Category: Financial Times

A financial crash is coming to a house near you.

While we’re not there however, the property market is fast approaching bubble territory.

On this topic, I’m sure that some of my colleagues (Phil Anderson, Terence Duffy as well as Callum Newman) over at Cycles, Trends and Forecasts may disagree with me! The team of property bulls do make some solid arguments, pointing towards an additional 15-year rally in property costs. If you ask them, we’re nowhere near the top in real estate.

Admittedly, they could be right. This is why I don’t ignore what they have to say. And neither should you. I suggest checking out what they’re saying here.

That said, having done my research around the property sector, I’m not about to run out and buy an investment property.

Here’s why…

Australia’s property market right now worth $6 trillion!

A good place to start is questioning whether home has already peaked. In some Aussie states, it appears so.

Looking from Perth, in a clear sign that the mining boom is over, the actual June REIWA figures show that the actual medium house price rests around $530,000. Prices possess crashed by $20,000 on average in the last six months.

While you don’t want to maintain Perth property, it’s another story over in Sydney and Victoria. The average house price has reached the $1 million tag in both states. And, according to the Australian, the good times may be over:

‘Amid booming prices in Sydney and Melbourne, regulators possess in the past year grown increasingly concerned that lending standards are slipping, as banks battle to lend and purchasers take advantage of record low interest rates.

‘In December, the Australian Prudential Regulation Expert stepped in and told banks to limit financing growth to property investors in order to 10 per cent a year…

‘Despite the banks continuous shrill of super-safe housing, APRA have thoroughly dismissed this given the major banks all failed the APRA November 2014 mortgage stress tests. And in May APRA highlighted severe deficiencies in bank housing lending credit underwriting standards.’

Indeed, the brakes take presctiption with bank lending. Which is a cause for concern.

The whole property market is built on the premise that the lending as well as leverage will continue forever.

Unfortunately, it is unrealistic to expect debt to develop forever.

Eventually, the system requires a main restructuring to grow again. This is not rocket science. The editors from Port Phillip Publishing have argued for years that the increasing global debt load is totally unsustainable.

With limited economic growth as well as deflationary conditions, it’s likely that the debt period will blow up soon. So when the overleveraged system goes down the actual drain, this won’t be good news for property prices.

The Book Bank of Australia’s Governor, Glenn Stevens, is also concerned. He said?that he was ‘concerned about Sydney‘ house prices,?which he described as ‘crazy‘ in June.?This week he or she backed up his view through saying that ‘dwelling prices continue to increase strongly in Sydney‘. And that the actual RBA is working to?’assess and contain risks that may arise in the housing market‘.

Given the extraordinary financial debt levels, authorities are even beginning to look at regulating negative gearing. Doctor Luci?Ellis, the?RBA’s?head of monetary stability,?told a Senate economics committee inquiry in to home ownership on Tuesday,

‘The combination of negative gearing and concessional taxation of capital gains creates an incentive which makes people more comfortable about taking on leverage… It’s worthy of a holistic review.’

At the end of the day, it’s really easy…

Increasing regulation and slowing lending growth are ominous signs for the housing sector. And when these measures go ahead, the knife will be put to the property bubble.

And if you didn’t know, 60% of Aussie wealth is tied to the property sector. This compares to the global average of 45%. Then when, and not if, property prices crash, household wealth will require a huge hit.

The property maximum is approaching

We’re also facing the biggest financial crash of our life span — the sovereign debt crisis. This is the real trigger for the fall in property prices. Don’t just take my word for this…

Doug Casey, from Casey Research, has been saying this for years now. Martin Lance armstrong, Chairman of Princeton Economics International, started warning concerning the coming ‘Big Bang’ back in 1985! And our founder, Bill Bonner, continues to be warning about financial systems flaws and faults since, well, before I was born!

The sad fact is that no one concentrates.

Unfortunately they will hear it when the bond bubble pops…and the majority of overleveraged products collapse. And this includes property prices.

Don’t be the last one standing

Already, the smart money is getting out…

Billionaire James Packer just sold his mansion for $70 million, breaking the all-time report. This kind of activity typically occurs at the top of the market.

And my close friend’s dad, a multi-millionaire in the Victoria property development space, is about to sell all his qualities. When the smart money is getting out like this, you don’t want to be the last one standing.

You need to look after yourself.

The best way to do this is by shifting your money into quality resource stocks. Compared to property, they’re dirt cheap. And when resources rebound, as I’m sure they will, you stand to make a tidy revenue. But you have to play your own cards right, buying into the right sectors…at the right time.

If you would like more information on how to best play these types of markets, you can start here.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

From the Port Phillip Publishing Library

Special Report: Nitro Stocks Completely unknown to most Aussie traders, there is a special type of ASX investment that can generate more cash in a week than most people earn each year! They’re called ‘Nitro stocks’ and they can cram 20 or 3 decades of market profits in to just a few months. Sam Volkering states, ‘It’s like taking a slow-moving bluechip and pumping it full of steroids!‘ Sam’s noticed three stocks on the verge of hitting their ‘Nitro-phase’. And if you want in, you’d better hurry!

I’ve long argued that a main war will break out by mid-2017.

I just don’t know where it’ll start…

Ukraine, the South Chinese Sea, and the Middle Eastern all have the potential to be the spark that sets this in motion. Wherever it begins, when this really kicks off, it’s likely to escalate quickly into the first major conflict of the 21st century.

I do not say this to scare you. And it’s not a subject that I enjoy talking about. But someone has to warn you about the real risks that we’re facing. The loss of life in a major conflict will be devastating. However there is nothing you or I’m able to do to stop that.

What you can do is prepare yourself and get your investments, so that if this war escalates when i believe it will, at least your wealth won’t be erased. Right now I don’t want to sound distasteful, speaking about the loss of life and the loss of money in one breath. But again, if this war breaks out you won’t be able to prevent the bloodshed. But you can protect your portfolio.

For now, let’s turn to the Middle Eastern.

The Middle Eastern conflict is continuing to grow around Syria for some time now. And when you’ve ever wondered why a poor country like Syria matters, a minimum of to the US and Saudi Arabia, I’ll explain.

The Middle East power play

And at the end of your day, the whole mess boils down to politics, power and money. I don’t anticipate this to shock a person.

But to kick things off, let’s start with religion at the very surface level. In doing so, please understand that I consider no view on religion. My purpose here is to provide an objective take on the region from an investor’s perspective.

With that said, it’s helpful to understand who the main players are. The governments of Iran, Iraq, Syria and Lebanon are controlled through Shi’ite Muslims. While the governments of Saudi Arabia, Qatar, United Arab Emirates and Jordan are ruled by Sunni Muslims.

When it comes to managing energy, these groups broadly have a tendency to back their own circle. That’s important when you analyse the world’s largest natural gas and condensate field — South Pars and North Dome. It is shared by both Iran (Shi’ite ruled) and Qatar (Sunni ruled).

Both the Shi’ites and also the Sunnis want to build their own gasoline pipeline networks. You can see this on the map below…

Source: passionforliberty.com

Click to enlarge

The Shi’ites want to use the route Iran-Iraq-Syria-Lebanon-Europe (Islamic pipeline); the Sunnis the Qatar-Saudi Arabia-Iraq-Syria-Turkey-Europe route (Qatar-Turkey pipeline).

But what’s the capture?

Well, both groups need to develop a pipe through Syria. And for this reason, Syria represents huge strategic value. If either the Sunni or Shi’ite groups are going to get their gas piped in order to Europe, they’ll have to go through Syria.

This is how it gets interesting…

The home of cards

Syria has been ruled through the Assad family for decades. There have been stress between Syria’s and Saudi’s elites for many years. And there’s huge tension between Saudi Arabic and Iran. The Saudis — the area’s largest oil producer — feel threatened by Iran’s rising dominance in the region, and they have long sought to replace its government.

For Saudi Arabia to exchange Iran’s government with its own judgment party, effectively gaining control over OPEC, it first needs to overthrow the Assad family in Syria. Then it can hopefully build the pipeline with the help of other Sunni groups.

The Shi’ites want Assad to remain in power, to allow them to build THEIR pipeline together with his blessing.

The Middle East conflict essentially boils down to a harmful game of poker.

To make things worse, a lot of powerful outside parties possess chips on the table.?The US has its chips on the Sunnis’ side (Saudi Arabia). And the Russians and Chinese language (although China remains undeclared) are all in on the Shi’ites’ side (Syria).

Now, you might wonder why the US really wants to get involved at all.

Thanks to fracking technologies, it’s the world’s largest essential oil producer. It doesn’t need Middle Eastern oil anymore. Adding to this, it’s in the process of building LNG terminals to export its shale gasoline.

So what interest does the All of us have in the region?

Aside from All of us companies operating in Irak, they’re hoping to help the Sunni cause.

Why?

If the Sunni natural gas pipeline gets to Europe, Russia’s geopolitical influence in Europe will be neutralised.

Geopolitical games 101

It’s clear the US wants to isolate Russia — it’s the only country (bar China) that really stands up to all of them. The US doesn’t like, and is not used to, being told how to proceed. So to put Russia in its place, it’s using sanctions along with other geopolitical tools. For example, attempting to cut off its lifeblood — oil and gas money.

Russia is by far the biggest supplier of natural gas to Western Europe — where many of America’s closest partners (Germany, France, Italy) sit.

It’s a massive bargaining chip. Russia could simply switch off the gas, and cause immense economic and political harm to America’s allies. It’s currently switched off Ukraine’s gas a number of occasions.

If Putin does this, it will squeeze Europe’s economy. Capital will flee Western markets and head towards the US, pushing the dollar even higher. Europe’s economy is a train wreck and its bond markets are ready to crash. US as well as European sanctions are poorly conceived — to say the least — and will jepardize hard.

If this escalates additional, we could see this geopolitical card played out by 2017. But it will have to obtain a lot worse for this to happen.

In the meantime, the US goal to isolate Russia continues. Obama realises that if Europe can get their gas from the Middle East instead of Russia, Vladimir Putin can no longer threaten to ‘turn off the gas’. Russia’s gas-monopoly trump greeting card ceases to exist.

That’s part of the reason that Russia is noisily safeguarding its interests in the region.

But this is not all…

Russia has just secured a major contract with the Syrian government. This now holds long term exploration and development rights to a large part of Syria’s offshore waters. If Russia can find coal and oil in the region AND have influence over a pipeline to Europe, it’s control over all the gas that flows into Europe.

Everyone has a lot on the table in this game of geopolitical chess. And the region is extremely hostile. At the moment, the US is pushing Spain to the edge. If it adopts Syria, it will draw Russia as well as Iran into conflict. This is arriving, whether you like it or not.

I hope I’m wrong concerning the scale of the coming conflicts. But if I’m not, you have to ask yourself, is your portfolio prepared for a global scale war?

Resource Speculator readers have been getting strategic advice for several weeks about the hurdles that we’re facing. They will be prepared for the tough times ahead. Indeed, during times associated with war, the demand for most commodities swells.

You just need to know where, when, and how to commit to maximise your returns. You can see more details here.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

From the main harbour Phillip Publishing Library

Special Report: Nitro Stocks Completely unfamiliar to most Aussie investors, there’s a special type of ASX investment that can generate more cash in a week than most people earn in a year! They are called ‘Nitro stocks’ and they can stuff 20 or 30 years of market profits into just a couple months. Sam Volkering says, ‘It’s such as taking a slow-moving bluechip and pumping this full of steroids!‘ Sam’s spotted three stocks on the verge of hitting their ‘Nitro-phase’. And if you want in, you’d better hurry!

What happened to the OSH share price?

Oil Search Limited [ASX:OSH] has been a rock-star performer over the last 13 years. That seemingly unbreakable fortune broke this past year with the collapse of oil price. It didn’t matter how strong the fundamentals were at Oil Search, its stock price went into a change V-shape, heading south.

With the fall of oil, the celebration was over for long-hold investors. However, the party continued for long/short investors. Those are investors who are able to benefit from both the upside and the downside of an asset, so they enjoyed the downside just as much.

Oil is depressed

On the fundamental side, there is nothing new. Global demand has been repeatedly downgraded by the IMF and the International Energy Agency. Around the supply side, shale, OPEC and now Iran will continue to add to the stockpile. It seems absolutely hopeless for oil.

But investors must ask themselves: what can oil sink? Must i buy the dip?

I am the emerging market analyst from Port Philip Publishing. I operate a service called New Frontier Investor. I help my clients to invest in higher growth opportunities in emerging markets.

Despite the turmoil in China, many of our Chinese opportunities are still way above their entry points. Most of our ex-China investments are profitable. How do we achieve that? We bought low and held onto value.

As of late, I have been promoting depressed assets such as commodities and depressed emerging market stocks. I brought oil onto my list over the past dip a few months ago. Right now, I’m telling investors to buy much more. I brought Brazil to the list a few months ago. It is yet to turn around, and it is right now even more attractive than before.

I guess you can call that contrarian trading. The point is, I believe oil is not high enough for its long term fundamentals, so it will rebound.

What should you do with OSH shares now?

If you are a long/short participant, your 52 weeks rolling return should be near or higher the 10% mark. It has been taking advantage of a series of long positions in the market. For long-hold investors, you ought to have a longer term perspective. Picking healthy companies at the dip is the most profitable strategy you can have.

Ken Wangdong+
Emerging Market Analyst, New Frontier Investor

I’m currently in the US on a research mission. A mission to discover some of the best cyber defence possibilities that exist in the world right now.

More on that in the coming days.

But when I’m away on a work missions it leads to a bit of period bashing away on the keyboard in a hotel room. And invariably in the background is good old US TV.

There’s not a lot to choose from really. Unless I want to watch endless re-runs of NCIS or the constant squabbling on The View, I’ve really only obtained about two choices.

One of these is ESPN. That’s great for downtime. And interestingly right now in the US, there’s some heated racial controversy in the NFL. Evidently one NFL coach is ‘uncomfortable’ amongst some of the black players.

I find it unbelievable that in both Australia and the US that certain of the biggest news stories is all about race.

It go to show that you are able to ‘progress’ as much as you like with equal rights, but shaking the shackles associated with history is hard to do. It is quite sad.

But racial controversy and ESPN aside, my additional viewing options is BloombergTV. So that as of today the biggest story on Bloomberg is cars.

You see a good indicator of an economy’s strength is new car sales. To put this very simply, if new car sales are on the increase, then things are looking pretty good.

It says people have jobs, cash is flowing and consumer confidence is on the rise.

And when all the car companies are reporting increases in new car sales, then you have to consider serious notice.

That’s not to say there’s not problems in the world

There’s much debate right now about where the global markets and economies tend to be heading. You’ve got Greece in turmoil over in Europe. Upon Monday the Greek marketplaces had the worst sell-off ever. In a matter of minutes after the starting bell the market tumbled 23%.

Five of the biggest banks lost 30% in the day. It would happen to be more except the daily limit is 30%…

With Greece in turmoil, we turn to Asian countries. And China is still in the midst of turmoil. The market is still tumbling, factory activity shrank more than initially expected, and growth is still looking weak.

Even new vehicle sales in China are falling. Volkswagen reported their first sales decline within a decade earlier this year. And Ford predict a drop in their Chinese language new car sales this year. China, it seems, isn’t always likely to grow.

This of course leads all of us to the US. If there’s weak point in China and European countries it could well spread to the US. If it does also it starts to drag on the US, it gives the Fed carte blanche to print more cash and keep prices on hold.

As Kris has said within Money Morning before, it could be a win-win for the Given. If the economy stutters a bit, they will print more cash and be announced the saviours of the economy. In the event that things look up for the better, then they’ll jack rates and say the economy is fit and fighting…thanks to them of course.

But looking at brand new car sales here in the united states, perhaps the economy here is already fit and fighting. Even when China and Europe’s problems creep across the Pacific and Atlantic, maybe, just maybe, the united states will push on via without the need to print cash.

How just one car can boost an entire economy

You see one of the best indicators for a strong economy is the correlation between new car sales and unemployment. If you’ve got a job, you can buy a car. If you don’t have a job, you can’t.

Source: Wall Street Daily

And because the unemployment rate lowers in the US, new car sales are climbing. IN fact the US just reported three straight several weeks with the new car sales rate above 17 zillion.

The last time this happened had been 15 years ago.

All major car makers are reporting stronger new sales numbers. General Motors [NYSE:GM] expires 6.4%. FIAT Chrysler Automobiles [NYSE:FCAU] up 6.2%. And even Toyota Motor Corp (ADR) [NYSE:TM], although not because strong, is still up Zero.6%.

But when it comes to selling cars the actual Ford Motor Company [NYSE:FORD] is one of the best. For the month of This summer alone they sold 222,731 new cars in the US. That’s a sales increase of 5%. It’s best because July 2006.

Much of this success is thanks to one model. The F-150.

Source: Ford Media

When sales of the F-150 are up, Ford is up. And when this 112 year old staple of American capitalism is up, so is the united states.

It’s hard to think, but the power of sales in the newest model of the F-150 can actually raise the entire confidence of a nation.

Sales of the F-150 have recently been a little shaky. This is down to financial jitters and production problems within Ford. But now manufacturing is back on track. And it seems as though the US might be as well.

Ford just released the F-150 sales numbers for July. And they caught everyone by surprise. The new F-150 saw a gain of 13% within retail sales. That is massive. In July they shifted 66,300 new F-150s. That’s the best July results in 9 years.

The increase in sales is a surprise. But the fact it’s the F-150 leading the charge isn’t. America loves big trucks. The bigger the better. Cadillac Escalades, Lincoln Navigator, Ford F-150, Ford Explorer, GM Sierra and more.

In the past these have all been big, cumbersome, heavy trucks and Sports utility vehicles. However there’s a change underfoot. It’s from big, bulky and high to big, bulky and lightweight. And the F-150 is leading the actual charge.

The latest F-150 is an incredible step forward in car making. Its body is made from aluminum. That makes it one the least heavy F-150s ever made. Importantly, the use of aluminium doesn’t sacrifice structural power.

The use of aluminium is part of a global trend in the car industry in order to ‘lightweight’ cars. The end game of lightweighting is to improve fuel efficiency.

The easy equation is that the lighter an automobile (or truck) needs less fuel. And with tough new emissions standards, these big trucks have to get more efficient.

However, it’s not only Ford pushing forward with lightweight technology. The Vw Group, FIAT Chrysler, and GM are lightweighting cars and improving efficiency.

That’s important to investors. Because it creates tremendous opportunities in wise investments. And in particular there are small-cap Foreign stocks that will benefit from a world with millions of lightweight vehicles built from aluminium.

With an 18-fold increase how can you ignore this opportunity?

Think about this. The US alone is on the right track to shift over Seventeen million new cars within 2015. Even with falling new car sales, China will still account for around 23 zillion new cars. And according to Statista, globally there will be around Seventy three.87 million new car sales this year.

Now looking at the F-150 for any second, each truck uses around 855 pounds (388kg) of aluminum in its construction. Right now aluminium costs about US$0.715 per pound. So each F-150 uses US$611 worth of aluminium.

In 2015 they are looking at the F-150 exceeding 700,000 units. That’s 271,600 tonnes of aluminum just for the F-150 alone. And Ford will spend around US$477 zillion on aluminium just to meet demand of the F-150.

Outside of The far east, global aluminium production within 2014 was 24 million tonnes. Including China that figure pushes up to around 50 million tonnes.

Ford’s demand for the F-150 alone is 0.54% of global aluminium production. That might not sound like a lot. But remember this is one single model of truck in an entire industry moving towards lightweighting technology.

The Wall Street Journal reports that,

‘By 2025, 18% of all vehicles in the U.S. are expected to have all-aluminium bodies, compared with less than 1% now, according to Ducker Worldwide LLC, a consulting and market-research firm.’

That’s a rise in demand some 18 occasions higher than it is today. In other words, one of the biggest market opportunities within the next five years are aluminium companies.

With 73 million new cars hitting the road each year, you can’t ignore this opportunity. It is a ready-made market that’s at the initial phase of new innovation. That is what expense dreams are made of.

Regards,

Sam

The ongoing crash in commodity prices wasn’t enough to force the Reserve Bank into an ’emergency’ rate cut yesterday. But the prospect of another rate cut in Australia is much nearer than most people think.

Earlier this week, manufacturing data out of China hit a two year reduced. Monday night, a studying of US manufacturing came in less strong than expected. This wasn’t great news for the commodities sector. Copper and gold lost about 0.5%. Brent crude fell a massive 5% to just above its January 2015 low point.

The item rout is now a bloodbath. As the Financial Times reviews:

‘The commodity rout is now officially as bad as during the financial crisis. The actual Thomson Reuters Core Commodity Index, the actual broadest and longest running basket of tradeable oil, whole grains, and metals, just fell to a level last seen in February 2009.

‘The drop in the index comes as Brent crude oil offers dropped back below $50 the barrel for the first time since The month of january and as copper and aluminum prices fall to a six-year reduced.

‘The TR CRB index hit 199.7688 around lunch break in New York, down from 203.1 on Friday. It’s low in early 2009 in the peak of the financial crisis was 199.6386.‘

By the end of the day’s trading, the index closed below this year’s low. The commodities boom is well and genuinely over folks. Keep in mind although that this is a US dollar denominated index. The situation is not quite as bad when you look at things through the lens of a weaker Aussie dollar, as you can see in the graph below:

In Aussie dollar conditions, commodities hit a low point back in 2012. Falling fossil fuel and iron ore prices (not reflected in the above chart) led the RBA to aggressively slash interest rates throughout 2012.

Commodity prices rebounded strongly into 2014 thanks in part to a depreciating Foreign dollar. Then came the oil price rout, which sent the index back down to test to June 2012 lows.

So far the lows are holding, but the chart certainly doesn’t look healthy. If you were to include the economically important fossil fuel and iron ore prices in to the above chart, then Australia would indeed be looking at the actual worst commodity price levels seen in many years.

Despite this, the RBA did not pull out a surprise cut the other day. I wrote in the past’s Daily Reckoning that I didn’t think he would, but one is coming at some point.

Bank boss Glenn Stevens may want to wait another month or two to see whether attempts to cool the housing percolate have had any effect. Rates of interest on investor loans have increased across the board, but so far it is had little effect.

By just about all accounts, capital is still pouring into Aussie property. A 25 basis point improve for investors is hardly enough to reduce interest in the sector. A weaker Aussie dollar is playing it’s part too. For foreign investors, a weaker Foreign dollar increases their buying power.

The Financial Review reported yesterday the Cromwell Property Trust [ASX:CMW] has had a deal from a Korean asset administration fund for its Cromwell Box Slope Trust. The trust is the owner of an Australian Tax Business building currently under construction in Box Hill in Melbourne.

And just last week, the Chinese sovereign wealth fund China Investment Corporation (CIC) bought Investa Property Group’s nine workplace towers for a massive $2.Forty five billion, placing the assets on a very low (bubble such as) yield of 5%.

As the Financial Review documented at the time:

‘The more than 30 per cent slide by the?Australian buck and the record low interest price environment?helped drive up the cost but also made it?more compelling for?offshore investors transacting in US dollars.’

In short, funds continues to flow into Sydney, buying up prime assets. How are lower rates of interest going to help? They won’t. Just about all they will do is encourage more speculation in residential property and more consumption on the back again of speculative gains.

To financial this borrowing and consumption binge, we need foreign capital, and we’re getting it by selling off our best property.

Pretty smart, huh?

The more property we sell, the more future income generated by those assets flows offshore. This will show up in the years ahead using a continually growing current accounts deficit.

The only potential gold lining is that you could make a disagreement that Chinese buyers aren’t particularly astute. Over the past couple of years, Chinese investors haven’t covered themselves in glory.

There would be a lot of buying of commodities near the top of the cycle in 2011, there is the Chinese property bubble, a gold buying spree as prices run up in 2011, and much more recently capital chasing speculative returns in the Chinese stock exchange.

In short, Chinese capital loves momentum, which is why you’re right now seeing big investments within Aussie property. Could the recent record investment from CIC symbolize another market peak?

Not in the event that rates and the dollar keep falling. Australia’s broken economic model still has some life inside it yet.

Getting back to commodities, are you looking to buy, with prices striking multi-year lows?

While the typical contrarian response will be a ‘yes’, I would say no. Why try and pick the bottom? Why not wait for signs that the downtrend has finally run its course prior to loading up?

Let’s use BHP for example. This is how I go about picking stocks picks (or avoiding them) in my Sound Money. Seem Investments newsletter.

The chart below shows the two-year performance of BHP. We recommended BHP as a ‘short sell’ in September last year. That means you make cash on the trade when the cost falls.

I knew BHP would are afflicted by falling iron ore prices and at the time the oil price had started to fall dramatically too. More importantly though, the stock price had just made a new low as well as was entering a downward trend.

The combination of negative basic principles and a charting outlook that confirmed the negative view was enough for me to tell subscribers to sell.

Now, as you can see through the downward sloping green arrow, the downtrend is well established. While BHP may be attempting to bottom right now, the path of least resistance is unequivocally down.

The odds favour this particular downtrend continuing, and I wouldn’t be shocked to see BHP break through support at $25 and make new lows in the weeks or months ahead.

I’ve discovered from painful experience that purchasing in the face of a downtrend is like swimming against a current. It’s tough work and there is a low probability of achievement.

You’re far better off waiting for the actual downtrend to exhaust itself and for a new turnaround to emerge before getting involved.

So if you’re tempted to buy commodities at this point, go jump in a river and try swimming upstream. Then, lay lying on your back and let the current get you. How much easier is that?

If you have in mind investing using this approach of blending fundamental and specialized analysis, click here. As you will see, it works.

Regards,

Greg Canavan,
Editor, Sound Money. Seem Investments

From the Port Phillip Publishing Library

Special Report: The Golden Age of Infrastructure China simply unveiled a $100 billion multinational investment bank for a single mission: Rebuilding the 2000-year old Silk Road trading route. Why? Because the Middle Empire is determined to redraw the global financial map…and establish a ” new world ” order of trade. So it’s kick-starting what could be the biggest infrastructure boom in history…and handing a once-in-a-lifetime value investing opportunity in two companies that could double in price once this brand new ‘Golden Age of Infrastructure’ dawns…

It’s day two at the Sprott-Stansberry Natural Resource Symposium in Vancouver, Canada.

And if you thought day one sounded good, day two was a cracker!

Doug Casey, particularly, was in fine fashion.

If you have not heard of him, he’s the actual Founder and Chairman associated with Casey Research — a globally accepted investment institution. Casey is libertarian and an anarcho-capitalist. And he’s well known with regard to never not having an opinion.

And he or she lived up to his reputation. While I was hanging onto every one of his words, I was thinking: when is he going to possess something positive to say!

‘Mining is a 19th century business’

Doug started off with a line that sent shivers throughout the space: ‘Mining’s worse today than it’s ever been before. And it has absolutely no future.‘

Not very comforting if you’re a resource investor!

But then again, will he be right?

I mean, mining has been around since before the days of the Roman Empire. Back in those days, the Romans dug up gold, producing an average of one gram for each tonne they mined. Now, you’re mining it for one 10th of a gram. So Doug’s right when he says that ‘most of the high-grade, low-surface build up are gone.’

And yes, gone forever.

Just look back 100 years…

The days of the actual gold rush seem like the fairy tale. No longer can you drop by the local creek and pan gold. You can’t even head to Bendigo or Kalgoorlie, start digging and load up the truck.

Now, complex technology is a must in the exploration business.

This means that studying geology, geophysics and geochemistry is mandatory. And even then, after spending millions of shareholder dollars, there’s not assure in finding a massive, high grade mineral deposit. After all, it’s just analysis at the end of the day.

So what great is there in mining?

To be honest, Doug couldn’t say much.

To start with, before you make any money from the my own, millions of dollars are spent on ecological studies — studies which often consider years to complete.

This isn’t just about all.

While the environmental battle is on, the local communities start seeking a slice of the pie. And, of course, of your time and money.

Then, once you’ve analysed the rock formation, you’ve got to drill it. And if you’re lucky — I mean, truly lucky — you’ll intercept some thing rich and thick. But then there’s millions more to become spent in proving up the deposit.

And if you finally do get around to mining the thing, government shows up again for their slice of the pie. Indeed, seeing the actual mine as an ‘entitlement fund’, government demands its fair share in royalties (if it doesn’t make money) and taxes (if it does make money).

So, indeed, mining is not a sexy business.

But if you like boring…Doug Casey says there is one opportunity

Gold!

Doug, like myself, believes that we’re in a massive bond bubble. For over 12 months, I’ve been warning you about the coming sovereign debt crisis in 2016/17. If you’re wondering, this is the event which should see gold go through the roofing.

And if you question what will take the bubble…

Think interest rates.

US interest rates have been falling for 3 decades. This has fuelled the debt period to Armageddon levels. And it’s nearly ready to pop. Indeed, the very first interest rate hike should come within September/ October. And a second rate rise is likely in December.

These occasions will trigger the end of the actual 30-year bond bull market. So while the stock market won’t crash this time, we’re not looking at quite a situation.

In Doug’s words, ‘The next financial crisis will squeeze the standard of just living, sending the world into a Excellent Depression worse than the 1930s. This is the reason why gold stocks, which are trading at crappy prices, may explode in the years ahead, thanks to fear and greed.’

No argument here. In fact, this is the precise financial crisis that I’ve been preparing Resource Speculator readers for since last year.

I’m helping my readers make use of the resources bear market. The low it goes, the more opportunities exist.

And I believe that we’re yet to see the final phase of the resources bear market. This means commodities have significantly further to crash, including gold, which has been long said will fall to US$931 per ounce.

That will offer you a great buying opportunity to pick up the best gold stocks available on the market.

If you believe that the sovereign debt crisis is coming, and you want to know how you can survive and prosper immensely, resources are the place you’ll want to look in 2016/17.

Click here for more details.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

I’m here at the Sprott-Stansberry Natural Source Symposium in Vancouver, Canada.

And exactly what a day so far!

Robert Friedman, Founder of Ivanhoe Mines [TXV:IVN] delivered an outstanding presentation. I saw the actual legendary resources veteran present last year in Melbourne. And he never ceases to impress! Indeed, he’s one of the best salesmen I’ve ever seen.

Rick Rule, Ceo of?Sprott?US Holdings, questioned him. Rick has more than 35 years’ experience in the resources game — another living legend in the business. And it was nice to hear that he’s bullish on the same resource sectors that I think offer the greatest potential over the next couple of years.

If you’ve been following me in Money Morning though, you probably know that right now I’m extremely bearish on most resources. But while I’m bearish resources, I see immense value!

So whenever Rick Rule says that he or she ‘loves a horrible resources market‘, I understand why…

Check out this chart

To understand on your own, check out this chart. It shows the performance of the junior gold mining sector from the US S&P 500. Which performance is shockingly bad. While the US S&P Five hundred is up nearly 70% from Next year, junior gold stocks are down nearly 90%!

Click to enlarge

I obtained this chart from David Sjuggerud, Editor of True Wealth at Stansberry Study.

As I watched Steve existing my jaw dropped. You would think he’s got a working very ball. Not only did he or she tell his readers to begin buying stocks at the GFC lower in 2009, he got them in to real estate in 2011, and biotechs within 2014 — before the bull market. He ended up making his visitors 800% on the biotech trade.

But what’s much more extraordinary was that he cashed out of the Chinese stock market lately. He bought at the bottom last year, when the mainstream was whining about Chinese ghost cities and over-leverage, and he just offered for a net gain of 86%.

As you can see, the best strategy is to disregard the mainstream. Instead, become a contrarian. Or else you’ll just be part of the 99% that lose money.

Talking about contrarians, Steve’s right now turning his attention to gold stocks. Given his history, this is a good signal…

Now, before I go on, if you don’t know already, I am extremely bearish on gold stocks. And Steve does agree with me. While his attention is actually on the gold sector, he’s not buying…yet.

He’s not even attempting to pick the bottom. This is because David is a conservative value investor. For this reason, he wants to buy once the uptrend resumes.

I, on the other hand, am looking to identify the bottom using technical and basic analysis. The bottom normally comes when everyone is extremely, and overly, bearish. And we aren’t there yet. This is why, for the past 1 . 5 years, even when gold was up to US$1,350 per ounce, I have been warning that we’ll view it fall to US$931 per oz.

But either way I’ll start recommending gold stocks soon — even if it goes below my target, which is looking more likely.

It requires courage to buy when other people are selling, but sometimes it just makes sense to buy what everyone else hates.

Rick Rule — these are the times when you are making the big dollars

Rick Rule has a powerful opinion on this. He says which ‘during a resources bull marketplace, everyone wishes they understood exploration companies when they created the discovery drill hole. But in a bear market, like we’re in today, nobody…absolutely no one…wants to learn about these companies. And this is the best time to purchase — one to one and a half years in front of everyone else.’

And that’s exactly what I’m doing. And have been performing for Resource Speculator readers. I’ve been preparing all of them this year for next year, after i believe we’ll see the resumption of the resources bull market. I’ve even pinpointed where In my opinion the bottom will be for my subscribers.

As such, I suggest getting your jobs ready today. If you pick the best stocks in the best industries, you’ll set yourself up to make the a lot of money. And if you want to know the best sectors, click here.

I’ll be back with more information from the conference tomorrow.

Regards,

Jason Stevenson,

Resources Analyst, Resource Speculator

What Happened to Origin Energy Ltd’s Share Price?

Today, shares in energy developer Origin Energy Ltd [ASX:ORG] jumped through nearly 2.7% on a whirlwind day for the Aussie stock market. Today’s price action is encouraging, but it has been difficult to make real money out of Source shares for a long time. At $11.Forty five, ORG shares are still less than at almost any time in yesteryear seven years.

Why Did This Happen to ORG Shares?

One associated with Origin’s key projects is Australia Pacific LNG Pty Ltd. This is a coal seam gas opportunity that Origin is developing like a joint venture with ConocoPhillips [NYSE:COP] and Sinopec Company [HKG:0386].

This morning, Origin passed on what’s promising about the project — it’s on track to meet its export target. The JV has started in order to load refrigerants to its Curtis Island LNG facility. It’s ‘firmly on track’ to create its first LNG export within the second half of 2015.

This good news obviously caught a few investors by surprise — putting a solid bid under this big company’s inventory price.

What Now for Origin Ltd?

Companies like Origin Energy must always find buyers for their items — but the question for you as an investor is: at what price?

A deluge of Foreign LNG is due to hit the market next year and beyond. Will there be enough demand at the right price, both here and internationally, to justify the massive investment in capacity the likes of Origin have made?

If not, writedowns could come — and the stock price could endure more than what investors possess copped over the past seven years. And when the macroeconomic picture falls apart, that pain could come swiftly for Origin traders.

To learn how you could use Aussie shares backed by hard property to protect your portfolio from potential collapse, go here to claim your free book through financial warfare analyst Rick Rickards.

And for deeper analysis on the Aussie stock market and worldwide economy, keep an eye out for my essays in Money Morning — Australia’s biggest free daily financial e-letter.

Cheers, Ricky Dohrmann+
Editor, Money Morning