| April 12, 2014 | | | | | | | |  | | | | Weekend Edition: Making Adjustments | | | | | - A minor (but important) tweak to The Daily Reckoning weekend edition...
- This week's must-see DR… The 5 Min. Forecast… Laissez Faire… and multimedia content...
- Plus, CEO and chief investment officer of U.S. Global Investors, Frank Holmes, reports on the golden surprise he learned about at a recent conference in Hong Kong...
| | | | | | | | | | | | Oil Money Is Back With a Vengeance 
Many people believe the time to make a fortune in oil is over… But they couldn't be more wrong!
America will become the world's largest oil producer in the next five years… and those who get in now could see unimaginable wealth.
Click here now for details. | | | | | | | | | | | | Bethesda, MD
April 12, 2014  Peter Coyne, making a small adjustment...
This morning, we're in Bethesda, Md. -- right outside the belly of the beast. We're camping out in a quaint restaurant called Nest Cafe as our fiancee and her lady friends celebrate her bridal shower. We figure that now's as good a time as any to explain a few minor tweaks to you… If you've managed to suffer through these daily reckonings long enough, you've seen your fair share of changes. Well, there's been another small one. I'm positive it will improve your experience. From now on, the top five items from our Daily Reckoning website are going to be slightly different. You'll notice that some of the links in today's episode have labels. For example, today, our friend Dave Gonigam's post below reads:  right before his article title. Perhaps obviously, that's because Dave the managing editor of our 5 Min. Forecast e-letter. What you may not know, however, is that Dave's material is reserved for paid-up subscribers. From now on, we'll be periodically making bonus material like Dave's writing available to you at no charge. Consider it a thank-you for reading. One place to find that sort of material from now on will be in the "This Week on DailyReckoning.com" section. That will be in place of linking to the essays from this week's episodes. Today, you'll see we have a video selection… a post from The 5… something from the folks at Laissez Faire… and one short "extra" to keep you up to speed on varying topics. We hope you enjoy them. Below those five links, we'll still feature our typical Flotsam & Jetsam section -- which will always go into detail about a topic outside of this week's theme (which was a partly about China and partly about "catalyst trading"). This week's forgotten topic is gold. And who better to bring you up to speed than CEO and chief investment officer at U.S. Global Investors, Frank Holmes? Ol' Au 79 gained about 18 bucks on the week. But that doesn't get to the heart of the demand story Frank uncovered recently in Hong Kong. More from him and this week's top five insights below. Please consider each item at your leisure... | | | | | | | | | | | | Urgent Tax Research Notice
If you HAVE filed your 2013 tax forms, please click here.
If you HAVE NOT filed your 2013 tax forms yet, please click here.
Either way, the research we have for you today could change everything you knew about taxes… And could instantly save you $1,000s this tax year, and every year for life.
Simply click here for all the details. | | | | | | | | | | | This Week In The Daily Reckoning
******************************* | | |
 BIG WINNERS FROM THE RUSSIA-CRIMEA FALLOUT
4/9/14
"The West is planning to pile on the sanctions to punish Putin's successful power play... But Russia is a global commodities powerhouse, supplying critical materials to many western supply chains. So the real question is, will Western sanctions against Russia work at all?"
  TOP 10 TAX MISTAKES TO AVOID
4/9/14
"Tax Day is fast approaching. And if, for whatever reason, you've been dragging your feet on filing, make sure you avoid these common tax mistakes before you send your return to the IRS. (When you're done watching -- check out part II.)"
 2 (ESSENTIAL) "HEARTBLEED" SOLUTIONS
4/9/14
"If anyone browsing the web over the last few days has logged into any website there's a good chance they've come in contact with a computer bug called "heartbleed". Internet users (maybe even you) might just have to change their passwords across the sites they use..."
  AN ECONOMIC THEORY TO HELP YOU INVEST
4/9/14
"The single most asked question I get at investment conferences is, "Do you have a list of money managers who invest guided by the Austrian School of economics?" The question is a good one..."
  DEBT MAKES YOU DUMB (JAPANESE EDITION)
4/2/14
"Popular theory views debt as a magical elixir - a "cure all" for declining economic growth. Nothing could be further from the truth. Let's rundown of one country that exemplifies this contradiction..." | | | | | | | | | | | | Is This Man a Villain or a Hero? 
Do you know who this man is? I doubt you'll ever see him on the news.
But to one group of incredibly powerful Americans… This man is a mortal enemy of the United States.
Who is he? Why do some men consider him so dangerous? And why does it matter so much to you?
CLICK HERE for all three answers. | | | | | | | | | | | | | Flotsam & Jetsam
******************************* | | | | The Gold Market's Big First Quarter Surprise | | | | by Frank Holmes | | | | |  Recently I visited the breathtaking city of Hong Kong to speak at the seventh-annual Mines and Money conference, Asia-Pacific's premier event for mining investment deal-making and capital-raising. During my time in Asia I had the additional privilege of addressing the audience of the Asia Mining Club, alongside my good friend Robert Friedland, Executive Chairman and Founder of Ivanhoe Mines.
The mission of the Asia Mining Club is to promote education among its members, and one way to achieve this is by hearing from experts in the financial markets, notably those focused on resources and commodities. During the club's sell-out event, I too, confirmed a great deal about the commodity "buzz" on that side of the world, especially on gold…
The demand for the precious metal in Asia is truly phenomenal! In smaller countries like Indonesia, Thailand and Vietnam, consumption of gold totaled 300 tonnes in 2013, and according to Bloomberg, in 2014 mainland Chinese buyers purchased a total of 125 tonnes in February (including scrap). This number tops the 102.6 tonnes purchased in January and 97.1 tonnes purchased a year ago.
As I wrote about in February, Switzerland plays a role in the movement of physical gold into Asia as well. Home to many of the big gold refiners, Switzerland released monthly gold trade data this year for the first time in over 30 years, with the report showing that 80 percent of shipments went straight into Asia. If we continue to see these large movements of the physical metal, especially from the West to the East, it's only a matter of time until these supply-and-demand factors lift the gold price.
| There are two sides to the gold equation: the Love Trade and the Fear Trade. | I often say there are two sides to the gold equation: the Love Trade and the Fear Trade. While Asia's cultural affinity for gold continues to feed the Love Trade, concern over government policies which increase inflation and devalue currencies, fuel the Fear Trade. The Fear Trade demanded attention again on the back of Janet Yellen's talk of the Federal Reserve raising interest rates in the next six months.
While low interest rates make it less expensive to borrow money, measures to keep rates low also chip away the value of the dollar and cause concern of accelerating inflation. Once real rates start rising, gold isn't as attractive to those who trade on fear.
As I've written about recently, a key driver in gold prices is the real interest rate environment — the real rate of return taking into account the level of inflation. When real interest rates are negative to low, gold prices historically turn positive because there is no opportunity cost to hold the metal. The lower the real rates, the better gold tends to do. So, Yellen's initial hint of rising rates sent gold prices falling.
On Friday the March U.S. jobs number came in at 192,000. While the number is in line with expectations and clearly shows that hiring in the U.S. is rising, it fell a bit short of the 200,000 jobs projected. The number was just enough of a miss to disturb investor confidence and drive some to seek refuge in hard assets, spurring the price of gold again.
BCA Research believes that after Friday's report, the current pace of employment will be sustained. Although the movement is gradual, hiring is going up.
BCA continued by commenting that,"The data will underscore the Fed's view: that the need for quantitative easing or other non-conventional tools is waning, but that there is no rush to normalize interest rates."
In my opinion, even with job numbers in line with expectations, the Fed is still going to focus on long-term job creation and keeping interest rates low, or at least not rushing to normalize them as BCA research stated. If inflation starts to rise while these rates are low, we could see a higher movement in the price of gold.
| "This deal is both sweet and sour." | Another headline-maker for gold last week was Yamana Gold's purchase of 50 percent of Osisko's mining assets. I think our Portfolio Manager Ralph Aldis said it best in a recent BNN interview with Howard Green regarding the takeover; "This deal is both sweet and sour."
The sour part is that by our models, which look at relative value of assets, it appears that both Osisko and Yamana are paying too much on this deal. On the flip side, the sweet part is that this bid caused companies like Mirasol, Pretium and SEMAFO to immediately rise. The structure of the entire deal is a complicated one, but witnessing these stocks finally waking up, is a change in the sentiment for the gold sector that, in my opinion, needed to be seen.
At U.S. Global Investors we are always watching for opportunity, while concurrently managing risk. Along with the "sweetness" of the Osisko deal, I find additional encouragement for the broader commodities space, as well as for gold, from Stifel Nicolaus' Barry Banister. His strategy for the second quarter of the year is that we may see a one-year rally in commodity-related stocks.
Based on the breakout of the Continuous Commodities Futures (CRB) Index, along with the movement in the U.S. dollar, he forecasts that commodities could rise 15 percent year-over-year in 2014.
High Frequency Trading became a household word overnight when bestselling author Michael Lewis gave an interview to 60 Minutes in advance of his new book, "Flash Boys." Lewis' allegations of high frequency trading practices that result in a rigged stock market have prompted a firestorm of support from Charles Schwab to Mark Cuban.
I agree with Schwab, chairman of Charles Schwab Corp., who said "high frequency trading has run amok and is corrupting our capital market system by creating an unleveled playing field for individual investors and driving the wrong incentives for our commodity and equity exchanges." I'm glad to see this issue getting the attention it deserves.
From short selling to overreaching regulation, over the years I've shared my opinions on practices that harm individual investors and create unjust advantages in our free market system. I believe that investing is key to long-term wealth creation and that investor confidence in the system is key to capitalism.
The first quarter of the year has certainly provided surprises for the gold market, but remember that every coin has two sides. Every downward data point has an upside opportunity. Follow the smart money, stay diversified and remain a curious investor.
Regards,
Frank Holmes
for The Daily Reckoning | | | | | | |  Frank Holmes is chief executive officer and chief investment officer of U.S. Global Investors Inc. | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book.
| | | | | | | | | Additional Articles & Commentary:
Join the conversation! Follow us on social media:
| | | | | | | | | |
© 2013 Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202. A lthough our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. 
No comments:
Post a Comment
Keep a civil tongue.