-Assad.

And tensions will keep rising as worldwide economic conditions move from bad to worse.

And instead of reducing taxes and burdensome regulations and restructuring fixing their bankrupt budgets, politicians all over the place are trying lay the blame on someone else for their mistakes.

For the majority of the last two years, the majority of this particular blame has landed on the shoulders of Russian Leader Vladimir Putin. And Western leaders are actually pointing their fingers in the Chinese.

Unfortunately for the Washington (and the West), Putin and the Chinese are no push overs. According to The Guardian, ‘A Chinese state-run newspaper with links to the Communist party said “we’re not afraid to fight the war?with the U.Utes. in the [South Chinese Seas] region.”‘

When war arrives, commodities historically outperform

History shows that once the economy declines (as it is right now), politicians often send their people off to war.

In my view, another war is coming soon. Now war is obviously not something that I want. But it is not in my power to quit it. And if major turmoil is coming, it’s best to prepare yourself right now.

As legendary investor Jim Roger’s states,

‘War is not good for anything, anything more, except commodities…if there’s going to be a war, it usually means commodity prices go higher.‘

Jim is spot on. Just check out this chart beneath. It shows commodity costs rising into every battle over the past 200-years.

Source: marketoracle.co.uk

And the next time war breaks out, one commodity in particular will skyrocket. I’m talking about crude oil.

Today there isn’t 1 hotspot but three: Ukraine, the South China Sea and Syria. And any of these three hot-spots could erupt into a full size war. In my free statement, I talk about the ongoing conflict in the Middle East, and why that’s where we’re most likely to see things spiral out of control. For more details, you are able to click here.

The world is viewing who will make the first move. Although it will take some time before we see a full on confrontation, the stage is being set for the next World War.

While I don’t want this any more than you do, Jim Rogers puts it this way:

‘Wars start when bureaucrats make mistakes and then additional bureaucrats react to those mistakes and the next thing you know, you have eight or ten bureaucrats sending Eighteen year old kids to kill each other, and it’s very worrisome what’s happening.

‘Having said that, war is not good for anything, anything at all, except commodities. I’m not going to state buy commodities because you don’t want to start a war, but if there is going to be a war, it usually means commodity prices go higher.’

I’ve been watching this unfold along with growing concern for some time right now. On 3 December 2014, whenever crude was trading at US$63 per barrel, I authored to readers of?Resource Speculator:

‘Crude essential oil prices won’t stay low forever. In fact, expect to see crude oil prices rocket into 2016/17.

‘As economies keep falling apart, geopolitical risk will pick up into 2016/17. You’ll see turmoil and social unrest rise around the world at an alarming rate.’

It’s time to start preparing your resources portfolio

But please note: before the oil price will take off, crude is likely to fall further — hitting my forecast associated with US$34 per barrel by earlier 2016.

I’ve been preparing Resource Speculator readers about this last crash for some time now. You will see a smarter time to buy. That period hasn’t come yet.

No shots happen to be fired. The US, Russia and China are not yet from war. But when this does occur, you will want to have exposure to crude oil stocks. And to make the most out of your investments, you’ll want exposure to the best of those stocks.

Which stocks am I talking about? You can learn more here.

Regards,

Jason

Three days ago a dam owned by a joint venture between BHP Billiton [ASX:BHP] and Vale SA (ADR) [NYSE:VALE] collapsed in Brazil. The fallout from this dam collapse includes the destruction of nearby villages and sadly the loss of life.

As this event unfolds over the next 3 days, and weeks, it could end up being as significant as the British petroleum Gulf of Mexico Oil Spill.

The British petroleum spill took the lives of 11 people as well as saw untold environmental damage. It also cost BP a world-record US$18.7 billion in fines.

The BHP/Vale Dam collapse has already seen 2 lives lost, with as many as 28 still missing. Furthermore, the flood from the busted dam has impacted communities and locations up to 100km away.

What’s important to understand is this isn’t a typical dam. This is a exploration mega dam made up of three individual dams that feed into each other. These dams are ‘tailings dams’ that are specifically made to house tailings from ore mining operations.

What is a tailing dam and what are tailings?

The mining of ore — in this case iron ore — involves an enormous amount of water. So much water that exploration companies will build tailing dams to access during operations.

The Vancouver Sun reviews that the job of a tailings dam is actually,

So the tailings dam holds the tailings from the procedure for producing iron ore. But what exactly are tailings? Well tailings are the excess rock and roll and process effluents from processing the ore.

In order to process ore it’s treated with a variety of mechanical as well as chemical processes. This extracts the required resource from the found ore. The waste from this procedure is the tailings.

Tailings.info explains,

??????????? ‘The unrecoverable as well as uneconomic metals, minerals, chemicals, organics as well as process water are discharged, normally as slurry, to a last storage area commonly known as a Tailings Management Facility (TMF) or Tailings Storage Facility (TSF).‘

 

This slurry is what was in the BHP/Vale dam which broke. The actual dam itself is the three-tiered dam system.

BHP put out a price delicate announcement about the incident today saying,

??????????? ‘Within this complex the actual Fund?o dam failed and also the downstream Santarm has been affected. This resulted in a significant release of mine tailings, surging the community of Bento Rodrigues and impacting other communities downstream.’

It’s still unfamiliar why the dams unsuccessful. But it’s clearly a significant enough failure that BHP CEO Tim Mackenzie was immediately on a airplane out to Brazil to find out exactly what went wrong.

You can expect there to be serious repercussions for companies if it comes to mild either or both are liable for the tragedy.

For now there is no clear indication as to what caused the failure. But one thing that is for certain, this is going to hurt BHP and Vale long term.

Is this now time to buy BHP?

Already in Monday trading BHP’s stock price was down 5.64%. Vale was down 5.6% on Friday. I expect that because the fallout continues and investigations find out what went wrong the actual stock price of both companies will fall.

You only need to look at what happened to the price of BP Plc. [LON:BP] once the Gulf of Mexico spill occurred. BP’s price cut in half going from 651 pence to 305 pence in a month.

Source: Google Finance

Will BHP’s inventory price halve from here? We doubt it, but you can get there to be some further drops from here. In fact I anticipate that BHP will go sub-$20 this week.

What it is going to mean is ongoing pain for Australia’s mining giant. Currently down 38% in the last year, the actual stock is battling. Actually it’s now at the same price it was at 10 years ago. Additionally, it means BHP has gone from the greatest company in Australia, to the 2nd biggest, with the Commonwealth Financial institution now taking top spot.

At such a cheap price although, is it time to buy BHP? No, I do not think so, not just yet. Expect more pain within the next few months. And maybe, simply maybe in 2016 there might be a perfect time to buy into the big, fighting Aussie miner.

Regards,

Sam?

It has been a bad few years for resources stocks.

That’s because it has been a bad few years for sources prices.

We’ll show you a chart in a moment to prove this.

So, is there any hope for the time sector?

Is there anything that can provide resources prices and resources stocks a boost?

Our resident resources expert, Jason Stevenson, believes there is. We’ll explain precisely what right now…

There’s no doubt that Jason offers controversial views.

That was evident at our Editorial Roundtable fourteen days ago.

That’s where we asked each of our editors to present their own key theme for 2016.

Jason had been one step ahead. He had currently presented his key concept for 2016 in a recent issue of Resource Speculator.

If you don’t yet sign up for Resource Speculator, you can catch a special model of that issue here.

The commodity bounceback is set to begin

Earlier we pointed out how it had been a bad few years for resources. This graph proves that:

Source: Bloomberg

The chart is of the Thomson Reuters/CoreCommodity CRB Commodity Index.

This index is down over 59% since it actually peaked in 2008.

It’s no chance that the commodity rebound arrived line with the many stimulation programs from 2009 onwards.

And while those stimulus programs didn’t help all commodities to hit a record high, this did help to elevate many commodity prices.

But then the stimulus programs slowed and stopped…and so did any wish of further commodity price rises. Since the US Fed cut back on its bond buying program at the end of 2014, commodity prices have slumped.

So what’s subsequent for commodities? If the Given really is intent on raising rates of interest, that will mean the end of increasing prices, right?

Could be. However according to Jason, there’s another catalyst that will soon trigger commodity prices to rise much higher. And it could happen soon…

Readying for an oil war

There aren’t many who like the word ‘war’. Except of course, for those in the business of battle. That includes governments and their geopolitics.

As Jerr explains in his special statement:

‘For many years, the US was a good ‘oil importer’ and heavily relied on inexpensive Middle Eastern oil.

‘Now, getting become an ‘oil producer’, the US geopolitical goal is to isolate Russia — it is the only country (bar The far east) that really stands up to US international meddling.

‘The US isn’t used to becoming told what to do. It can’t handle the fact that it’s a declining kingdom — economically, geopolitically, financially, and culturally.

‘As such, you can expect the US to help keep doing whatever it takes to apply its authority over Spain.

‘This means, hitting Russia exactly where it hurts — cutting off its oil and gas money.

‘Russia is the biggest supplier of natural gas to Western Europe. This grants the county a lot of power. If necessary, it can turn off the gas or raise prices, because it has done during northern winter season in years past.

‘The US doesn’t such as this power play, and to neutralise Russia’s influence over Europe, the US has backed the Qatar-Turkey pipeline (Saudi Arabia).

‘Russia clearly has an interest to make sure this doesn’t happen. What’s more, it retains long term exploration and development rights to a large part of Syria’s offshore waters.

‘If Russia will find gas and oil in the region AND have impact over a pipeline to Europe, it can gain more control over all the gas that flows into Europe.

‘There is a lot at stake here — wealth, prestige and energy — for a lot of historically stubborn and confrontational nations.

‘Geopolitical tensions are warming up.

‘And all the dangerous ingredients for any Middle Eastern proxy-war are in place.‘

According in order to Jason, if real war breaks out in the Middle East, commodity prices, and one specific commodity price (it’s not gold) will soar.

And although there are lots of stocks that will benefit from which price surge, Jason has snagged one that he believes could do better than any other.

As we say, Jason isn’t afraid to say what he thinks. This could be the most timely and most essential report he’s written up to now. We urge you to take a look now. Go here.

Regards,

Kris

What happened to the HGO share price?

Hillgrove Sources Limited [ASX:HGO] has seen a strong rebound lately. With energy costs reaching a cyclical bottom, the marketplace is slowly starting to put their bets on a revival within the commodity market. That means better days for commodity suppliers such as Hillgrove.

However, the current bottom can always stay with us for a little bit lengthier. Eventually the demand and supply rebalancing of the commodity market will work by itself out, bringing a potentially slow recovery in cost.

Of course, that means higher reveal prices for commodity producers.

What should you do with HGO shares now?

How did I uncover HGO? This came onto my radar in the latest study at Port Philip Publishing. In this study, we looked at some of the most ‘underrated’ stocks in the Australian stock market universe.

Hillgrove had been perhaps the most ‘underrated’ stocks within the list. While the company is nevertheless receiving ‘buy’ ratings from experts and brokers, it has were built with a poor track record in terms of revenue growth, liquidity and totally free cash flow.

I wouldn’t normally recommend investors to touch stocks that don’t have great financial health, but Hillgrove is strictly the kind of underrated stock that can give back in months in the future.

What are some of the other underrated stocks on our list? Decmil Team [ASX:DCG] and Peet Ltd [PPC] are among our other highest rated stocks.

The most interesting relationship within our list of underrated stocks may be the semi-strong inverse relationship between P/E ratio as well as dividend yield.

A cheaper P/E several actually leads to higher results yield for our list of mostly micro-cap and small-cap stocks.

If you want to obtain the full list and the analysis, click here.

Ken Wangdong+

Emerging Market Analyst, New Frontier Investor

I stole today’s headline out of this week’s UBS Equities Sales trading revise. The major investment bank said (with my emphasis):

‘On the macro side our focus remains mainly on commodities. After the sharp August bullish reversal in crude oil we argued that the low in oil is very likely in. We remain bullish oil and energy stocks!

‘Copper is forming a potential base, which silver is close to completing. [And] gold trades inside a triangle pattern, where a break of $1150 would be bullish.

‘Together with initial breakouts in soft commodities we see a major strategic bottom in commodities forming, that is bullish Emerging Markets as well as suggests that a reflationary trade just started.‘

In other words, UBS believes which resources bull market is going to be born.

Terry Campbell, Chairman associated with Australian Foundation Investment Company [ASX:AFI], would be licking his lips if he read that comment.

According to the Australian Financial Review, Terry has plans to dive head first into the sources sector:

‘The signals we are seeing pointing toward a bottoming of the sector are sounding very noisally right now, whether it is how reduced the rates of return are on invested capital that companies are now achieving, whether it is how deep we are now into the cost curve in nickel and other commodities, whether it’s the emergence of private equity groups coming onto the registers of companies… Production cuts are also now coming via, so there are a lot of signals saying that this sector is very interesting.’

His bullishness does not surprise me. The Bloomberg Item Index is, indeed, hanging around 1999 level lows.

Said otherwise, resources are buying and selling near their lowest level these days.?You can see this on the chart below:

Source: Bloomberg

So have resources bottomed?

Unfortunately, not if you ask me.

Far too much euphoria continues to be in the sector. What we’re seeing is a classic ‘bear marketplace rally’.

For a resources bottom, we have to see huge distress overall — either on the balance linen or the share price level. With every man and his dog turning bullish on resources, obviously this isn’t the case.

Time should alter this. In fact, hope should start fading into the darkish after this month’s US rate hike.

First interest rate rise will be bearish for resources

While you may not think it, US interest rates have an important bearing on resource prices. Higher interest rates will send the US dollar dramatically higher. As the US buck goes higher, resource prices — denominated in US dollars — will mind lower.

In other words, the first US rates rise won’t be good for commodity prices.

On this topic, I’ve long said the united states Fed will raise prices in September or Oct. Followed by, potentially, a second rate rise in December.

After last month’s non-event, the Fed’s credibility is now on the line. All year they’ve prepared the market for a 2015 rate hike. This would be the first rate lift in nearly a decade.

Many believe that the Fed won’t raise rates.

But…

On Wednesday, Federal Reserve Bank of Bay area President, John Williams?reiterated that rates should rise this year. And possibly, with the economy improving, as soon as this month.

When Mr. Williams speaks, Walls Street takes note. Their views tend to reflect the centre of thinking inside the Fed.

While John’s positivity may seem worrying with regard to resource punters, he insists that a rate rise will be ‘data dependent’. He noted that September’s conference was ‘a very close call‘. And that officials don’t need much brand new economic data before walking rates.

October US rate increase to kick start financial avalanche

Looking forward, the primary focus will be upon two data points:

1. Employment information;
2. Concerns over China’s economic slowdown.

Regarding employment, last Friday’s number was a terrible. The?US?economy made a mere 142,000?jobs?in?September. This compared to the 203,000 job number expected.

While the united states dollar got hammered, stock exchange punters popped open the champagne cork. We’ve since seen the celebrations run just about all week. Resource punters have joined the party.

Unfortunately, Mister. Williams may turn out the lights. According to CNBC he said,

‘The [labour] market, continues to improve, a key metric as the Fed considers a possible rate hike at its last two meetings of this 12 months, in October and December.’

Mr. Williams cautioned against last Friday’s shock reading. And said,

‘The economic climate will soon need no more than One hundred,000 new jobs per month to feed a healthy [labour] market.

‘Every time all of us add jobs we are really moving down the field.

‘Unemployment is at 5.1 percent; full work for the U.S. economy is around 5 percent.

‘We’re essentially at full employment. We’re still adding jobs. We can’t get caught up in short-term volatility.

Furthermore, just before you thought about buying stocks today — ahead of the subsequent rate rise — Mr. Williams is much more positive on the macro front.

‘Since the actual Fed’s September meeting, there has been no signs of a deteriorating global outlook, and while current trade data was worse than expected, data upon consumer spending has topped his expectations.

This isn’t surprising…

After a week long holiday, the Chinese Shanghai Composite Index rose 2.97% the other day. And it’s recovered nicely since August’s market low.

Looking at the actual economy, even Chinese foreign currency outflows have slowed…

On this be aware, it should be said that no data point is more important than People’s Bank of China’s (PBOC’s) foreign exchange reserves. During China’s economic changeover it can, if needed, dump countless billions of US treasuries to support the yuan.

As is stands, the actual PBOC’s foreign exchange reserves fell by US$43 billion to US$3.514 trillion within September. In comparison, August’s outflows totalled US$94 billion. August was a turbulent month in China.

As such, it’s my personal view that a rate backpack remains on the cards this month.

Stock market and goods — expect lower lows ahead

This will not be good for confidence.

If a rate backpack comes, expect the market to panic. And for it and resource prices to head dramatically lower.

You should prepare your portfolio for another 10-13% correction. I say ‘another’ since i warned you about the very first correction at the top of the market upon 30 April, here. Because this time, the ASX has misplaced more than 12%.

If the Dow Johnson cracks 16,000 factors on a weekly basis, watch out. There’s a pretty good possibility it will head to 14,750 points. That said, at the very least, we will have a re-test the August reduced of 15,370 points. During this period, the ASX will surely follow. As well as your resources portfolio will get hit hard.

On the flipside, to stave off a correction for now, we need to see a weekly close above 17,000 factors. It also needs to hold above this particular level in the weeks ahead. As the market is trading closer to 17,000 points, this favorable case seems unlikely soon.

In this case, while UBS is counseling you of a major low on the cards, I strongly suggest you consider their advice. While the stock exchange correction will be short lived, source prices are due for a final crash.

I’ve been preparing Resource Speculator readers for this final crash for some time right now. There will be a smarter time to buy. That time hasn’t come however. If you don’t buy near this point, you’ll surely be i’m sorry when the sovereign debt crisis comes in 2016/17. If you want to know when to buy, see here.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

From the main harbour Phillip Publishing Library

Special Report: The End of Australia Vern Gowdie’s brand new book is called The End of Australia: The Real Story Behind Australia’s Economic Collapse and What That you can do to Survive It. We are mailing free duplicates of this book to anyone who requests one online. It doesn’t make for cheerful reading. However the idea is that you’ll be safer (and much wealthier) in 10 years’ time from receiving a more sober and realistic evaluation of what’s going on…what happens next…and what you should be doing about it now… (more)

I woke up yesterday to the headline, ‘ASX wipes $55b in savage sell off.’

As a good investment analyst and editor it isn’t the kind of headline that you want in order to wake up to. It’s a pretty significant fall though. The S&P ASX 200 was down 4%. That’s crazy-town.

It’s the kind of volatility that used to be thrown about within 2008 and 2009.

First I had to see why, during the night, ‘$50b’ was wiped off the ASX. After that try to figure out what it means for you. That’s the really important part.

It wasn’t hard to find the trigger stage for the selloff. Glencore PLC [LON:GLEN] was down around 28% in the UK on Monday. We knew this before We went to sleep. But I didn’t think it would drag on the actual ASX so heavily. After all it’s just one stock.

However, Glencore is a headline maker. Even though there are plenty of bigger and more important mining companies, this fall had a bit of sting in the tail.

I also didn’t expect what I found with bit of further research. Apparently the reason for the 28% drop in Glencore was an analyst statement. Just one analyst asking a fair question. The question was, is actually Glencore a viable company if resource prices stay at current amounts?

The short answer is no, most likely not.

It’s a fair question. And I can see why it would impact Glencore’s share price. But to suggest that one expert report can subsequently produce tens of billions in stock market falls around the world is near on insane.

Don’t get me wrong, analyst research can have positive and negative impact on individual stocks. But if you believe it impacts an entire market, or can wipe $50 billion off the ASX, then you’re a buffoon.

Prophetic talks online

I’ll tell you what caused the actual $50 billion selloff on the ASX yesterday.

Fear. Plain and simple, investor fear. And a little bit of panic thrown in for good calculate.

One of the more amusing commentaries We heard on Tuesday was, ‘Glencore’s drop is the Lehman Brothers moment for resource stocks.‘

I had a bit of a chuckle over that one. It is nothing like Lehman Brothers. Besides, in the event that Glencore does fail, it would be a good result for the likes of BHP or Rio.

If Glencore fails the boards from BHP, Rio Tinto and Vale SA will rejoice. When a major competitor fails this benefits direct competitors. Any major assets Glencore own will either shut down or sell for cents on the dollar.

I was talking online to a source of mine in the mining industry about Glencore last Friday. We were chewing the fat regarding resource stocks. Glencore came up within conversation and he said this particular to me,

‘Ahhh [Glencore is] old news. Respectable, Glencore and Trafigura can only survive upon cheap debt and with high costs.

‘We’ve known for some time Glencore was in trouble because they’ve already been shopping their assets around the market to sell off.‘

To be honest, resource stocks aren’t something I have been particularly bothered with over the last three years. But it was interesting to hear his views on Glencore. He or she even questioned if Glencore would still be around in 6 months’ time.

Maybe they will, maybe they won’t. Maybe the likes of BHP, Rio and Vale will benefit without Glencore in the market. Should you worry about it? I don’t believe so.

It’s time to look at Australia’s ‘new economy’

Right now the last place you’d want to invest is resource stocks. Commodity prices are on a continuing downwards trend and some of the planet’s biggest companies are suffering. Will there be a reversal? Yes, I think so. Eventually, but not at this time. And not for a long time.

That means at this time you should be focusing your attention on another industry. Particularly you want to look at an industry which Australia needs to lead this to a prosperous future. You have to look at Australia’s ‘new economy’.

I’m talking about services industries. High-tech, high growth, high skilled industry of the future.

That includes companies that make consumer and commercial products. Companies that manufacture equipment for high tech application. Software program and online companies that have a product which fits an untapped area of the market.

These industries are vital with regard to Australia to turn around its fortunes. To be globally relevant in a decade Australia has no choice but to look with other industries to generate growth in the economy.

I’m pretty sure the new federal government recognises the need for a high-tech long term. Maybe they can help it happen. If they do — and it’s a big ‘if’ — these ‘new economy’ industries could see a boom like resources experienced through the early-mid 2000s.

There’s a pretty sizable risk to make if you’ve got the risk urge for food for it. Do you sit aside and wait it out, and maybe miss the boat around the upside? Or do you have a punt on the industries that will generate Australia forward again?

Tough call. But my view would be to play the long game as well as take the punt.

Cheers,

Sam

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)

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

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

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

Same story different week.

Fears regarding China’s economy slowing caused the Dow to shed 470 points last night.

Weak manufacturing data out of The far east spooked the Aussie market yesterday. Last week’s recuperation has all but been vaporised. The ASX lost 2.1%, or $32 million, in one day.

Adding to the marketplace’s woes was our worse than expected current accounts deficit (our net borrowings from the rest of the world) — a blowout of $19 billion.

The RBA has kept prices on hold. But I believe that, as the global economic situation continues to deteriorate, further rate cuts will be on the table.

The IMF issued an update warning…worldwide growth will be weaker than they forecast two months ago. Truthfully, why do we pay these folks? They are perpetual over-estimators.

Hark back to January. The year started out with such guarantee.

Share markets continued where these people left off in 2014…moving onto new highs.

Global growth forecasts were optimistic.

But issues haven’t quite worked out towards the rose-coloured plan the policymakers might have liked.

The scoreboard so far is:

• Commodities catalog down 10%
• Growing fears about the degree of the slowdown in China’s economy
• Eurozone Gross domestic product growth fell in 2nd quarter 2015
• Less likely the Given will raise interest rates this particular month
• Australia Bureau of Statistics introduced in June that Australia’s long-term unemployed hit a 16-year higher.
• The RBA has reduced cash through 2.5% to 2%
• And Australia’s mining field continues to struggle.

‘Alpha’s collapse shows more coal mines must close for others to survive‘

Australian Financial Review, 31 July 2015

While this is not the outcome the central bankers and politicians would have foreseen in January 2015, none of this may come as a surprise to you.

My outlook for 2015 was included in the Twenty-seven January 2015 edition of The Every day Reckoning, and has been reiterated many times in Money Morning and The Daily Reckoning since.

Understanding the big picture is crucial to investment success. In the trading game, avoiding risks is, on balance, more important than capitalising on opportunities.

Significant losses can set you back years and even years.

Appreciating what lies ahead is critical to long term wealth creation AND retention.

The End of Australia, my recently published book, is actually my big picture view on exactly how all these forces at play in the global economy lead to a fiscal collapse. And on what you can do to safeguard your family’s wealth, and profit from the recovery on the other side of this crisis. You can still purchase your free copy on the internet; click here to find out how.

The finest debt powder keg in history

The Great Depression was preceded by a debt crisis.

The long bust in Japan was beat by a debt crisis.

The globe is sitting atop the greatest level of accumulated debt in the history — in both dollar conditions and percentage of GDP. This cannot end well. Yet, as a society we are not getting any meaningful discussion concerning the single greatest threat to our living standards.

There is plenty associated with talk on marriage equal rights, becoming a republic or whether a retired judge intends to talk at a function.

While these topics may be near and expensive to individuals, none of it really matters if the world is turned upside down financially.

When the actual GFC hit, all talk about climate change (the great moral, economic and social challenge) was completely sidelined. Why? Because when it comes to what really matters to homes, money and employment are top of the list.

The fact the global debt issue is not entrance and centre in the nationwide forum is a reflection on the level of community complacency and politics deception we have in culture.

This, to me, is a further contrarian sign that an economic disaster on a par with The Great Depression awaits us.

For a bit of perspective on the recent market mayhem, which no one in the mainstream seems to have seen coming, beneath is an extract from my personal January article on the perspective for 2015.

Commodities in 2015

Firstly let me say that one of the risks in forecasting is the old ‘extrapolate the past into the future’ trick.

Commodities is a very broad container of goodies — agricultural, nutrient, timber, energy, livestock and precious metals.

Predicting the direction of each one of these is beyond my personal capabilities. However on the crucial commodities — iron ore, copper, natural gas and oil — my expectancy is the past price motion is likely to continue this year.

We possess world of increased supply meeting one of decreased demand. Ultimately price equilibrium will be restored but only after supply decreases or demand increases or perhaps a combination of both. The more probable scenario is for supply to lower as marginal players close-up shop.

In the fight for survival producers are inclined to lower prices to generate cash flow. My expectation is perfect for lower commodity prices this year. This outcome only increases the deflationary scenario we are facing.

China’s outlook

The slowing growth rate in China is a function of globalisation and domestic imbalances — a result of massive debt financed infrastructure spending.

Like the rest of the world, China believed at some point during the past six years the traditional western consumer would revert in order to type and the growth engine would once again purr into action. China backed this belief with a full throttle method of infrastructure investment.

In 2000, China’s credit score market debt was US$1 trillion. Today it is US$25 trillion.

China has generated it, but no-one (at least to not the numbers they need to service the debt) has come.

To achieve this objective China needs to create its own internal demand.

Eventually this’ll happen, but not in 2015.

In the meanwhile the continued retreat of the traditional western consumer and the challenge of stabilising an economy which has leveraged up 25x in Fifteen years will further slow China’s financial progress. In due course China is placed to register growth numbers beginning with a 3.

[…]

Thoughts on Australia

A slumping China means more discomfort for our mining sector.

More minor miners will close operations in 2015. Banks are already increasing their own bad debt provisions to the mining sector.

Higher unemployment calls from the resources slowdown together with the softening in global development.

A hostile and financially reckless Senate means the Federal Government operates larger budget deficits compared to originally projected.

The Official money rate is destined to fall below 2%, perhaps into the low 1% range.

Judging by the public backlash to government authorities that have had the temerity to tackle debt issues, it appears our political masters happen to be put on notice by an electorate that has very little urge for food for unfunded promises to be scaly back.

Australia dodged the worst of the GFC for two reasons. China’s full throttle response to infrastructure spending would be a huge boon to our source sector. And Federal Government financial debt was non-existent.

Australia will not be so fortunate when the next crisis arrives at our shores.

China’s decision to help ease up on infrastructure spending and transition to a more consumption dependent economy means the source sector will not play the role of the ‘white knight’.

In the space of seven years the us government has gone from being $20 billion in the black to $390 billion in debt.

As a percentage of GDP this is relatively modest through international standards, but it is of the sufficient level the Government has to be more considered in its stimulation responses…unless of course it goes down the path of the US, Europe, UK and Japan.

Summary

At some point over indebtedness may lead to massive debt write-offs (defaults). Resulting in serious financial pain for investors holding the invoices — bond holders and financial institution shareholders.

Governments will renege on their sociable contract regarding entitlements for life. The social upheaval from those ill-equipped (as distinct from those who are as well sick, old or disabled) to generate income independently will create a troubling and unsettled social mood. A depressed social mood will be reflected within the prices investors are prepared to pay for assets — shares and home.

Finally, overcapacity will be resolved initially by producers filing for bankruptcy or simply closing the doors on their reduction making enterprises. In due course the rest of the producers will benefit from the steady consumption uptake from China and in due course, Indian.

In summary over indebtedness, over promise and over capacity has put us all over a barrel. This can be a bad situation that has to be labored through. It cannot be avoided or solved with printed document and suppressed interest rates.

Many in the mainstream press would have you think that the chaos on marketplaces for the last few weeks was something which no one saw coming. Fundamental essentials same figures that will sell you other market myths, like ‘stocks always go up in the long run’. That may even be true, however it won’t do you much great if it takes longer than your lifetime for them to recover from the crash.

Financial advisors and hedge fund managers with a vested curiosity about having your money in the market may claim not to have seen this particular crisis coming. But the leads to are there for anyone who cares to look. To read more about why the market is ripe for a drop, and what you can do to protect your own wealth, order your free copy of The End associated with Australia here.

Regards,

Vern Gowdie,

Editor, The Gowdie Letter

When I started working with Port Phillip Posting in December 2013, the Publisher, Kris Sayce, was the biggest marketplace bull I had ever fulfilled.

Yet, as you read in his post here, he’s now turned shockingly bearish! And for good reason.

Kris’ view now aligns with our co-workers Jim Rickards of Strategic Intelligenceand Vern GowdieofGowdie Family Wealth. They are all anticipating a major near-term stock market accident; possibly worse than that of the worldwide Financial Crisis.

Will they be right?

Only time will tell.

I’ll explain…

The US interest rate rise is coming

Kris recently wrote in Tactical Wealth, ‘the more We look at the evidence and review what I’ve written, the greater convinced I am that a major stock market collapse is only days away‘.

When someone who’s been right for seven years straight modifications tack, it’s worrisome. Kris’ view is that the stock market will crash because of two reasons — interest rates and earnings.

So let’s speak interest rates…

I’ve long said to anticipate a US interest rate hike this year.

US Federal Reserve Chairperson, Janet Yellen’s continues to confirm our forecast with her comments this week. In her own phrases,

‘Most judged that the conditions with regard to policy firming had not yet been achieved, but they noted that conditions were approaching that point. Participants observed the labor market had improved notably since early this year, but many saw scope for some further improvement‘

Indeed, it’s now not ‘if’ however ‘when’ the US Fed will raise rates. That said, the US Given plans to raise rates sooner rather than later.

On the topic of timing, it’s always been my view that the high quality hike will come in September or October. This target lines up with Yellen’s comments last month:

‘We should also be careful not to tighten too latebecause, if we do that, arguably we could overshoot each of our goals and be faced with this situation where we would after that need to tighten monetary coverage in a very sharp way that could be disruptive.

‘If there is a negative surprise to the economy with rates of interest pinned at zero, we don’t have great scope to respond through loosening policy further, while with a positive shock obviously we can tighten monetary policy.‘

What I find interesting is the Fed’s intention to have some ammunition upward its sleeve, to fight the following financial crisis.

This is a shocking cause to raise rates.

But I guess the worst forecasting institution around the globe — a tough call when you toss in the International Monetary Fund — has to at least seem useful.

As Kris recently wrote to Tactical Wealth readers,

‘The Fed appears to believe that increasing interest rates is a no-lose situation for them. If the Fed raises rates of interest and the markets keep booming, they can say they were to raise rates.

‘But if the Fed raises interest rates and markets dive, it gives them an excuse in order to intervene in the market…perhaps through launching a new money-printing program.

‘An increase in the September meeting seems probably. That’s because it’s just two to three days before the next US revenue season‘.

Kris Sayce says ‘watch out for the October stock market crash’

And this brings me personally to my Publisher’s second stage — earnings. No doubt, and in collection with Kris’ October stock market accident warning, he expects them to be terrible.

In fact, looking back at when we were approaching the Global Financial Crisis, earnings began to slow down immensely. Yet, while earnings slowed down, mergers and acquisitions activity was booming — a sure sign that the crash was coming…

In today’s regard, this quote from Dealogic describes it all:

‘Global Healthcare M&A volume stands at a YTD record a lot of $422.8bn in 2015, up 42% from 2014 YTD and has almost exceeded the full year record high volume of $429.3bn set in 2014.’ A big increase in M&The activity is a danger sign. You usually see a peak within activity as the economy and markets near a peak‘.

So with earnings slowing down and acquisitions at an all-time high, is a accident coming?

Worse than subprime

According to finance experienced Vern Gowdie, it’s inevitable. And when it comes, the crash’will be far even worse than either 9/11 or the GFC. Banks going broke. Governments reneging on bond obligations. Massive pension funds scrambling to protect what’s left of their portfolios.‘

This aligns with Rick Rickards: ‘when the next crisis hits, the actual predictable and illogical response will be for panicked investors in order to storm the doors of america Treasury and demand to buy as much of that worthless paper because they can‘.

The argument for owning All of us Treasuries is that, like it or not, the US is the still the reserve currency of the world. It’s also got the largest economy. And the greatest and most liquid financial markets. So, when panic comes, individuals turn to the US financial markets with regard to safety.

No doubt this is precisely why Rickards believes that the bond bubble can continue to run for, possibly, years to come…

So, if the three has don’t see the crash arising from the bond market, where will the crash come from?

Eye wide open

Jim Rickards elaborates here:

‘The next financial collapse, already on the radar screen, will not originate from hedge funds or house mortgages. It will come from junk bonds, especially energy-related and emerging-market company debt.

‘The Financial Times recently estimated that the total amount of energy-related corporate debt issued from 2009-2014 for exploration and development is over US$5 trillion. Meanwhile, the Bank for International Settlements recently estimated that the total amount of emerging-market dollar-denominated company debt is over US$9 trillion‘.

So Jim Rickards is looking for a dual financial crash next year! Part one will be in All of us dollar-denominated emerging market corporate credit sector. And part two will arise in the energy corporate credit space.

And for this reason Tim Dohrmann and Jim wrote in Strategic Intelligence this week:

‘If Yellen will raise US interest rates, secure your seat belt and look away below. Markets will have absolutely no bottom and we’ll be set for a 1998-style crash beginning in rising markets.

‘For that reason, the most important date of the year will be the Sept 17 Fed meeting.

If the Fed raises rates, you’re going to visit a huge amount of capital hurry into the US dollar. This might trigger the emerging marketplace crisis in the years forward. Lower oil prices could easily trigger a junk bond collapse.

And there you have it: the right ingredients for the next financial accident.

But if you ask me…

The next global financial crisis will stem from government bonds.

The majority tend to be far too bullish on bonds — at a time when economic development has come to a halt and the financial system is severely overleveraged. Historically, these conditions typically spell the end of bond bubbles. However most people dismiss that there could ever be a crisis in bonds which could wipe out wealth worldwide.

Governments defaulting on their bonds is the turmoil you should be worried about…

And when the US fed raises rates, it will spell the end to this 30-year bond bull market.

The hedge?

Commodities.

To find out more, go here.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

From the Port Phillip Posting Library

Special Report: Nitro Stocks Completely unknown to many Aussie investors, there is a unique type of ASX investment that can produce more cash in a week than many people earn in a year! They’re known as ‘Nitro stocks’ and they can cram 20 or 30 years of market profits into just a few several weeks. Sam Volkering says, ‘It’s like taking a slow-moving bluechip and pumping it filled with steroids!‘ Sam’s spotted three stocks on the verge of hitting their ‘Nitro-phase’. And if you want in, you’d better rush!