Tuesday, January 27, 2009

Commodities | Cellulosic Ethanol the Answer?

Is cellulosic ethanol the answer to the alleged energy crisis? I don't think so. We already know ethanol made from corn has so many downsides that the idea of continuing to produce it, or even having industry based upon it is fooish at best, and reckless at worst.

Already the ethanol industry is self destructing as producers are falling by the wayside, as the news lets us know.

Ethynol stocks are a joke, and companies are all teetering on bankruptcy, if they aren't bankrupt already.

Power equipment like snowmobiles and chainsaws are being decimated by E10, and repair shops are full from the broken down machinery.

Stocks related to ethanol are also being crushed, and all the marketing schemes in the world aren't going to change that reality. Ethanol as an investment sucks, and there's no other way to put it.

As far as cellulosic ethanol goes, it's just another pipe dream that will fall along the wayside, as billions in taxpayers dollars are wasted on another ill advised biofuel obsession.

What cellulosic ethanol is made of is material that is in the majority of plant matter, which is the reason there was so much news on the subject, because it provides a unlimited amount of resources for the fuel.

Plant matter like rice straw, corn stalks, switch grass, wood chips and wheat are part of what could be used to make the biofuel.

The problem with cellulosic ethanol is the technology doesn't exist to mass produce it, and it will be an extremely expensive process to develop, making it less price friendly for consumers.

As the news of the ethanol debacle continues to come forth, we're finding more and more that the supposed bridge between corn ethanol and cellulosic ethanol is simply a myth. It's being used by those with vested interest in continuing to obtain funds from taxpayers for their pet projects to keep them going.

Even the former chair of the House Ag Committe in the USA admitted accidently that he doubts cellulosic ethanol will ever take off as a viable biofuel. So with corn ethanol being considered more and more dubious as a legitimate source of fuel and energy, it may be past time to shut down the ill advised investment and turn to other research and experiment to find real solutions to future energy needs.

Another practical problem with cellulosic ethanol is its difficulty in breaking down in contrast to corn ethanol. The reason is because starch in corn ethanol is much easier to break down and much cheaper to produce.

The truth is that there would be no ethanol producers, ethanol companies, ethanol stocks or ethanol investment if there wasn't the misguided "Renewable Fuel Standard" of the 2007 Energy Act, without which biodiesel and cellulosic ethanol and corn ethanol would have long faded away, and news of it would be absent.

Unfortunately, mainstream media loves ethanol in all its forms, and continues to ignorantly report on it as if it's the answer to energy and fuel problems. In reality the process and inputs are more of a problem that the solution it's trying to become.

Even politcians like those in Missouri are under fire for investing in ethanol companies to benefit from the tax supported industry. Sarah Steelman is bravely fighting not allowing them to profit from the windfall, as in the case of Show Me Ethanol.

This is ridiculous that in what would be considered insider trading and illegal in the private sector could be allowed in the public sector.

We hear about the scientific side of things in order to justify the money for research for ethanol. For example, with cellulosic ethanol, they say researchers are working on enzymes so they more less expensively produce the potential fuel.

The problem is that's a bunch of nonsense. It's meaningless. Researchers are working on it? What does that mean? It means there's no solution and its a bunch of smoke and mirrors as to its potential.

All of this is a governmental marketing scheme for ethanol, and it's ignorant. Try to use news outlets to do there marketing as they do, the government knows that the ethanol industry in general, and the cellulosic industry in particular, has no future. It's not going to happen.

The only people benefitting from this are the producers, investors, companies and repair shops, who are filled with snowmobiles, chainsaws and generators from the ethanol caused break downs.

One good thing about it all is those ethanol companies and investors thinking they were going to make a huge profit at the expense of taxpayers and users of the faulty biofuel, are now finding themselves losing a ton of money from the socialist program.

It doesn't matter what type of ethanol is being touted in the news, it isn't even a part of the answer going forward. Have all the conferences you want and strategy meetings, it doesn't work, and it's becoming more and more obvious the longer we're in it.

Before this debacle is over, we're going to see billions of taxpayers money flushed down the ethanol biofuel drain, as the mandate to produce 36 billion gallons of biofuel by 2022 will result in outrageous actions to attempt to make it happen, unless the 2007 Act mandate is rescinded; which it will have to be.

The mandate requires 15 billion gallons of biofuel from corn, and 2 billion from cellulosic sources. The news is that's not even going to be close to being able to be achieved.

Almost everyone concurs that to achieve the levels mandated by law, the tax credits to the companies involved would have to be jacked up to much higher levels to make it even close to being possible.

What's the conclusion? Drop the program altogether. It's absolutely unattainable, and to continue on the course is reckless.

Not only is corn ethanol not the answer, but cellulosic ethanol is even less of an answer. It's far past time to simply acknowledge that reality.

Monday, January 26, 2009

Commodities: Caterpillar in Massive Layoffs

Caterpillar, the huge mining and construction equipment maker, announced today it was going to lay off about 20,000 people in response to a worst than expected quarter, as plunging commodity prices caused mining companies to cut back on equipment acquisitions.

According to Caterpillar, their net profit in the fourth quarter plunged by 32 percent to $661 million from the same time a year ago.

The performance was so bad for the equipment maker that they said 2009 will be their poorest year since World War II. Earnings for the fourth quarter came in at $1.08, in contrast to the estimated $1.31 analysts were looking for.

Caterpillar CEO Jim Owens concurred with the outlook, saying it's going to be a very tough year for the company.

Much of the poor performance came from mining companies, as they cut back on equipment purchases as commodity prices fell in a big way in the last part of 2008.

This is unfortunate, as it looks like with gold and silver prices rising, the last half of 2009 will probably be a good one, as money starts flowing to acquiring equipment again. But the battering on Caterpillar forces them to make these moves in order to survive.

Looking ahead, Caterpillar cut its 2009 sales and earnings guidance from $51.3 billion and $5.66 a share, to $40 billion and $2.50 a share.

The first half will be brutal for the company, but as I said, the second half will bring some recovery, but it won't be nearly enough or in time to offer any short-term support to the company or stock.

Why this is significant, especially in the commodities sector, is Caterpillar is a bellwhether for the overall economy; both nationally and internationally. Taking this big of a hit has brought optimism back to reality, and tells us things will be tough going ahead.

For investors, this should be a sign that gold and silver will continue to be good places to put their money in 2009, as the U.S. dollar will weaken and diminish as a place of safety, and gold especially will start to be the place people look for for safety, as it usually is in times like this.

Commodities: Drunk Broker Attempts to start Fire

A drunk commodities broker attempted to start a freight elevator on fire after he mistakingly ended up there. The drunk commodities broker, named Ryan Brinkerhoff was arrested outside of 7 World Trade Center as he was grinning and laughing in a druken stupor as he was being led away by police.

Evidently Brinkerhoff as an obsession for fires, as if you go to his MySpace page, he's seen doing various fire-related antics showing off to his friends. Things like blowing alcohol through a lit lighter.

On his way to work, Brinkerhoff lost his way and ended up in the elevator. Seeing a aerosol foam cleaner which someone had dropped in the elevator, the commodities broker attempted to start a fire by spraying the foam all over the elevator and trying to light it.

Brinkerhoff was only slightly successful, as smoke from the attempt caused a fire alarm to go off and the elevator automatically returned to the ground level where Brinkeroff stumbled out and eventually went out where he was arrested by police.

Because Brinkerhoff had DRW Commodities ID card, he was able to gain access to the building and the elevators.

Brinkerhoff was charged with felony arson, among other counts, and was transferred to Manhattan Criminal Court.

It seems Brinkerhoff was obsessed with fire and performing various fiery feats. He was clueless when he was taken into custody, as the commodities broker had no idea what was going on when attempts to ask him questions by reporters ended with irrelevant answers.

At one point Brinkerhoff even asked the reporters why they were taking his picture.

I don't think the commodites broker will be doing any trading in the near future.

Sunday, January 25, 2009

Commodities: Corn Futures Under Pressure

There are many reasons and variables why commodities in general are making an expected comeback, while agricultural commodity grains continue to struggle.

Corn is one of those, as it dropped for the second day in a row, while its commodity counterparts outside of grains made significant increases, including oil, gold and silver.

Corn futures, and other grain futures will continue to battle to retain price thresholds as the economic slowdown cuts back on governments spending money in the U.S., which in general has higher grain prices.

The price of corn futures has already fallen over 50 percent since early summer, and there's nothing in play that will keep that from continuing on.

While the Argentine drought has cut into wheat, corn and soy production, it doesn't look like it'll cause any shortages, as global production has been up this year.

There has been nothing wrong with the grain this year, as the yield for corn has been good, and production solid. That's not the problem, as with oil. There's just so much people are willing to spend this year across the world, and demand, more than anything else is what's driving corn futures, as well as most other commodity markets.

Now that government spending have been irresponsibly brought into the mix, farmers, companies and investors are looking to them for solace, rather than allowing the market to clean itself out and poorly run businesses to fail.

So with corn storage, production and yield being fine, the deciding factor will be the economies of the individual countries and the willingness to spend on grains, including corn.

Until the pocketbooks are opened up again, corn futures, along with all grain futures, will continue to be under downward pressure.

Accordingly commodity grains and the corn belt that produces them will struggle until the economic conditions improve. From what it looks like, it'll be some time before that battle will be over.

Commodities: Drought Devastating Argentine Wheat

Argentina, another country that relies heavily on commodities to succeed, has been devasted by a drought which has crushed their wheat market. It is also decimating their cattle which rely on the grain for food.

This is the worst year for lack of rain since 1971, said one Argentine meteorologist. As usual, competing national weather forecasts make the situation unpredictable, as they contradict whether rain will come or not, and whether the drought will continue.

While some farmers in the U.S. were eyeing the situation with interest, hoping to get their wheat out of storage and make some money on it. That may not be though, as even if Brazil buys some wheat from the U.S. because of Argentine companies not being able to provide it, the cancellation of Nigerian imports of American wheat makes it difficult to see any value to wheat farmers in the U.S. It'll keep prices from rising in any significant way. Wheat futures fell when the Nigerian cancellation became public.

A continuing steady diet of bad weather could make a dire situation for agriculture in Argentina even worse, as they're already projecting losses of $5 billion in the overall sector for this year alone.

Other commodities being decimated are soy, corn and beef. Many cattle are dying for lack of food, as farmers do everything they can to keep them alive. Even if they succeed, breeding will be difficult because of lack of nutrition to the animals.

In many places the wheat storage bins are empty, and farmers have nothing but the cows to fight to keep alive.

The news out of Argentina is the wheat harvest could plunge by 44 percent for the 2008-2009 wheat season, while corn is projected to suffer a 27 percent drop, and soy, which is more resilient, is in the best shape in Argentina, looking for a 7 percent increase.

Because wheat in storage has been dwindling, and cattle dying of starvation, the government has temporarily suspended the minimum weight for slaughtering livestock so farmers can sell their livestock before they die.

On the assumption wheat from the U.S. may be imported by Brazil, prices increased some on Friday, but soy and corn prices were volatile, even though the numbers will fall significantly from earlier estimates from Argentina.

This news is grim for the country, as the entire agriculture sector is suffering, and so the nation. With wheat storage bins empty, as well as soy and corn underperforming, it's going to be a tough year for Argentina, as it struggles just to stay afloat.

While other commodities have been surging lately, many grains will struggle to maintain prices, especially wheat, as the dry weather in Argentina continues.

Saturday, January 24, 2009

Commodities: Oil Prices Rise

There are a number of variables involved with the overall commodity sector, and oil is affected just as much as all the commodities.

Some of the obvious factors are the economic slowdown, forced liquidation and deleveraging that have had the type of impact that has caused commodities to be very volatile, in contrast to their normal predictable behavior in an economic slump.

For example, gold would usually be considered the place for investors to put their money when recession times like this are upon us. But gold hasn't skyrocketed the way it normally would have, although signs are it's starting to do that now, along with silver, platinum and other precious metals.

Oil prices especially are affected by the economy, as consumers stay home rather than using their disposable income on gas. That has caused oil stockpiles to rise and prices to plunge. The oil surplus has alos caused gas prices to fall in a major way as well.

In an attempt to put a halt to the surplus, OPEC is cutting oil production even more in an effort to shore up prices. Oil companies have cut back on drilling too, as the lower prices keep them from keeping too many wells in production.

Even though stocks have risen a little recently, traders are starting to look again to commodities as their choice of investment. U.S. dollar related investments are becoming increasingly risky in this environment, as the government goes into horrid debt, which the Federal Reserve will have to pay for by keeping the printing presses running full time.

Those who think the proposed Obama stimulus plan will change this are in for a big surprise, as it will only add fuel to the fire, and will do nothing to help the market. In truth, the market doesn't need to be helped, and the Obama big government machine needs to realize that.

While futures traders are looking more favorably at precious metals, they're puzzled about oil, as it seems many are attempting to make it look like it's going to continue to go up, but the underlying fundamentals aren't pointing that way.

No matter what OPEC or others attempt to do to inflate the prices, the higher oil goes, the less people will buy. Demand will go down, and prices with it. What will the government do, implement oil price controls? That's already proven to be a horrible failure which will launch oil shortages. History has proven this is always the result of price controls.

Consequently, the idea that oil stockplies will decline is ludicrous, for the reasons stated above. People holding tight to their money aren't going to change their habits when oil prices rise. They didn't do it when prices had plunged far below the current levels.

To underscore that, even as oil prices have risen for a couple weeks, so has crude inventories in the U.S., rising by 14 million barrels in just three weeks, says the Department of Energy's Energy Information Administration.

I'm not sure where oil industry watchers think the commodity will continue to rise, but it's a fallacy, and those betting on it are going to lose big time.

Some people think oil is totally unpredictable, as they're moving away from supply and demand, and instead are looking at governments who are attempting to game the market by their bailouts and cutting of oil production. Those artificial efforts are useless.

Commodity prices will rise in 2009, but oil won't be included in that basket. It may rise some, but the trend will continue for some time. It's moving lockstep with the economy, and people have stopped spending their money on travel. Nothing a government can do will change that reality.

Oil is one commodity I would short. Unless there's something unknown that happens, that will be the reality for some time to come.

Commodities: Silver Price Going Up

Commodities are starting to resume their upward run, and silver and gold should lead the way.

Investors have been waiting for a breakout, and that time arrived on Friday, as gold and silver exploded in price, with silver surging by 57 cents or 5.1 percent to $11.932.

Silver is similar to platinum in that it is both an investment and industrial metal, making investors look at two sides of the equation in making decisions on whether to invest or not.

It rings true when those watching silver say there's probably little resistance to it moving up to $14 an ounce. Silver could very well be on the cusp of a second move within the commodity bull market in general, and silver bull market in particular.

This is all more than just a moment of fashion or blip, it's definitely the beginning of a new upward move, as silver trends higher in an ongoing rally. Support levels should continue to move upwards, with no short-term signs of a peak in this bull run.

Investors are taking this move to heart and are getting more bullish on silver as an investment as the U.S. dollar begins its inevitable decline, as massive U.S. debt continues to be incurred in response to endless government bailouts.

There haven't really been a series or chain of events that have handed this gift to investors, it's only been a matter of when - not if - silver and gold were going to start rising in price again.

Forced liquidation and deleveraging have been the only circumstances that have held the commodity bull market from rallying even more, and it looks like those are winding down, and money is available to flow back to commodities.

Companies looking for cash to cover debt had to unwillingly sell off their silver and gold assets - along with other commodities - in order to get cash to survive.

Speaking in terms of percentages, we could see silver prices outperform all metals in 2009, a real gift to weary commodities investors who have looked at the sector as having its charm wear off.

Whether the charm has left or not, this is a fine place to be in, and we'll cross the peak destination of the commodity road when we get there. For now, silver will be a tremendous investment for 2009, and the bull rally should continue for some time.

Commodities | Platinum Prices 2009

Commodities and platinum prices enjoyed a rebound last week that could be a sign of what is ahead for us in 2009. Many of the metals, including platinum, enjoyed price increases as the U.S. dollar fluctuates, and confidence in the greenback continues to fall.

Many investors are looking at platinum as a potentially great investment for 2009, as the price ratio to gold makes many think platinum is ready for a strong upward move.

What this means is two different indicators are being looked at to determine where things will go over the short and long term for platinum.

The first indicator is the demand side of the equation for platinum, the obvious industry being the auto sector, which isn't looking too good at this time in spite of the government bailouts used to shore them up.

It isn't known whether demand for platinum will be the determining factor in the price rising, even though it is very low.

One smaller but significant factor in the ratio between gold and platinum, is the rarity issue. There is about three times as much gold as platinum in the world, and that could determine some of the pricing for platinum in 2009 in relationship to gold.

Another player in the field is the strength of the U.S. dollar, which will definitely be under downward pressure for some time ahead, including 2009. All of the money promised by the variety of government bailouts ensure inflation is just a short step away, as the Federal Reserve ramps up its printing presses.

The reason this will happen is Sovereign Wealth funds and other funds are starting to move away from the dollar, as it is increasingly being looked at as an inferior currency. Foreign governments are no longer thinking of it as a place of refuge, certainty and safety.

China is already experimenting with using its currency internally as the way to exchange goods in certain wealthier provinces.

So for the long term the greenback looks bad and gold and platinum are looking pretty good. Gold will advance this year for sure, and platinum, if it moves in lock step with it, could bring solid returns for investors, whether it's moved by demand or the ratio of it to gold.

If it begins to move in the way it has historically, platinum could surge to high prices in 2009, making it a potentially great investment.

There has been a temporary lull in the commodities bull market, but that will only be for a short season of time, as demand for natural resources inevitably starts again. Platinum will mirror that move, and gold will continue to be a haven for investors looking for a place their money can be safe, as well as grow.

We need to continually monitor platinum futures and prices, now, and in the next couple of years, as it has the potential to surprise on the upside, and long term platinum should have a lot of upward movement, as the global economy eventually rebounds and demand skyrockets. Platinum has a lot of potential going forward.

Commodities: Gold Prices Lead Commodity Surge

The price of gold exploded Friday, leading a large number of commodities to a big rebound. At the close of the day, gold prices had settled at $895.80 per ounce for February delivery - a gain of $37 - after passing the $900 barrier for a short time.

The gold market hasn't enjoyed those prices since early October. An number of other precious metals, along with grains, rose along with gold.

Investors should continue to move out of U.S. dollars and buying gold as futures and physical gold will continue to move upward.

Gold prices have been held back as deleveraging and forced liquidation forced the precious metal to be held down for some time. It appears some funds and foreign governments are coming back into the commodity market as those positions unwind.

It's hard to tell where the price of gold will end up, but we can be sure the buying of gold will continue as confidence in the U.S. dollar continues to fall.

Other commodities followed gold's lead, as other precious metals like silver and copper enjoyed solid gains.

Grains responded to the gold rally as well, with wheat increasing by 16 cents a bushel to $5.8275, and corn for March also enjoyed a small gain, growing by three cents to $3.905 a bushel. Soybeans didn't fare as good, dropping 3 cents a bushel to $10.09.

Light, sweet crude oil also moved lockstep with the other sectors, gaining farely significantly by $2.80 to settle at $46.47 a barrel.

Gold will continue to increase in price as it did today, with inflation moving many of the other commodities up with it.

As the U.S. dollar continues to be pressured from the bailouts and debt load, gold will be the place of safety investors look to.

When inflation hits, gold prices could soar to extraordinary levels, as investors migrate to the traditionally safe haven it has always been.

The trend will be to put more funds into gold as foreign countries shun the weakening U.S. dollar, losing confidence in it's ability to remain a strong currency.

Gold futures will be the commodity of choice going ahead.

Tuesday, January 20, 2009

Gold Investment Digest Report: World Gold Council on Gold Performance in 2008

Gold Investment Digest Report from the World Gold Council on gold performance for 2008 and looking ahead to 2009

NEW YORK & LONDON - (Business Wire) Gold proved its metal in 2008, according to World Gold Council’s latest Gold Investment Digest, providing a safe haven and long term store of value for investors in record volume and outperforming many other assets in relative price and volatility terms.

Despite one of the most tumultuous years in financial markets since the Great Depression, gold ended the year on a firm footing recording its eighth consecutive annual price increase. The last three months of 2008 was a quarter of two halves. While distressed gold sales by some institutional investors meeting margin calls on other assets had a dampening effect on price in the first few weeks of the final quarter, by mid November broader recognition that the dire financial situation was likely to endure for some time, fears about the credit system and future inflationary impact of shifts in monetary policy and the dollar resuming its secular decline led gold to rally by around $150/oz. Gold, therefore, closed the year at US$869.75.oz, up 4% from the same period in 20071.

Gold price volatility remained high by historical standards at the end of the year, at 37% (gold’s long-run price volatility is around 12.5%), although still below most other asset classes. However, underpinned by robust and diverse market fundamentals, gold traded in a tighter range than other financial assets, major world indices and most other commodities.

“Gold’s performance over the year is impressive considering the massive wealth destruction that took place elsewhere in financial and commodities markets,” said Natalie Dempster, Head of Investment, North America for World Gold Council. “Impacted to a lesser extent by the financial crisis, which affected equities, and declining industrial demand, which affected physical assets, gold outperformed global equities and all major commodities during 2008.”

During the final quarter, investors turned to physical-backed gold ETFs in large numbers, buying 96 tonnes of incremental gold via exchange trade funds. December recorded the strongest monthly inflow into gold ETFs, with investors buying 44 tonnes of gold. Investment in gold ETFs, monitored by the World Gold Council, now stands at around US$33 billion2.

“As investors became increasingly concerned by the state of the economy during the course of the year, they turned to gold as a store of value. Within the third and fourth quarters of 2008, inflows into gold ETFs reached record levels as investors were motivated by gold’s lack of counterparty risk and the opportunity to hold a real, physical asset,” Dempster said. “As we move into 2009, continued uncertainty over the financial landscape, combined with future inflationary fears resulting from interest rates cuts and quantitative easing by central banks, are likely to pique investor interest in gold further.”

Gold Investment Digest, a concise and comprehensive analysis of investment trends and economic indicators that influence investment interest in and the demand for gold, can be downloaded at www.gold.org. Users will need to register, which is free of charge. At the same address, users can access a range of investment statistics, which we have completely overhauled to extend the country coverage and make the materials easier to download. For further information, or should you like to learn more about investment in gold, please contact:

Notes to Editors:

World Gold Council

World Gold Council (WGC), a commercially-driven marketing organization, is funded by the world’s leading gold mining companies. A global advocate for gold, WGC aims to promote the demand for gold in all its forms through marketing activities in major international markets. For further information visit www.gold.org.


The Gold Investment Digest Report from the World Gold Council points out the performance of gold for 2008 versus other investments, while looking ahead to what 2009 holds for the yellow metal.

Friday, January 16, 2009

UBS Selling Commodities Businesses to Barclays

UBS made an expected statement on Friday that they are selling some of their commodities businesses, something the have mentioned as a goal in the past.

Barclays Capital is acquiring the power and gas businesses in the U.S., oil, and their base metals divisions. All together approximately 100 people are employed in the combined companies or units. Details of the terms of the deal weren't disclosed.

With losses in the billions, UBS is looking for alternative ways to raise capital in these difficult circumstances. They've already written down about $49 billion and received intervention from the government.

Other deals they've made are the sales of the stake they had in the Bank of China, and separately their global agriculture business and Canadian energy operations to J.P. Morgan Chase.

Last year they also got out of some of the power and gas markets they served in Europe, while keeping those in North America, northwest Europe and Britain.

The company is keeping its exchange-traded commodities, precious metals and index commodities, as well as continuing to trade in refined oil products and crude oil.

Assuming specific conditions of the deal are met, it should close sometime at the end of the second quarter.

The move is understandable, but when commodities begin to return in the future, they'll be sorry at the extraordinary profits they forfeited.

Thursday, January 15, 2009

Commodities: Rio Tinto Makes Further Cuts

Commodity giant Rio Tinto makes further production cuts

Rio Tinto has said it's thinking about selling more of its assets and making more production cuts, but it's more than simply taking things into consideration, there's nothing out there at this time that will change the fortunes of the company in the short term.

Even the billions being thrown around with the stimulus plans of countries won't do much to make any difference. It'll help them and similar companies a little, but more in the sense of patching holes in the boat than catching a good amount of fish.

According to Rio Tinto CEO Tom Albanese, the major factor at this time for any type of recovery is the stimulus package implemented by the Chinese. Again, it'll help some, but it won't have much impact on the bottom line or the need to cut operational costs.

This is confirmed by some of the cuts they've made in projects that would have had potential for growth. Put on hold are the iron-ore project in Brazil as well as the expansion of copper operations in Australia. They've also shut down diamond processing in Australia too.

By the end of 2008, the company said it would cut 14,000 jobs, which would cut expenses by $5 billion. They also said they have a goal of reducing their debt load by $10 billion.

To that end, they hired a new president of their aluminum division, who is ready to identify and make the cuts necessary to go forward, said Albanese, which undoubtedly include more layoffs.

Being a bellwhether commodities company, this gives a snapshot of what's ahead for 2009 in the sector. Safety will drive the movement of commodities in the near term, which should help gold and silver move up for the year.

Oil also should move up, as OPEC continues to slash production in order to stimulate more demand. Even so, if the global economy continues as it is for some time, all the cuts in production won't force people to buy gas at the higher prices, they'll just cut back more on using it.

Cuts will continue in the commodity sector until governments and companies begin buying materials again.

Wednesday, January 14, 2009

Ron Paul Educating Lawmakers on the Origin of the Economic Crisis

Ron Paul talks on the folly of the continued proposed bailouts by lawmakers and what the real cause of the economic crisis is. They need to start listening.

Tuesday, January 13, 2009

Commodities: Consequences of Destructive Ethanol

Consumers continue to be battered by artificial commodity - ethanol

Rage, outrage and disgust continue to grow concerning the ethanol debacle, which continues to harm people's equipment, while the government officials stubbornly refuse to drop the ignorant pursuit of the alleged biofuel, in order to gain political currency.

Almost every type of power equipment, including outboard motors, weed whackers, chainsaws and snowmobiles, among other types of goods like those.

What's worse, is not only the terrible effects of ethanol being neglected by the government, but now the artificial industry has its people pushing for a higher mix of ethanol in gas, which would devastate power equipment even more.

The reason behind it is to shore up the failing industry, and make more money at the expense of the consumer, who will have most of their power equipment destroyed by the faulty fuel.

Some things to look for if you're using the damaging ethanol are: hard starting, erratic running, internal damage and eventual failure.

We need a grass roots uprising that will drive this ill-advised initiative out of existence before we experience thousands of dollars in damages to our equipment, and billions more is wasted to a completely lost and wasteful cause.

Ethanol is not a commodity, it's a government creation that, as usual, is doomed to fail. How many consumers will be hurt by the initiative before its finally halted?

Commodities: Alcoa Has Net Losses for Quarter

Aluminum prices hammer commodity companies as demand plunges

Aluminum giant Alcoa Inc. (AA) reported losses far greater than projected on Monday, with net losses coming in at $1.19 billion, or $1.49 a share. That's in contrast to the strong quarter they enjoyed last year where the garnered a net income of $638 million, or 75 cents a share.

Analysts were looking for about a 10 cents a share loss, while the company almost had three times that with a loss of 28 cents a share.

Overall revenue for the quarter also plunged significantly with $5.7 billion, down from last year's $7.39 billion during the same period.

Most of the poor performance came from decreasing aluminum demand, which pressured prices down by 35 percent for the quarter, as the large sectors Alcoa served were themselves struggling, such as the construction and automotive industries

Talking of the measures the company is taking to combat the economic downturn, CEO Klaus Kleinfeld said in a statement, "By moving quickly to address the market decline, we are using Alcoa's strategic flexibility and solid liquidity to address the continuing economic uncertainty and emerge even stronger when the economy recovers."

Another strategy the company will put into action is the cutting of 13 percent of its workers - equaling 13,500 jobs globally - by the end of 2009.

Kleinfeld added that in comparison to many of their competitors, they are on solid footing, and when infrastructure demand kicks in again they'll be competitively positioned to take advantage of that.

[Most Recent Quotes from www.kitco.com]

Aluminum will probably lag behind other commodities in prices rising, as others will lead the way. That will keep downward pressure on prices and companies with a large exposure to the metal.

Monday, January 12, 2009

Falling Commodity Prices Push Brazilian Stocks Down

Bovespa plunges as falling commodity prices put pressure on the Brazilian stock market.

As commodities go, so goes Brazil, and that has been shown again to be true as falling commodity prices pushed the Bovespa to its lowest levels since November 21, 2008, dropping 2,179.47 to 39,403.47, a 5.2 percent loss.

That effectively wiped out half of the gain since the beginning of the year. Much of the rise in the first part of the year was from the illusion the stimulus plans implemented around the world would push up the demand for commodities, which Brazil relies so strongly on.

Even so, long term Brazil will do well, as sooner or later the need for commodities will kick in and override the fears permeating the global markets at this time. As far as the near term, many are starting to believe the optimism was highly exaggerated, and things will take longer to recover than thought.

In 2008 the Bovespa went off the cliff by 41 percent, but had a brief surge since the beginning of 2009.

Vale, Rio Tinto Group, Gerdau and Petrobras, among many others, all participated in the big decline today.

Raw materials and oil make up 54 percent of the MSCI Brazil Index.

When it comes down to it, investors don't believe countries are anywhere near ready to invest heavily in commodities, so they're pulling back until they are convinced to the contrary. That'll take some time.

Friday, January 9, 2009

Platinum Prices and the Year Ahead

There are a couple of different takes on the importance of platinum as an investment over the next year.

Some think the downturn in the auto industry and the resultant decline in platinum demand will slow the pricing of the metal, while others look at the price relationship between platinum and gold, and think platinum will be the best performing metal in 2009.

Under normal conditions, it usually requires between 1.7 and 2.2 ounces of gold to buy an ounce of platinum. Today the two metals are very close in price, generating the idea it's at bargain levels.

On the demand side, today South African investment bank and asset manager Investec (INVP.L) cut its short- and long-term outlook for platinum, citing the uncertainty in the auto industry as the driving factor.

In a research note, Investec analyst Rebecca O'Dwyer said, "We see downside risk to the platinum price in the near-term, particularly if vehicle sales continue to decline in the first few months of 2009."

Revised numbers from the bank places platinum at $970 and ounce in 2009 and $1,350 an ounce in 2010. Original projections were $1,350 for 2009 and $1,675 an ounce for 2010.

Who's right? That will depend upon whether demand is the determining factor in why investors buy platinum. Metals should be an excellent investment in 2009, and the economic circumstances would do more to dictate why people invest in them, rather than demand.

What I mean by that is U.S. equities, bonds and treasuries aren't going to be the focus of investors, with the danger connected to the U.S. dollar and the misguided bailouts and increased government spending.

So metals should be one of the few promising safe and growth sectors going forward into 2009. That in itself could override the demand factor concerning platinum (assuming it does go down), and the price definitely could surge up as investors pour their money into metals, and specifically platinum.

Thursday, January 8, 2009

Peter Schiff on Origins of Economic Meltdown

Economic expert Peter Schiff gives a devastating critique of the origin and causes of the global ecnomic collapse in this extraordinary TV interview.

He largely takes aim at the the medicine being offered for the disease: more government spending, and calls for the need to amputate the gangrene originating with the illusion larger, socialistic government will be the answer to the dilemna.

Rather, Schiff exposes the government as the perpetrator of the global disaster, not the solution.

As Schiff rightly illuminates, the government has no wealth, all they can do is confiscate the wealth of others and redistribute it through their taxation and redistribution program.

So the announcement of Obama that he's going to come to the rescue with the misguided public works expenditures, he's not really creating wealth or jobs, he's simply taking it and redistributing it to less valuable areas.

In other words, he's going to take wealth that the private sector creates, and redistribute it to government-created programs. The consequences will be the destruction of real employment opportunities, according to Schiff, which will cut into our standard of living.

Schiff's solution to the problem?

Let recession run its course

More discipline by Americans in spending and consumption

Need more savings and less borrowing

More production and less consumption

Schiff on government's role:

Less government spending

Sound monetary policy

Lower taxes

Get rid of military/industrial complex

Slash government programs

Higher, not lower interest rates

View video below if you want one of the best video presentations of the truth behind the economic crisis. It's brilliant!

Saturday, January 3, 2009

Commodities: End of the Ethanol Era

Ethanol an artificial commodity, not the answer

Imagine a plant that can be easily grown on farms all over America. Imagine it can be turned into a fuel through a simple process. Imagine we burn that fuel in our cars to reduce our dependence on foreign oil.

That sounds wonderful. But that plant is not corn. That process is not simple. And that fuel is not ethanol.

Click here for more on "End of the ethanol era"

I can't consider ethanol a real commodity, as is trying to be foisted on us by the government and greenies. There's absolutely nothng about it that has any value, as about every positive assertion made about it is turning out to be false.

Thursday, January 1, 2009

Overstock CEO Patrick Byrne: Get Rid of the Federal Reserve

Overstock CEO Patrick Byrne calling for an end to the federal reserve and negative role fiat money plays in the current economic disaster.

Byrne also talks about the possibilities of the retail industry getting a piece of the bailout money.