Wednesday, October 29, 2008

Federal Reserve Overnight Rate Cut to 1 percent

Still trying to jumpstart the economy, the Federal Reserve cut its key interest rate by half a percentage point to 1 percent. The federal funds rate cut is on overnight loans and what banks charge one another.

This is the second time in a month the fed has cut rates by half a percentage, as the month started off at 2 percent overnight lending rates, which was cut to 1.5 percent on October 8.

Commercial banks are expected to follow suit and cut their prime lending rates by half a point as well.

According to the Fed, they are willing to cut rates this low because economic conditions seem to indicate inflation will be contained. That assumption is probably unwarranted, yet the pressure to cut rates is why this event happened, not because it's good for the long term health of the economy.

Some are asserting it's the weakness in the market which is causing the fall in commodity prices, so this cut in rates is not risky. But that's only a small part of the picture. The reality is commodity prices have plunged because of the lack of credit, and large funds having to sell their positions in order to access cash.

That, more than anything else, is the reason for the drop in commodity prices, not the underlying fundamentals.

Remember that when inflation rears its ugly head again in response to government printing more money and lowering lending rates.

This is why the commodity bull market will extend longer than thought, as this temporary credit squeeze will eventually run its course and the demand from emerging countries for commodities continue to grow.

Commodities: Gold Mining Companies

Gold mining companies looking to preserve capital for yellow commodity business

Until the forced liquidation period is over, mining companies will have as their major goal the preservation of capital, rather than exploration and expansion. In other words, survival is the key during this difficult economic period.

None of the underlying fundamentals for demand has changed, as the needs of China remain. What all this will do is prolong the commodity bull market as we go through this temporary hiccup.

Like in any difficult time, commodity companies with heavy debt loads will suffer more than those that are run leaner. It's also probable that some of them either won't survive, or they will be bought up by healthy companies.

As far as commodities that at this time are being considered hot for 2009, tin, manganese, molydenum and bauxite are looking good. Others like cobalt, zinc and vanadium are probably going to tank over the next year.

Allan Trench, Australasian regional director of CRU research and advisory group said, "There is opportunity for the likes of tin, manganese and bauxite -- in the same way there was in uranium two years ago and as there was in phosphate earlier this year -- for IPOs."

Commodity companies that are well run will be looking to preserve capital throughout 2009.

Tuesday, October 28, 2008

Commodities: USDA MIsses Big on Corn Estimate

USDA misses big on acres planted in corn

It's hard to believe, but the U.S. Department of Agriculture missed the number of acres planted in corn this year by 1 million less than asserted on October 10.

That will bring the number of expected bushels down by 167 million from the last report.

Consequently, that could be good news for farmers, who can now expect about 5 cents more a bushel than thought, coming in at between $4.35 to $5.35 a bushel going ahead.

The USDA hasn't done too well this year in its corn estimates and other grain estimates as well.

Zcom Networks, Inc. Announces Company Has Appointed Mr. Robert Chastain as the Chief Mining Engineer

ZCOM NETWORKS, INC. (PINKSHEETS: ZCMN), a publicly traded company, announced the Company has appointed Mr. Robert Chastain as the Chief Mining Engineer. Mr. Chastain is a Mine Engineer with over 50 years' experience in precious metals exploration and production. He has worked in the US and International mining realms as a surveyor, geologist, mine engineer in grass roots exploration, mine planning, and development including milling operations, process plants, and mining activities. He worked with Anaconda Copper Company in mill development and served as lead mining engineer/part owner of Mineral Services Company until he accepted the position as President of Grubstake Mining America. Over the years, Mr. Chastain has mined gold, silver, copper, and founded his company Magic Uranium where he mined Uranium for the US Government.

For more information

About Zcom Networks, Inc.: Zcom is a multi-industry holding company with diversified interests including, among others, wholly owned subsidiaries, Allied Mineral Group, Inc., a mining development, exploration and extraction company with the 160 acre gold, silver, tungsten, platinum and copper placer mining claim CLS#12 in Ridgecrest, California; Pam TV International, Inc., a talk and music program provider offering a wide range of content through an interactive multi-media broadcast platform utilizing the internet, traditional radio and satellite radio; and Super Bazar International, Inc., a shopping network company marketing and promoting multiple products on TV, radio and internet including Super Fuel and TV Box.

This release include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties including, but not limited to, the impact of competitive products, the ability to meet customer demand, the ability to manage growth, acquisitions of technology, equipment, or human resources, the effect of economic and business conditions, the ability to attract and retain skilled personnel. The company is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

Zcom Networks, Inc.
Dr. Alex Parsinia

Monday, October 27, 2008

Commodites: Jim Rogers Agriculture Best Sector

Jim Rogers gives a great lesson in economics, current crisis, and why agriculture will be the place to invest in the years ahead.

Rogers believe the most financially successful people going ahead will be those that gravitate toward the agriculture sector, and in many cases those who choose to farm.

Friday, October 24, 2008

Commodities: US Dollar Strengthens

Dollar will collapse in spite of current strength

The U.S. dollar continues to strengthen because of the unique market circumstances, as it improved against euro, British pound, and the Australian and New zealand dollars today.

Against the Japanese yen though, it dropped to a 13-year low, as it's growing into the currency of choice for those seeking safety. At its lowest point against the yen today, the dollar fell to 90.89.

As Watching U.S. Dollar said today, "remarkable factors in the market keep the dollar high against other nations' currencies, as it was up to two-year highs against the euro, while it enjoyed a six-year high against sterling.

"Sterling fell to as low as $1.5270 against the U.S. dollar, while the euro was as low as $1.2498. The Australian and New Zealand dollars also plunged against the greenback, with the Australian dollar taking the biggest hit, falling by 7.6 percent to $0.6213, while the New Zealand dollar was right behind it, decreasing by 6.5 percent to $0.5576."

Looking ahead, the US dollar will eventually collapse as a perfect storm seems to be brewing against it in 2009.

Commodities: Gold Fall Lowest in 21 Months

Gold continues to get hammered as institutional investors continue to sell their precious metal positions in order to raise cash to cover bad stock trades and other bad investments.

The reason they have to do this is because they leveraged themselves to make investments, and now lenders are calling their loans, forcing them to raise short-term cash. This is why the usual strength and safety of gold in times like these hasn't come about, as prices continue to be pressured downward.

On the other side of it, the U.S. dollar has been the beneficiary of this trend, as most commodities, including gold, is dollar-denominated, pushing the greenback up in circumstances which usually weaken it.

Since the underlying fundamentals remain the same, this will eventually correct itself, but because of the complexity of some of the financial instruments invested in, it's impossible to measure the amount of time it will take for all of this to unwind.

Once it does, things will start to react normally again, and the U.S. dollar will start to fall, while gold will again rise. Again though, the time frame is impossible to predict at this time.

Early today December delivery for gold dropped to $681 an ounce on the New York Mercantile Exchange, a $33.70 fall. That's the lowest since January 11, 2007. Later in the session gold rebounded to $708.70.

Gold could end Friday with the worst trading week in its history.

Commodities: OPEC Slashes Oil Production

OPEC Continues Cutting Oil in Effort to Support Prices

In a dramatic emergency meeting meant to shore up the plunging price of oil, OPEC slashed oil production by 1.5 million, in the middle of the expected 1 million to 2 million barrels analysts were looking for.

Even though OPEC will cut production dramatically, crude prices responded by falling another 5 percent; evidently speaking to demand, which isn't going to change in the current economic crisis, which has consumers cutting back on any unnecessary spending or traveling.

OPEC is of course cautious in their approach, as some of the other oil-producing nations pressured them to cut production by at least 2 million barrels a day. The problem they face is if they cut it too much, and prices surge too high, consumers will cut back even more on expenses, and the plan would backfire.

All this has done for OPEC is offer the possibility of neutralizing or slowing down the fall; it won't make prices go up much higher ... if at all.

OPEC President Chakib Khelil confirmed this saying the intention of the production cuts was to limit the fall in oil prices, not an attempt to increase them.

Khelil was quick to add that even with the idea of consumers cutting back if prices go too high is part of their decision, they will cut production even more if crude prices drop to unsustainable levels.

On the New York Mercantile Exchange today, oil futures fell at one point to under $63 a barrel, while they were at $64.51 a barrel at around noon EST.

What it looks like OPEC is attempting to do is stop the price drop per barrel at about $60.

At this point nothing OPEC is doing is doing in cutting oil prices is keeping the price of oil stable.

Thursday, October 23, 2008

Tirex Resources Intersects High Grade Mineralization in New Zone at Mirdita

- Tirex Intersects 13.85m of 3.5% Copper and 1.3g/t Gold including 1.10m of 13.6% Copper and 7.4g/t Gold

- Assays pending on additional holes

- Drilling continues on multiple priority exploration targets

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 23, 2008) - Tirex Resources Ltd. ("Tirex") (TSX VENTURE:TXX) is pleased to announce the first drill assays from the Gurthi South No. 2 Zone on the Mirdita Project in Albania. The drill hole intersected a 13.85 metre (45.4 ft) section grading 3.5% Copper and 1.3g/t Gold including 3.65 metres grading 10.6% Copper and 2.9g/t Gold and including 1.10m grading 13.6% Copper and 7.4g/t Gold. The intersections are interpreted to be close to true width.

Summary of assay results from drill hole MR08-16:


(m) (m) (m) (%) (%) (g/t) (g/t)
125.35 139.20 13.85 3.5 0.6 7.5 1.3
126.25 129.90 3.65 10.6 0.2 6.5 2.9
126.25 127.35 1.10 13.6 0.2 11.5 7.4

Drill hole MR08-16 was drilled on the Gurthi South No. 2 target area located 2.5km south of the Koshaj Deposit area. Earlier this year Tirex announced wide zones with high grade drill intersections at Koshaj.

Tirex has also received results from drilling on two early stage target areas on the property.

At Shebe North located 18km south of Koshaj, Tirex crews found copper-bearing boulders near a geophysical anomaly. Two drill holes were completed to search for the bedrock source of the boulders. The first hole intersected a pyrite silica alteration zone with low metal grades. Assays are pending for the second hole. Such alteration zones are known to occur in peripheral areas around copper, zinc and gold mineralization. Tirex is now conducting additional geophysics surveys in the Shebe North area to better define targets and the potential source of the copper bearing boulders for future drilling.

At Gurthi South No. 1, located 2km south of Koshaj, Tirex drilled four exploratory holes to test the extent of mineralization reported in a historic drill hole. All four holes intersected narrow zones of mineralization. The best intersection (DH M08-10) assayed 2.75% copper, 1.27% zinc, 25.7g/t silver and 1.3g/t gold across 0.45m.

Bryan Slusarchuk, CEO, states, "Today's announcement regarding a new zone of high-grade mineralization at Mirdita represents a big step towards our goal to prove that multiple high grade zones exist in this District. Whereas the initial phase of drilling at Koshaj identified very high zinc grades with excellent precious metal grades, today's results show very high copper grades, also with excellent precious metal grades. Gold and silver values are largely unknown at Mirdita as silver was not assayed for during previous state run exploration and gold values were kept a state secret. Today's results indicate that precious metals exist in both zinc rich and copper rich zones in the District. The Tirex property is host to 17 known historical deposits and 102 geophysical anomalies most of which remain untested. Three drills are now turning at Mirdita and we hope to continue to produce excellent assay results such as we have announced today in this new area."

Tirex is a company purpose-built to explore and develop the large 344 square kilometer Mirdita Property in Albania. The nature of the VMS mineralization in this District provides Tirex investors with exposure to a high grade basket of metals: Copper, Zinc, Gold and Silver. The property is readily accessible by paved and gravel roads and is located 70 km north of the capital city of Tirana. The property covers the core of the historically productive Mirdita VMS base metal district. It represents an opportunity to explore Copper, Zinc, Gold and Silver zones that were previously partially mined, explored or evaluated at lower metal prices, and provides an opportunity to apply modern exploration techniques toward the discovery of new VMS deposits and extensions of known zones. In addition to the historical deposits identified by previous state-run exploration, Tirex has identified numerous high priority exploration targets resulting from the 2007 airborne geophysical survey, ongoing ground geophysics, geological mapping and other field work. The Mirdita exploration project is managed by an experienced team of Canadian geologists and other professionals, and several senior Albanian geologists, geophysicists and surveyors.

John Nicholson, P.Geo., a Qualified Person under the meaning of Canadian National Instrument 43-101 and Mirdita Project Manager, is responsible for the technical content of this news release. Drill core was HQ size (6.35 cm diameter) and BTW size (4.20 cm diameter). Half core samples were collected with a rock saw, tagged for identification and securely stored at the Tirex base camp until shipment. A total of 5% assay standards and 5% blanks were inserted into the sample shipment as a quality control measure in addition to the internal quality control measures applied by the laboratory. All samples were shipped directly to Global Discovery Labs in Vancouver, Canada where they were dried, weighed, crushed and pulverized. Splits of each pulp were then analysed for 30 elements by ICP Spectrometry and assayed for copper, lead, zinc, silver and gold by standard assay methods.

Further details on the company and the Mirdita Project can be found on the Tirex website at


Bryan Slusarchuk, CEO and Director

Forward-Looking Statements. This Tirex News Release may contain certain "forward-looking" statements and information relating to Tirex that are based on the beliefs of Tirex management, as well as assumptions made by and information currently available to Tirex management. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitations, exploration and development risks, expenditure and financing requirements, title matters, operating hazards, metal prices, political and economic factors, competitive factors, general economic conditions, relationships with vendors and strategic partners, governmental regulation and supervision, seasonality, technological change, changes, industry practices, and one-time events. Should any one or more of these risks or uncertainties materialize or change, or should any underlying assumptions prove incorrect, actual results and forward-looking statements may vary materially from those described herein.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

For more information, please contact

Tirex Resources Ltd.
Bryan Slusarchuk
CEO and Director
(604) 687-7160
(604) 687-7165 (FAX)

Alan Greenspan "Shocked" at Depth of U.S. Credit Breakdown

In one of the most pathetic comments I've ever heard from an alleged financial expert, former Federal Reserve Chairman Alan Greenspan told Congress Thursday that he was "shocked" at the depth of the breakdown in the U.S. credit markets.

If that's not bad enough, now Greenspan, who formerly opposed government regulation, has found government religion, as he is saying (under pressure) that he was "'partially' wrong in his belief that some trading instruments, specifically credit default swaps, did not need oversight."

While many big-government politicians are attempting to hide the government's direct culpability in the worldwide disaster, the only politician that understands what is going on, Ron Paul, had this to say about more government interference:
"In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many 'oversight' agencies and their mountains of regulations show that we are far removed from a free market economy."

Additional regulation is being touted to hide the fact that all this is the fault of the government in the first place. Now they're making it look like the free market is the problem, when in reality it's the abandonment of the free market that has driven this fiasco.

To get more specific, Democrats are in particular to blame for this because they pressured Freddie Mac and Fannie Mae to offer the sub-prime loans to unqualified buyers, which when they did, overall led to this disaster. Now the outrageous Democrats are trying to add more regulation to the mix, setting the nation and world up for something worse in the future.

This is the old socialist idea that everyone needs to be equal: eqalitarianism. The problem is this is a false premise, and a idealistic notion that has failed over and over again in the past, as there is a reason many people aren't able to buy homes or other financially related things: they aren't able to manage the responsibility.

Get people with no personal financial management understanding or ability into a house they can barely afford, and you have set them up for failure; they don't even think in terms of repairs or outrageous increases in taxes.

Here's how Greenspan described what happened:

"Without the excess demand from securitizers, subprime mortgage originations -- undeniably the original source of crisis -- would have been far smaller and defaults, accordingly, far fewer.

"A surge in demand for U.S. subprime securities, supported by unrealistically positive ratings by credit agencies, was the core of the problem."

What did he just admit? He admitted that government pressure to get people in homes is the underlying problem of the credit crisis. That's what he really said in words most Americans won't understand, so he felt safe to say it.

The excess demand came from the lower interest rates instituted by Greenspan, and the demand came from government pressure, especially the Democrats, to get people in homes that normally wouldn't be able to afford it.

As far as Alan Greenspan goes, there went his legacy, and deservedly so.

A number of economists that understood the extraordinary dangers facing the economy because of Greenspan's decision to keep interest rates so low, and thus cave in to the pressure to bring them low enough (and terms loose enough) to get uncreditworthy people into homes, have been saying for years this disaster was going to happen, and evidently the financial celebrity didn't think he needed to heed the warnings.

The most dangerous and bizarre thing in all this, is the non-capitalist Federal Reserve, and by extension government, have been moving away from capitalism for years, unbelievably, in the name of capitalism. So now those that want to make the government even more powerful are lying and saying it's a failure of capitalism, when in fact it's a failure of an increasingly socialist-leaning U.S. government.

Commodities: Scott Bleier Says Oil will Drop

As oil prices fall, will a contango arbitrage opportunity arise? I think so!

While some have thought the prediction of Scott Bleier that oil and commodities would fall after they reached outrageous prices that didn't line up with the fundamentals was precient, I don't think it was very hard to predict.

In the middle of July Bleier said oil was going to plunge to $100 a barrel, when it have made significant moves upward. Of course you had the usual clueless that got caught up in the euphoria who started predicting $200 a barrel in the near future, which made Bleier's prediction seem even more prescient.

Of course Bleier was even being too conservative in his projections, as they fell further than even he thought.

Now, as world demand is plummeting, and credit extremely difficult to get, he's predicting oil will fall to as low as $50 a barrel. It very well could.

The major reason that could happen is because cash-hungry institutional investors have been selling their positions in commodities like oil to become more liquid. That and slowing demand because of consumers cutting back on unnecessary driving and traveling is driving the price of oil and other commodities down.

Who knows, it could go below $50 a barrel, even with OPEC meeting next month to possibly reduce production by 1 million barrels a day in hopes of stopping the fall in oil prices.

Scott Bleier is president of Create Capital.

Oil as a commodity looks like it could provide an excellent contango arbitrage opportunity when oil rebounds.

Wednesday, October 22, 2008

Commodities: Livestock Organizations Outraged

Livestock Organizations outraged over loan support by USDA for ethanol industry

With the corn-based, subsidized ethanol industry in America becoming more of a debacle and outrage daily, the recent comments by Agriculture Secretary Ed Schafer shows he must consider the ethanol industry a religion, as it could only be blind faith that could even consider it legitimate, not reality.

Schafer commented on using USDA rural development loan guarantees to artifically support rescue ethanol plants that can't make it. Essentially it would be a bailout of the unwanted industry.

According to the livestock organizations, the reason the ethanol industry is in trouble is their irresponsible speculation in corn futures.

"We in animal agriculture are particularly concerned that you would consider adding one more level of support for the corn-based ethanol industry," eight livestock organization leaders wrote to the secretary.

In one of the understatements of the millenium, Schafer said concerning ethanol plants that they "got away from their focus on producing ethanol and started speculating in the commodity markets. It's hurt them." Duh. Where'd they get this clown?

The livestock organizations correctly pointed out, "It seems to be the opposite of free enterprise to insure companies – and only some companies – against the possibility that their speculative commodity bets might go wrong."

Not only is supporting an already irrelevant industry completely against free enterprise, but then rewarding these government-founded companies with poor behavior is even worse.

We should have a full-blown federal investigation on the misappropriation of funds and misuse of government subsidies. Like some of the crooked and poor managers of financial institutions, these people need to be held accountable and brought to justice.

Taxpayers and all Americans need to rise up and say no to another government-sponsored idiocracy concerning the ethanol industry.

Look at what ethanol is doing to snowmobiles, chainsaws, and other power equipment!

Commodities: Jim Rogers - In the Footsteps of Japan

Jim Rogers - America Following in Footsteps of Japanese Bailout Mistake

On CNBC's Squak Box Wednesday, Jim Rogers reiterated his call for Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson to resign for artificially undergirding poor performing "zombie banks" that should have been allowed to fail.

Citing the debacle of the Japanese government 18 years ago when they made the same mistake, Rogers said their stock market is still 75 to 80 percent lower than it was then.

The Japanese government decided at that time they weren't going to let poorly run banks fail, and they've reaped the consequences of those actions ever since. That could very well be the fate of the U.S. in the years to come.

For now, along with the Swiss franc and Japanese yen, Jim Rogers is continuing to invest in agriculture, and also other strong performers like Asian water treatment companies.

As Rogers points out, we shouldn't go in the failed footsteps that have kept Japan in a state of no growth for decades.

Other Jim Rogers Articles:

Jim Rogers: We're Facing an "Inflation Holocaust"

Jim Rogers: History Reveals Bailouts do more Harm than Good

Jim Rogers: Government Bailout a Huge Mistake

Jim Rogers: People Don't Understand Commodities

Jim Rogers Says Commodities Should Come Back Strongly

Tuesday, October 21, 2008

Commodities | Copper Futures Drop

For the first time in almost two years, copper futures fell below the $2 a pound mark today, as a slowing global economy dries up demand.

In the middle of the session copper futures fell as low as $1.9920 before finishing at $2.0070 a pound for December delivery; a 5.2 percent decline. The last time it was below $2 a pound was in November of 2005.

If copper continues to fall at this pace, we'll see it suffer its worst yearly decline in 20 years.

So far this year its dropped by 34 percent, already its largest loss by percentage since 1988.

Because of the widespread use of copper in the market, it's used as a measuring stick for the overall economy. It's fall in price confirms the slowing global economy, especially growth in China.

Commodities: Positive Secondary Effects of Commodity Slowdown

On its third-quarter earnings call today, Caterpillar (CAT) confirmed what most of Commodity Surge readers already know, that over the short haul commodity prices will probably continue to drop, even after their steep plunge over the first half the year.

If you're in investor in companies like Caterpillar, who count on the business of companies connected to commodities, you'll find that they'll continue to make significant investments in raw materials and equipment to take advantage of the fall in prices.

In a statment Caterpillar said: "A weakening world economy could continue to push prices down and impact producers' investment plans.

"The current investment cycle was already under way in early 2005 when the oil price was a little over $40 and copper was $1.40. Current prices remain favorable for investment."

So while the eventual return of higher commodity prices could negatively impact company investments, for now we should see an upswing to grab low prices while they can.

Of course we have the credit problem to deal with in relationship to getting the funding to make these purchases. But companies with a low debt load are in a strong place to take advantage of the declining prices, and companies like Caterpillar will be helped significantly from that.

The problem for Caterpillar hasn't been sales, which for the quarter were at a record high, it was the high costs of materials which undermined the profits; falling by 6 percent even with the increased sales.

Steel prices were the primary culprit in downward profit results for the quarter.

The commodity slowdown is only going to be temporary, be prepared and watch for when the commodity bull market continues.

Commodities are in "Forced Liquidation" - Jim Rogers

Jim Rogers, CEO of Rogers Holdings said in an interview with Commodity Online that the commodity bull market will last longer than he originally anticipated because of the financial crisis around the world.

Historically, said Rogers, there have been eight or nine periods of what he calls "forced liquidation," where people sell everything regardless of the underlying fundamentals. He added that this is one of those periods.

He explains it this way: ”The cyclical demand for commodities may slow, but the secular supply will be badly affected so the commodity bull market will last longer and go further in the end.”

What this means is the rate of growth will slow, but nothing has changed in the long-term demand for commodities in the emerging markets. Natural resources will continue to be needed for many years to come, and that means commodities will remain in demand.

Illiquidity is what's holding things back at this time, not the demand that hasn't changed. As Rogers said, people are being forced to liguidate in order to get access to immediate funds. When that's over, we'll go back to the commodity bull market as defined by the fundamentals of the market.

Other Insights from Jim Rogers:

Jim Rogers: Where he's putting his money

Jim Rogers: We're Facing an "Inflation Holocaust"

Jim Rogers: History Reveals Bailouts do more Harm than Good

Jim Rogers: Government Bailout a Huge Mistake

Jim Rogers: People Don't Understand Commodities

Jim Rogers Says Commodities Should Come Back Strongly

Friday, October 17, 2008

Warren Buffett: Now is one of Best Times to Buy into U.S. Stock Market

One of the many things Warren Buffett is known for saying, is to "be fearful when others are greedy, and be greedy when others are fearful." In our lifetimes, this is one of the most significant times where that saying has more meaning than ever.

We do have to keep one thing in mind right now before going ahead, and that is the U.S. government is now using Warren Buffett as a mouthpiece to calm the markets down and hopefully bring investors back to equities in order to get some money flowing. So everything he says in these areas has to be taken with that as a backdrop.

Even so, what Buffett is saying about this being a great time to invest in American publicly-held companies is true.

This difficult market has one great value for investors: it exposes the weak as well as the solid companies, so what to look for when considering investing in U.S. companies at this time is really simple - don't invest in companies that are highly-leveraged, and look for those with strong competitive advantage. These companies will perform strongly in the next 10 to 20 years.

The current discount on some of the better companies in America make this one of the most ideal times to expand our ownership in companies.

As Buffett has always said, over the short run, there's no way anybody can know how a company will do, but keeping in mind the competitive advantage and companies without too much debt, we will do good over the long haul.

Commodity: Shorting VIX

If you want to make some potentially big money, you should look at the VIX and think in terms of shorting it.

What is the VIX? It's an index that measures the swings in the S&P 500 ... similar to the Dow Jones. What it specifically measures is the price of options contracts in the S&P.

So if you have a low VIX, it's another way of saying things are going pretty smoothly, but if the VIX goes high, you know there's a lot of volatility and fear in the market.

When the S&P is at a healthy state, it'll usually trade at between 10 to 15. It's former all-time high was in 1998 when it reached 44.28. The reason for that was the Russian default. Today it's measuring at 81, by far the highest level its ever reached. For the last two decades its averaged a little over 22.

The reason today's moves are happening is because options sellers are charging much higher prices to write option contracts. With the huge risk of current swings in the market, they charge the higher premium to offset that risk.

How can a person make money on it? By shorting it.

There are only two things to consider when thinking about this. Either you must know and understand the options market, or have a broker you implicitly trust to help set up the options trade. All you have to do is tell your broker you want to short the VIX.

This is a window of true opportunity that won't be around for a long period of time, so if you're interested, it's something to contact your broker about very soon, or if you know how to trade in options, get into it now. Shorting the VIX is at a prime moment.

VIX Chart

Thursday, October 16, 2008

Commodities: Pardo Capitol Holding its Own

Pardo Capital Enjoys Solid Growth, Steady Rise

CHICAGO, Oct 16, 2008 (BUSINESS WIRE) -- While stocks tumble and surge, the roller coaster ride for Americans may be starting to grind to a halt. But for those who have invested in XT99, an automated algorithmic trading system, the trip has been a steady climb.

Pardo Capital Limited and XT99 had an impressive September -- while Wall Street plummeted,XT99 rose9.7% for the month.

"We're pleased with the performance and integrity of our automated system, to say the least," said Bob Pardo of Pardo Capital."Year to date, we're up 33.9%, and the ten year track record is a compounded annual return of more than 22%."

According to information provided by Pardo, when you consider this compounded annual rate of return, the overall return is an impressive 547%.

XT99 trades exchange traded futures markets on a global scale.This includes currencies, agricultural commodities, energy, stock indices and fixed-income instruments.

"We've designed this model to exploit long-term, macro-economic trends," Pardo said. "Unlike many long-term trend followers, XT99 is better at anticipating trends and that is proven in our substantial results."

According to Pardo, risk management is accomplished through traditional pathways such as market diversification and trading pace diversification, but the foundation of the risk model is a proprietary asset allocation methodology developed by his partners.

For more information on XT99 contact Marketing Director Rich Sternal at 630.355.2337 or or visit Pardo Capital.

SOURCE: Pardo Capital Limited
Pardo Capital Limited
Rich Sternal, 630-355-2337

Copyright Business Wire 2008

Wednesday, October 15, 2008

Commodity Surge: China's Slowdown

While I don't see expectations of an ongoing boom in commodities changing in any way over the long haul, in the short term we could definitely see a period of time when commodities will be out of favor, as demand stalls.

Leading the way in commodity demand is China, and they are definitely looking like they're going to be slowing down. China is estimated to account for over 40 percent of the commodity demand in the world.

Much of this is coming about because of the vulnerability of China to the slowing consumer product demand in America, which much of its growth is dependent upon. If America slows, China slows, and there's no way around it.

This will cause a period of slowing growth in China, although it'll definitely keep growing, as the momentum they carry can in no way be stopped. It's a matter of how fast they grow, not if they grow.

Before the pullback of consumer spending in America, China was expected to grow in 2009 by between percent and 10 percent. Now it's more likely that'll drop by a percentage point or two to around 7 percent to 8 percent. While that's not shabby, it's pretty huge when you consider the size of China's economy.

This will definitely hit a variety of commodities companies like miners, who in many cases are betting everything on China. Companies like BHP Billiton and Rio Tinto will definitely be hit hard, and already have, as they've already lost 10 percent of their market value, equal to about £10bn. It's suspected that this isn't through yet either, and we'll see more pain before we start to see a gain.

What all this may mean for commodities investors, is the growth period could extend longer than thought, while the pace of growth slows down. That could me less volatility (once things settle down), but smaller yearly gains; at least for the next couple years.

There of course will always be exceptions to that, but that probably will be the general rule.

Don't forsake the idea of commodities, just watch the market and be ready to dive in again when things start to turn around.

Tuesday, October 14, 2008

Commodities: Plunge in Copper Prices

In spite of all the enthusiasm engendered by those who misguidedly think the government interference in the markets through the bailout plans will change the realities of the marketplace, all you have to look at the base metal commodity copper to see the folly in that belief.

Since copper is one of the more important commodities, being used in so many applications, it is definitely a bellwhether as a key measurement of the health of the economy.

With that in mind, we can see from the charts below that over the last year demand has slackedned, and the price reflects that accordingly; not only in America, but across the world.

While copper enjoyed a little temporary jump over the last 24 hours, it feel last week to a low of $2.12 a pound. It's been about 3 years since we've seen prices this low.

30-day Copper

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The point? Don't let temporary fixes and the governments around the world attempting ease our minds as a reason to think this is going to change the economic realities we currently live in. It'll take years to flush out the problems in the system, and throwing money at the problem historically has fueled the fire, rather than help put it out.

60-day Copper

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Copper is a key measurement in the demand for products around the world, and a bellwhether for commodity demand in general, as it's used in cars, new homes and appliances, along with many other products. And as you can see from the charts, demand has been falling for some time.

1 Year Copper

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Monday, October 13, 2008

Dow Jones in Largest Point Gain in History

The Dow Jones Industrial Average surged up by 936 points Monday, the largest gain in the history of the index. As far as percentage goes, the 11 percent upward move was the second-largest in the history of the Dow, and the largest since March, 1933.

Much of the positive move is credited to the Treasury Department giving out some details on the proposed "rescue plan." Of course the horrible performance of the Dow last week guaranteed there would be a significant rebound soon. Still, it was an impressive move by any standard of measure.

Another significant factor in the record-breaking upswing was early announcements that banks in Europe would start investing in troubled banks as well. The groundswell spread from there.

The Dow closed the session at 9387.61. Also enjoying he up day was the S&P500 Index, which swelled by 11.6 percent, ending the day up by 104 points.

The Nasdaq also moved up at similar levels, finishing the day up 195 point, or 11.8 percent.

While everyone was exuberant over the news, we do have to realize that the market is going to go up and down in large swings over the near term, and will have to get used to that as a temporary way of economic life.

Friday, October 10, 2008

Commodities: Where Jim Rogers is Putting His Money

The commodity Jim Rogers considers important: currencies

Last post we talked about Jim Rogers' view on the interference by governments which will inevitably lead to inflation. In this case Rogers is calling it an "inflation holocaust."

So what is Jim Rogers doing at this time to make some money? He's continuing with a couple of his favorite currencies. Rogers is investing his large amount of cash in the Swiss franc and Japanese yen. He also said he's continuing to invest in agricultural products.

[Most Recent Exchange Rate from]

Agricultural products have also participated in the reason plunge in commodities, as demand across the world has fallen because of economic concerns and some of the high prices in connection with the former demand.

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This will probably change around fairly soon as no matter what happens with metals and other commodities unrelated to gold or food, agricultural products, as well as gold, will continue to rise in price in the months ahead, as inflation rises in response to the misguided attempts by the U.S. government and others around the globe that continue to interfere with the markets.

Commodities: Jim Rogers on "Inflation Holocaust"

Talking on CNBC Friday, billionaire investor Jim Rogers, CEO of Rogers Holdings and commodities expert, said we are facing an "inflation holocaust" because of government interference in the markets. He's right of course, as governments will have to issue more debt and print more money in an attempt to not allow the market to clean itself out as it has for a "few thousand years."

It is amazing to see the government to take these unprecidented steps in order to make it look like it has some value to the market. It's main and really only purpose in this arena should be to enforce contracts. Nothing else.

But as Rogers and many others are pointing out, this is in reality setting us up for an inflation disaster as the artificial propping up of poorly run companies will make us all pay a lot more for goods and services in the long run. The government and politians are counting on the general population to forget this as this go ahead in time.

Rogers added that we should simply allow businesses and people to go bankrupt in order to clean out the excesses and unhealthiness in the markets. That is how it's always been done in the past, and each time things start over again with many helpful lessons learned from the mistakes made.

In a desperate attempt to make prove they have relevancy to the general populations across the world, governments and politicians are scrambling to interfere and tread in places they have no idea of the consequences of their actions.

There is nothing more short-term in thinking than what is being wrongly foisted on people in American and across the world at this time. As Jim Rogers says, we are setting ourselves up for an inflation holocaust that will happen based solely on the actions of the U.S. governement, and other governments at this time.

Since when don't human beings have to go through failures and mistakes? When have we designated taxpayer dollars of responsible people to be used to bailout finance and business leaders for the poor decisions they've made?

As Rogers concluded concerning the upcoming G7 meeting where government leaders of the stronger economies are getting together in order to attempt of figure out a solution, "What they (G7 leaders) need to do is go down the bar and leave the rest of us alone."

Referring again to the usual solution by governments, printing more money and offering more debt will do more harm than anything else. It simply needs to be allowed to play out as it usually is. There's nothing the G7 countries will be able to do other than that.

These are markets made up of billions of actors and consumers. Nobody, no matter how much they try to convince us, is able to centrally plan or salvage this mess. Socialism has already proven itself a failure, and this is nothing more than corporate socialism.

As many people know in their individual lives, when they live in excess they will have to go through some real pain in order to overcome those excesses. For someone to interfere with that isn't kindness, but a form of hate, as they enable the person to continue on in their folly.

It's no different with government interference in the marketplace. To shore up poor management and irresponsible decisions isn't a form of help, it's only reinforcing terrible choices and behavior, and possibly setting the rest of us up for more and more significant pain in the near future.

See Video Here

Rogers maintains commodities will continue to be a good place to put your money. We're simply on pause for the time being.

Thursday, October 9, 2008

Bottom Continues to Fall Out of Dow, Plunges to 5-year Low

Today's performance of the Dow Jones industrial average capped off the worst yearly performance in 34 years as the 679 point drop brings the total since last October 9 to a 5,585 point loss, or 39.4 percent. Last year on the same day the Dow stood at 14,164.53 at the end of the session. Today's drop was over 7 percent, finishing at 8,579.19.

The Standard & Poor's 500 index didn't fare any better as it also dropped by over 7 percent for the day, finishing the session down by 75.02, falling to 909.92.

Investor's nerves continue to be on edge as every negative announcement causes huge selloffs in the market. Today the main impetus was the announcement by a credit--rating agency that Ford and General Motors may have their ratings cut, which would tighten credit for them even more.

The Dow isn't making the type of history it would wish, as the decline of 2,371 points for the last seven sessions is the worst drop for that time period in history. Percentage-wise, the fall of 20.9 percent is the worst since the seven days ending on October 26, 1987, where the fall was 23.8 percent of the Dow. That seven-day period included the infamous Black Monday of October 19, 1987, where the Dow plunged by 23 percent in one day.

Also falling significantly, but not as much as the other major indices were the Nasdaq composite index, which dropped to 1,645.12; a 5.5 percent, or 95.21 decline. For the Russell 2000 index, it performed the worst according to percentages, as it fell by 8.7 percent to 499.20, a 47.37 drop.

The major refuges for investors has been short-term Treasurys, where most people are just looking to preserve their capital. Gold, as usual in times like these, has started an upward move as the economic news gets grimmer. It did go as high as $925 tonight, although after hours at about 10 p.m. EST it has fallen back to almost $914 an ounce.

Wednesday, October 8, 2008

Commodities Drop to Lowest Levels in Year or More

Commodities remain bullish as a number of them hit their lowest level in a little over a year, while some dropped to levels that haven't been seen for about three and a half years.

Copper, which other base metals usually mirror, fell to its lowest levels since March 2006, falling to $5,250 a ton. Oil also continued its plunge as it almost leveled at $86 a barrel, falling as low as $86.05 a barrel.

Other base metals didn't even fare as well, with aluminum, zinc and nickel declining to levels not seen in over three years.

After the interest rate cuts corn did rebound settling at $4.275 a bushel on the CBOT, a 10.5 cent or 2.52 percent gain.

With a number of central banks cutting interest rates Wednesday, officials were glad to see prices fall, as concern about inflation have also been rearing its head.

Now that demand for oil has been dropping, Opec is said to be considering an emergency meeting to decide if it wants to cut back on production, possibly meeting in November instead of the scheduled late December date.

Even with low price levels, the bull run for commodities isn't over, and price levels will start to move again as nations and businesses start spending again.

Central Banks Around the World Cut Rates by Half a Point

A number of key central banks around the world, including the U.S. Federal Reserve, cut interest rates in hopes of quieting the enormous turmoil in the markets. In the U.S., rates were cut to 1.5 percent. Also approved by the Fed was a half point cut in the discount rate to 1.75 percent.

The banks participating in the move all cut their rates by half a percentage point. Interestingly, the Bank of Japan declined to cut rates at this time.

Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.

Tuesday, October 7, 2008

Gold & Silver Bald Eagle Coins Going Fast

... as United States Mint's December 12th Offer Deadline Quickly Approaches

Eagle Foundation Suggests Precious Metal Collectibles as Alternative Investment to Stocks

PIGEON FORGE, TN, Oct 06, 2008 (MARKET WIRE via COMTEX) -- E-Wire -- The non-profit American Eagle Foundation ( announced today that United States Mint's 2008 Bald Eagle Commemorative Coins are selling very well, and have already raised over $6 million for the future protection of Bald Eagles.

All three legal tender coins (gold, silver; clad) celebrate the successful recovery of the Bald Eagle to America's skies and the upcoming 35th Anniversary of the Endangered Species Act on December 28.

"We're grateful that so many patriots are stepping forward to support our nation's living symbol of Freedom," said AEF President Al Cecere. "Every American should do their part to help keep this majestic bird thriving for generations to come."

Surcharge monies generated from the sale of each coin are being set aside to create a permanent endowment fund benefiting the Bald Eagle's future prosperity, which is managed by the eagle conservation group -- based at Dolly Parton's Dollywood park in Pigeon Forge, Tennessee.

There are only about 32,000 $5 gold, 162,000 silver dollar and 465,000 50-cent clad (copper/nickel) coins left, and they will no longer be offered by the U.S. Mint ( after December 12, 2008.

If every coin in the special limited edition series sells out by that deadline, over $10 million would be raised for the eagle preservation fund.

"This is an ideal time to diversify and buy gold and silver, since the stock market is so volatile," says AEF President Al Cecere. "Traditionally, precious metals have been a relatively secure alternative investment."

The clad coin features the stately image of the celebrity bald eagle "Challenger" (, which is the first time in U.S. history that a famous eagle (or animal) and its name have been placed on a legal tender coin.

The silver coin bears the original 1782 Great Seal of the United States, which has not previously appeared on any government issued coinage. The present Great Seal and two young eagles about to leave their nest appear on the Gold coin. The words "In God We Trust" are included on all three coins.

The coin purchase prices are $319.95 for proof gold ($309.95 uncirculated), $43.95 for proof silver ($37.95 uncirculated) and $10.95 for proof clad ($8.95 uncirculated).

"With Christmas quickly approaching, these beautiful precious metal collectibles make wonderful gifts that will be valued forever," said Cecere. "What better way to be bullish on America than to invest in the ongoing care of such a precious national treasure."

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Al Cecere
American Eagle Foundation
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SOURCE: American Eagle Foundation

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Monday, October 6, 2008

Gold Only Commodity to Gain as Recession Fears Grow

Even though gold was pummeled earlier in the trading session, dropping to a two-week low of $828.40, it was able to settle up by $33 to finish the day at $$866.20 for December delivery. It was the only commodity in the positive for the day.

Even though gold was in the positive, it hasn't performed in the difficult enconomic environment as a place of safety, as jewelery sales decline, the U.S. dollar is holding some of its strength, and speculators hang on to their money.

When the dollar falls, at that time gold should enjoy a hefty climb again.

The Reuters-Jefferies CRB Index participated in the decline along with individual commodities, as it plunged to a 13-month low, following the worst week of its history.

Oil continued to fall in price as well, as it dropped below $88 a barrel to $87.81 in the U.S., while London Brent crude settled at $83.68 for the day, a $6.57 decline.

Other significant declines in the commodities market were soybeans, which fell over 7percent to yearly lows, while copper also fell by over 7 percent to a 19-month low of $2.493 a pound in New York. Corn finished at its trading limit of 30 cents a bushel to settle at $4.24 on the CBOT, a 6.6 percent fall.

Friday, October 3, 2008

Ron Paul's Response to Outrageous Bailout Passed by U.S. Government

Commodities May Experience Largest Weekly Plunge Since 1956

Largely led by silver, corn and copper, commodities are on their way to their biggest weekly loss since 1956, as concerns over the weakening global economy, along with the surging U.S. dollar against the euro, continue to put downward pressure on the sector.

The Reuters/Jefferies CRB Index dropped by 9.9 percent so far this week, again, its largest downward move in 52 years.

Two major factors are delayed weakness of the European market, which is just starting to show its strains, as well as the softening Chinese housing market. The overall U.S. market is of course further along than the two economies mentioned, and is already partaking in the pain.

As far as corn, copper and silver, they all have dropping to their largest weekly losses in over 20 years. The 18 percent fallout of silver is its worst performance for a week since 1983.

The labor department also released jobless claims figures for the week ending September 27, and they're the worst since 2001. That puts the jobless rate at about a five-year high of 6.1 percent.

It is spurring more debate on whether it's wise to implement a bailout plan which not only won't help in these difficult times, but will exasperate the problem, as history has taught us.

Wednesday, October 1, 2008

Jim Rogers: History Reveals Bailouts do more Harm than Good

The assertion by Jim Rogers that government intervention in the market will cause more pain then help is absolutely correct. Interference in the markets during the Great Depression, in reality, caused the Great Depression. Honest economists say it would have only lasted a very short time without interfence from the government.

If there hadn't been government interference during that time, the marketplace would have cleaned itself out and lasted only a very short time.

Our present situation

"Capitalism is where the market does its work. These guys [Alan Greenspan and Ben Bernanke], for the last 8 to 10 years, have refused to let the market do its work to clean itself out," Rogers said. "You let things collapse…and you have a clean growth afterwards."

The obsession by the professional politicians to become heroes in the eyes of the easily swayed population will eventually be destructive rather than helpful. They're doing it because they hope by time the next election cycle comes around people will forget what happened and vote them back into office.

Either that, or things will be so much worse than they are now because of government action, that politicians will be able to bluff their way through and make themselves look like they're fighting for Americans even more, even though they've made the problems worse.

It's unfortunate that Americans overall don't understand why these problems are happening and the source of them. Until we become more economically literate, the boom and bust cycles will continue as government continues to make problems worse by inserting their abusive policies into the marketplace.

As far as Rogers and what he's investing in now, he says commodities will continue to offer superior returns over stocks in the near future, and he's also investing in China as it loosens up its monetary policy.

Processors of Raw Materials and Manufacturer Margins Under Pressure as Commodity Prices Surge

AMSTERDAM, Netherlands, Oct 01, 2008 /PRNewswire via COMTEX/ -- A report by Atradius, a leading global trade credit insurer, has found that manufacturers are bracing themselves for further price hikes in raw materials as vital commodities such as tin and copper suddenly become as highly prized as gold.

Between 2002 and 2006, for example, copper producers enjoyed a 560% price increase. This price inflation is largely due to China and other emerging economies developing huge appetites for industrial raw materials. In 2007, the Chinese economy accounted for 37% of global steel consumption. The U.S. share, by contrast, was only 10%.

With output and prices up, producing nations are taking advantage of their new-found market power. A number of commodity-rich countries are implementing policies that can restrict the supply of vital raw materials. China, Russia, Venezuela and Bolivia are named as particularly risky investment sites for this reason. Governments in these countries have implemented policies that restrict the free flow of materials driving prices even higher. Despite this, these emerging commodities markets are reaping most of the benefit from the growing demand. Europe's metals industries have seen dramatic declines in their share of world metals production output. The EU's share of aluminum output fell from 21% in 1982 to 9% in 2005, and its share of steel fell from 25% to 16%.

With raw materials prices at such high levels, raw materials processors' and manufacturers' margins are being squeezed because they are not able to pass the full cost of the increase on to consumers. Stefan Dunker, a manager at Atradius Risk Services comments, "We have not yet seen a wave of bankruptcies, but if there are further price increases, that could well happen."

In Germany, a recent report by the Federation of German Industries (BDI) showed that from 2002-2007, German industry had already been hit by euro 97 billion in higher direct raw materials costs. This has led to 148,000 job losses in German industry and a 0.5% reduction in the overall German GDP.

However, the outlook for commodities buyers is not all bad. Some manufacturers are taking a number of steps to avoid a direct impact from rising costs, such as stockpiling raw materials, investing in their own supply sources, decreasing their use of precious metals, and increasing the efficiency with which they use materials of all types. Innovation using alternative materials will also play its part in long-term demand of various raw materials. All these factors should help to moderate demand and reel in prices.

Isidoro Unda, CEO of Atradius, concluded: "Though the run-up in commodities prices has been sharp and severe, demand has traditionally been cyclical depending on demand for the products in which they are found. The convergence of a number of economic factors, including a looming U.S. recession, slowing growth in Europe, falling oil prices and tightening credit conditions, could combine to produce some relief in prices of some raw materials for both manufacturers and consumers. These changes, however, are generally slow to take hold, and declining prices may not be in the cards for a few years."

The Atradius Global Trade report Bedrocks of Prosperity can be downloaded free of charge from the Atradius website at:
About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence in 40 countries. Atradius aims to protect its customers against unexpected losses resulting from their buyers being unable to pay for the customer's products and services. With a 31% share of the global trade credit insurance market, its products contribute to the growth of companies throughout the world by protecting them from payment risks associated with selling products and services on credit. With 160 offices, it has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily.

Further information:
Atradius Corporate Communications
Kathy Farley
Tel.: +1 410-246-5584

Ian Miller
Country Manager - Canada
Tel: +1 613-256-9134

Karel van Laack
Country Manager - Mexico
Tel: +011 52 55 5484 0026

SOURCE Atradius Group

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