Saturday, February 27, 2010

Jim Rogers Denies British Pound Statement

Jim Rogers on British Pound Collapsing

According to Jim Rogers, the comments attributed to him that he said the British pound was ready to collapse, possibly in the next several weeks, isn't true, and he knew nothing of the press release which made the assertions.

Interestingly though, Rogers did make a fortune betting against the pound in the past.

Even so, Rogers didn't exactly back down from the issue in general, as he reasserts that while he didn't make the statements attributed to him, he still considers that over the next several years the British pound has some major problems.

What is sounds like is Rogers believes in the collapse of the British pound, he's just saying it didn't say it.

Jim Rogers on British Pound Collapsing

Questerre Energy Corp.(TSE:QEC): Utica Shale

Questerre Energy Utica Shale

Western Canada has historically and rightfully been considered the energy capital of Canada, but the discovery and early promise of natural gas in what is being called the Utica shale, has many companies and people in the area giddy about the potential if things play out the way they think.

Questerre Energy Corp. (TSE:QEC) says there's a possibility Utica shale could contain over 20 trillion cubic feet of recoverable natural gas, although it'll take time to prove that assumption.

In the first several weeks of the opening of the well, 12 million cubic feet of gas was produced on a daily basis, although that has dropped to less than half of that since that time. That's the normal way natural gas shale production works though, so not a real problem in that regard.

There are three more wells set to be opened similar to this particular well, which will give a better picture of the overall promise in the area.

While there is a lot of excitement about the potential in the first well, it will take some time, in fact years, and many more wells before it is known how strong of a find this is, but it's important that the first well at least showed solid potential and reason to go forward.

Other than Questerre Energy Corp., another way this could be played would be through Talisman Energy Inc. (TSE:TLM), which has a 75 percent stake in 400,000 hectares of land held by Questerre.

Questerre Energy Utica Shale

John Paulson Buying Land in Western States

John Paulson Building Lots

John Paulson will be bidding on a number of building lots in western states through one of the hedge funds he backs, built for the purpose of reselling those lots to homebuilders who can't find enough lots to build on as banks keep the lots off the market so they can keep them on their books.

Lots being offered are from TOUSA, Inc., a bankrupt builder of homes, and whom chose the Paulson-backed real estate recovery fund to bid on lots in Nevada, colorado and Arizona.

If banks were to put the foreclosed properties on the market, they would then have to declare the losses, which would give a more accurate picture of their financial strength, which they don't want to do.

Although prices are starting to climb on finished lots, there are still good deals out there, and enormous demand for lots that are still going relatively cheap.

John Paulson and others are bidding on these knowing there's a built-in market by all the healthy builders looking to put up houses on them quickly.

John Paulson Building Lots

Shell (NYSE:RDS.A), IBM (NYSE:IBM) Oil Fields

Shell and IBM Extending Life of Natural Gas and Oil Fields

Shell (NYSE:RDS.A) and IBM (NYSE:IBM) are partnering to look at ways they can extend the lives of oil and natural gas fields; the second deal Shell has entered into in about a month, as they also are working with Hewlett Packard in a separate deal for different purposes.

For IBM and Shell, IBM has developed software which is analytical and can simulate conditions in relationship to data collected on the ground in the physical locations of the fields.

The efficiencies created from the partnership will hep Shell move quicker and spend less as they get a more accurate picture of what is going on in the fields in order to recover natural gas and oil more efficiently.

Shell and IBM Extending Life of Natural Gas and Oil Fields

Friday, February 26, 2010

Teck Resources (NYSE:TCK) Red Dog Mine

Teck Resources Red Dog Mine

Teck Resources (NYSE:TCK) is on the verge of having to shut down its Red Dog mine, the largest zinc mine in the world based on dubious charges it is discharging toxins into a local stream used for drinking water.

The Red Dog mine provides close to 80 percent of the zinc that is mined in the United States.

If this is what happens, even after being issued a permit by the U.S. Environmental Protection Agency (EPA), it could cause zinc prices to rise more than they did in 2009, which had increased by 100 percent. Supply in 2009 was also down by about 500,000 tons.

What this probably will do will give the smaller zinc producers a chance to get into the game, assuming the whether the appeal is allowed to go forward or not. If it is, it could take about two years to go through the process for Tech Resources.

There is no doubt zinc mining for the smaller companies will get a big push if the Red Dog mine is shut down.

Teck Resources Red Dog Mine

Commodities Rise on Falling Dollar

Commodity Prices Rising

The falling dollar gave commodities a boost today, as many raw materials rose as a result of the dollar-denominated factor.

Gold, silver, copper, platinum and palladium all enjoyed price increases with little resistance in a relatively light day of trading.

Another commodity sector rising was energy, where oil, natural gas and gasoline all spiked.

Also joining the other commodity sectors in rising in price were the grains, where corn, soybeans and wheat all moved upwards.

What this shows me is how important the U.S. dollar is to the inflationary pressure we continue to face. While that's nothing new, it does show how just a little weakness in the dollar can drive commodity prices upwards.

It also shows me how vulnerable we are to inflation, and how quickly things can change in relationship to that.

Commodity Prices Rising

Financial Advisor

Cotton Acreage Up This Year?

Cotton Planting and Cotton Prices 2010

Reports from the Mid-South Farm and Gin Show revealed that cotton acres planted could come to an estimated 10.1 million in 2010, according to the National Cotton Council.

Estimates are cotton consequently could sell for about $1 a pound if projections hold, as stocks would tighten up.

Other consequences could be less acreage planted in soybeans.

Cotton Planting and Cotton Prices 2010

Corn Prices Rise on Weather

Corn Prices 2010

Although it's only speculation at this time, corn prices surged on the possibility melting show in the mid-west will result in flooding, which will in turn cause a smaller planting of corn by farmers in the spring.

A smaller planting of course will end up with a smaller yield of corn.

Even so, estimates from the USDA have corn acreage to be planted this year at some 89 million, up from the 86.5 million acres in 2009.

With weather expected to be at very cold levels in the region for the next three weeks, along with a potential 6 inches of water inherent in the snow laying on the ground of the great plains and the mid-west, that will put back the normal time of the spring thaw, making it harder to plant as well as harvest corn.

Taking that all into consideration, the question is whether the additional corn acreage planted in 2010 will make up for the late season and possible crop shortage in some areas.

Corn Prices 2010

George Soros Betting Against Euro

George Soros and Euro

George Soros is swooping in like a vulture on a carcass with the euro, as the currency expert who has made the vast majority of his fortune betting on currencies, is looking to make another killing by betting against the euro.

Via his Soros Fund Management company, Soros is putting a huge amount of resources to generate what will eventually be an extraordinary sum of money made from the euro crisis stemming from the PIIGS in southern Europe: Portugal, Ireland, Italy, Greece and Spain.

Soros isn't alone though in his hedge fund focus, as others are salivating to get into what looks like one of the surest bets around to make a once-in-a-lifetime deal on.

George Soros and Euro

Great Returns on Gold, Farmland

Investing in Farmland

We have heard a lot over the last year or so from the likes of Jim Rogers and Marc Faber concerning the value and profitability of investing in farmland.

Depending on what part of the world you live in, it has been one of the most lucrative investments over the last decade, and only trails gold when taking into consideration safety as part of your investment decisions.

In England, for example, prices have surged by 164 percent in the last decade for farmland prices, and this includes bubbles and a terrible recession. Of course those two events are part of what has driven investors to the rural land to begin with; that and concerns over potential catastrophic failures which could lead to he breakdown of society, which isn't considered that far fetched anymore by a growing number of people and investors.

And while farmland is a good haven, it is becoming far more than that as we enter into what I call a "peak" world, where many raw materials are reaching the point where they can't be extracted at the former low prices, and so it will cost more for them in the years ahead.

Even though food prices are down now, and may be for another year or two, they will start to rise again, and when they do farmland will be an extraordinary investment, as there is no more growing anywhere out there, and it will bring great returns in the years ahead as food demand skyrockets.

This is a great long-term opportunity for investors, with the combination of safety and great returns a hard to beat proposition.

While I see gold as a good investment for years into the future, I think over an even longer term, farmland will far outperform that and most other investments for a long time ahead.

Investing in Farmland

Eldorado Gold (NYSE:EGO) in Gold Bull Market

Eldorado Gold Bull Market

With holdings in a number of European, Asian and South American countries, Eldorado Gold (NYSE:EGO) looks like a good play in the ongoing gold bull market.

There is no doubt with recently released data from the Labor Department and Commerce Department of the United States that the recession is continuing on, and gold will continue to be one of the few reliable and predictable places to put your money in the mid-term.

Along with that, the Federal Reserve and Ben Bernanke refuse to stop their money printing press, and so inflation is inevitable, and along with the sovereign debt issues in a number of countries in the European Union (PIIGS), gold will continue to be a safety haven for some time to come.

Eldorado Gold (NYSE:EGO) is in a good position to take advantage of those realities and will perform well for investors.

Eldorado Gold Bull Market

Freeport-McMoRan (NYSE:FCX) Loaded with Cash

Freeport-McMoRan Growing Organically

Freeport-McMoRan Copper and Gold (NYSE:FCX) is in the enviable position of not needing to make acquisitions which would cause them to have to pay a premium for growth. The reason why is they're loaded with cash and can grow organically.

Plans for the cash, according to Chief Executive Richard Adkerson are to use it to expand their exploration drilling, relaunch development projects on hold, pay down their debt, and to increase dividends for their shareholders.

Although some major markets they operate in have been slow, the company is bullish on copper over the long term and are positioned to participate in expected growing prices and demand going forward.

Freeport-McMoRan (NYSE:FCX) Growth Strategy

Goldman Sachs (NYSE:GS) Greece Credit Default Swaps

Goldman Sachs Greece Credit Default Swaps

The pathetic chairman of the Federal Reserve, Ben Bernanke, blathered on recently on how the Securities and Exchange Commission will be checking into Goldman Sachs (NYSE:GS) and their practices concerning using legal credit default swaps as a best against Greece defaulting on their debt.

Credit default swaps are a type of insurance used against bond defaults. They are tools to use as hedges in other words.

But for Bernanke, who should be the one being interrogated for his role in the collapse of the U.S. economy through easy and cheap credit, along with his response of printing an endless amount of money which is continuing to destroy the value of the U.S. dollar.

Anyway, to now to play god again from his perch at the helm of the Federal Reserve, evidently feeling aggressive from his installment for a second term as Chairman of the Federal Reserve, Bernanke is making it look like Goldman Sachs is doing something wrong by betting against Greece. This is something done all the time by individual and institutional investors, in a number of catergories, currencies and countries.

To make this look unusual shows the disingenuousness of Bernanke and the U.S. government which continues to attempt to distract the American public by stunts and assertions like this which takes the focus off of their outrageous behavior with bailouts using taxpayers' money.

Goldman Sachs Greece Credit Default Swaps

Newmont Mining (NYSE:NEM) Fourth-Quarter Earnings

Newmont Mining (NYSE:NEM) Fourth-Quarter Earnings

Newmont Mining (NYSE:NEM) enjoyed a super fourth quarter as far as earnings go, performing far beyond expectations, as prices shot up for copper and gold, while the management reined in costs to generate the great numbers.

Earnings for the fourth quarter reached $558 million or $1.13 a share, an increase of $4 million from a year ago.

Overall sales of gold grew by 55 percent while copper sales were over ten times what they were from the year before, rising from $47 million to an extraordinary $533 million.

Reserves for both metals increased as well for the year, with copper reserves increasing 17 percent and gold reserves increasing by 8 percent.

It's great to see the second-largest gold mining company behind Barrick Gold (NYSE:ABX) not only flourish because of market demand, but also because they took steps to cut back on costs at the time good management does: when things are going great. Good job overall for Newmont and good discipline.

Newmont Mining (NYSE:NEM) Fourth-Quarter Earnings

Silver Wheaton (TSE:SLW) Converts Debenture with Pan American Silver (TSE:PAA)

Silver Wheaton Debenture with Pan American Silver

Silver Wheaton Corp. (TSE:SLW) announced after the close of the markets that they will convert its debenture with Pan American Silver Corp. (TSE:PAA) in order to acquire a 12.5 percent stake in the Navidad mining project based in Argentina.

Pan American held the debenture because of its acquisition of Aquiline Resources, who was the former owner of the Navidad mining project.

Specifics of the deal are Pan American will receive $32.4 million in an upfront payment from Silver Wheaton, in return they will be able to acquire silver at either $4 or what the particular market price silver is at at the time it is delivered; whichever is lower.

The actual upfront of $32.4 million will be made in payments rather than at the actual close of the deal.

Silver Wheaton (TSE:SLW) Converts Debenture with Pan American Silver (TSE:PAA)

Thursday, February 25, 2010

Barclays Capital (NYSE: BCS) Copper Prices

Barclays Capital Copper Prices

Barclays Capital (NYSE: BCS), the investment are of Barclays PLC, is high on copper prices for 2010, saying they see them going as high as $8,000 a ton in just the first half of 2010.

This is quite a change from projected prices of about $6,875 a ton for 2010, $7,000 a ton in 2011, and up to $8,500 in 2012.

The problem I have with these numbers is I think they are being offered on the assumption we are in an actual economic recovery, when in fact we aren't, as data from all over indicate.

With China cutting back significantly on copper imports this year, it does make you wonder where this demand is going to come from, with some throwing out it will be from Economic Cooperation and Development (OECD) countries.

One possible event that could make this happen is the hoarding of copper in anticipation of potential future shortage which would in fact drive up prices significantly for those countries without copper reserves set aside like China has.

Barclays Capital (NYSE: BCS) Copper Prices

Gold Rising 30% in 2010?

Gold Rising 30% in 2010

According to the London Market Bullion Association, gold could rise close to 30 percent in 2010, as continual concerns over central banks printing money, sovereign defaults, quantitative easing and outrageous government stimulus programs weigh on the minds of investors.

It's unknown what will happen if the British pound collapses, as a number of investment experts like Jim Rogers and Marc Faber are predicting, and that could cause gold prices to go through the roof as investors and consumers look for somewhere safe to place their money.

Now that the government stimulus programs have been proven to be mass failures, the growing realization we aren't close to being out of the recession yet is settling on people, and that will cause even more to move toward gold as a haven.

In the short term it doesn't look like any new gold mines are coming online either, making gold a possible rare commodity as funds continue to buy physical gold to back them up. That is another possible factor which could move gold prices higher in 2010 and beyond.

Gold Rising 30% in 2010

Coeur d'Alene Mines (NYSE:CDE) Senior Unsecured Notes

Coeur d'Alene Mines (NYSE:CDE) Senior Unsecured Notes

In an effort to raise capital for the construction of its tailings dam at their Kensington mine, Coeur d'Alene Mines sold $100 million in senior unsecured notes, while also selling shares of common stock in the company for another $3.75 million.

According to Coeur d'Alene Mines Chief Financial Officer Mitchell J. Krebs, some of the capital could be directed toward its Palmarejo silver and gold mine in Mexico, where more underground development is needed.

Coeur d'Alene Mines (NYSE:CDE) Senior Unsecured Notes

Anglo American (LON:AAL) Doubling Copper Production by 2017

Anglo American Copper Production

Anglo American (LON:AAL) said earlier in the week that by 2017 its copper production will almost double to 1.2 million tons.

The major problem for copper mining companies is how quickly the auto manufacturing sector and home building sector rebound.

The most recent data isn't a great sign that we're into any type of sustainable recovery, as equipment sales in America plunged in January, confirming the December numbers were based only on replenishment and not growth.

Of course the good news for Anglo American is more than likely by the time they're producing at this level, there's a good chance there will be a real recovery before 2017.

For 2010, CEO of their copper business division, John MacKenzie said sales will reflect last years numbers of about 669,800 tons of copper brought out of the ground.

Dividends should be again offered by the company sometime near the end of 2010.

Anglo American (LON:AAL) Copper Production

China Tightening and Gold Market

China Gold Market

Even though China is tightening their money supply some, according to the Far East managing director of the World Gold Council, Albert Cheng, it will have little effect on the gold market or gold demand..

The reasoning behind Cheng's assertion is the Chinese market doesn't have investment vehicles like exchange-traded funds, so they aren't a factor in that market.

Consequently, the Chinese market for gold is driven by retail investors and consumers, and the majority of them want to include gold as a part of their investment portfolio in order to maintain their wealth.

For China itself, they've been steadily increasing the amount of gold holding they have in the country, up to 1,054 tons now from the approximate 600 tons they had in 2003.

While they are getting a little more investment savvy and didn't bite at the offer from the IMF to acquire about 191.3 tons of gold, it is suspected they continue to buy behind the scenes.

China Gold Market

Marc Faber: Will China Collapse?

Marc Faber on China

We've been talking about a lot of negative factors which could have a dramatic effect on the market and commodities lately, and all of them are important to keep in mind. That's the case with Marc Faber and his input on China.

Faber sees China as being at a tremendous risk of crashing, to the tune of about a 30 percent chance. He adds that whether it crashes or not it will definitely slow down.

With that in mind, it will have a significant impact on certain commodities, as the Chinese government, to a certain degree, is starting to tighten up some on its lending.

I'm not convinced on the motives of the Chinese yet though, as I think some of tightening is a move in relationship to negotiating on some of its commodity imports, specifically iron ore.

Even so, they do want to cool the economy down some, and that is probably a surety going forward.

The problem is where are they going to cut back on? It doesn't seem it will be in the area of iron ore or steel, as there is huge demand still in China for those, not only domestically but for exports too.

We do have to remember that China, even if it cuts back from its approximate 10 percent growth, down to 8 or 9 percent growth, it's still the biggest growth market on earth, and will drive the commodity market for years to come.

I think a small slowdown in China is more likely than an outright crash, as the elements involved in their are much different than their Western counterparts.

Marc Faber on China

Jim Rogers: British Pound Collapsing

Jim Rogers on British Pound

According to currency and commodity expert Jim Rogers, the British pound is ready to collapse in the near future, saying it could easily be within the next several weeks.

In typical response to that reality, the Governor of the Bank of England, Mervyn King, said the central bank is ready to print as much money as needed to deal with the situation, which pushed the value of the pound down even more. Keynesian's still don't get that printing money and simulating the economy don't work, doesn't create jobs, or have a lasting impact. They're learning the hard way now that this is true.

As far as the British pound collapsing, Rogers added that this will make the great recession look like a small blip in comparison, and could come near the end of 2010.

Rogers and Marc Faber agree that a currency crash will come before the coming economic crisis.

Taking into consideration the figures from the U.S. Labor Department, Commerce Department and those on the British economy, and the idea that we're in a recovery is a joke.

Those who want to get a more in-depth explanation of what's happening will have a chance to on March 19, 2010, where Jim Rogers and Marc Faber will join British investor Vince Stanzione to talk on how to successfully invest in the coming recessionary environment.

Jim Rogers on British Pound

Rand Paul on Kentucky Coal

Rand Paul on Coal

Responding to a smear campaign from his fading political opponent, Kentucky Secretary of State Trey Grayson, Rand Paul defended himself against accusations from Grayson that he was not a friend of the coal mining industry, which is a strong part of the economy of eastern Kentucky.

In a TV interview, Paul responded to the Grayson ads saying, "I'm against Cap and Trade. I'm for reigning in the EPA because I think they're limiting the permit process. I'm for allowing mountain top removal of coal. That doesn't sound like I'm very anti-coal, and yet he takes a quote out of context from two years before, where I say that there are cleaner forms of energy that we will eventually evolve to. That doesn't mean I'm against coal."

Paul also went on the offensive, showing a video of Grayson supporting bringing in nuclear powered plants after the coal-fired plants are taken out of the picture.

Rand Paul on Coal

David Einhorn: Gold and Government

David Einhorn on Gold

Speaking at the Value Investing Congress recently, David Einhorn of Greenlight Capital, revealed the reasons he felt gold was a solid investment into the future.

Looking at it from a slightly different point of view, Einhorn said in his opinion, gold does the best based on the fiscal policies being enacted. When the Federal Reserve and other central banks ramp up their printing presses, gold does well, when they deal with it like Paul Volcker did in the 1970s, gold does poorly. And obviously, we're not in a Volcker-like environment at this time.

Unless the government starts wising up and takes the right course of action, Einhorn said gold will do good for some time to come.

With the sovereign debt of a number of nations in serious trouble, and in danger of default, Einhorn looks at that and any currency crisis as markers that gold will do well in those circumstances too.

Taking into consideration the horrid economic policies of the Obama administration, gold has a bright and long future ahead of it for those investing in gold.

David Einhorn on Gold

Nouriel Roubini on China Tightening

Nouriel Roubini on China

While a lot of people have made a big deal about the tightening in China, I agree, with Nouriel Roubini that in reality there is not much real tightening going on, and I think it's because of the negotiations China's going through concerning various commodities, including iron ore for its steel industry, among other commodity contracts they're negotiating over.

Eventually Roubini sees there will be an eventual tightening because of inflation, but that time doesn't seem to be here yet.

China is pretty cagey about its negotiations, and they got burned some last year when they didn't enter into predictable contracts with the major three iron ore companies, and spent more on the open market as a result.

Even with the so-called tightening, projections are China will lend at a growth rate of 20 percent form last year, albeit a little slower than the 30 percent at that time.

Nouriel Roubini on China

Why George Soros, Jim Rogers and John Paulson are Buying Gold

So why are George Soros, Jim Rogers and John Paulson buying gold?

These guys are experts in currencies, possibly more than any other investment vehicle, and the acquisition of gold means they believe gold will rise against the majority of currencies in the world, based on the extraordinary amount of stimulus money printed and thrown around by central banks around the globe.

While there are obvious other factors like the inevitable inflation and ongoing risk factors which continue to rise rather than abate, as witnessed by the Dubai debacle and sovereign wealth crisis in Europe.

The only question someone needs to ask themselves is if the currency they trade in will be worth more than gold in the foreseeable future. If not, guess which one wins out for the best investment choice?

Even if you don't understand all the particulars, when you see heavyweights like George Soros, Jim Rogers and John Paulson acquiring, increasing their positions and holding on to gold, you know they see something important, and part of what they see is mentioned above.

George Soros, Jim Rogers and John Paulson buying gold

Are Silver Wheaton (NYSE:SLW), Silver Standard Resources (NASDAQ:SSRI), Endeavour Silver (AMEX:EXK) Lost Causes?

Future of Silver and Gold Mining Companies

Some are out there talking as if companies like Silver Wheaton (NYSE:SLW), Silver Standard Resources (NASDAQ:SSRI) and Endeavour Silver (AMEX:EXK) are going to start to slow down in growth, largely based on assertions and innuendo rather than facts.

We can't continue to make investments decisions maybes or could haves, rather we must base it on solid data and evidence if we want to do well with our commodity investments.

While it may be a good time to take a breather and look at the overall economic landscape, there's no way I would sell my silver or gold investments at this time, although it would depend on what I was investing in, such as silver or gold futures or specific silver or gold mining companies, or maybe even physical gold or silver.

There is this foolish idea floating around that we have to put more money into equities just in case we actually enter into a recovery. That's somewhat stupid to me, although, again, a specific company could do well in the current economic and investment climate, like many have done throughout the years.

But to assert our time of risk is over and we should start to move our money into equities in general is just plain dumb. We are far from being over risk, and we are in more dire straits with sovereign risk with the PIIGS and consumer confidence declining, along with a so-called economic recovery with no jobs being created.

Even the talk of future interest hikes by the Federal Reserve is irrelevant. Ben Bernanke has already stated he's going to hold things where they are for some time to come, and even if you don't trust Bernanke, he's right in that he will have to do it, as he and the Federal Reserve are caught in a trap they can't get out of, and he's going to bide his time in hopes something will emerge which will help him and the Federal Reserve.

Silver and gold companies like the ones mentioned above are far from running their course, and it's highly unlikely they'll stay down for any long period of time going forward, although there will always be market corrections.

Future of Silver and Gold Mining Companies

Wednesday, February 24, 2010

Silver Standard Resources (NASDAQ:SSRI) Silvertip Property

Silver Standard Resources (NASDAQ:SSRI) Silvercorp Metals (NYSE:SVM)

Silver Standard Resources (NASDAQ:SSRI) has sold its stake in its Silvertip property to Silvercorp Metals (NYSE: SVM) for C$15 million. The property includes silver, lead and zinc. The terms of the deal was half in common shares of the company and the other half in cash.

“The Silvertip project ranks among one of the highest grade silver-lead-zinc carbonate replacement deposits in North America — with great potential to grow,” said Rui Feng, Silvercorp chairman and chief executive.

The lead could be especially rewarding, as it had a concentrate grade of 65 percent and 80.4 percent was deemed as recoverable in a test a couple of years ago.

Another factor is lead for batteries continues to be in strong demand, while there are only about 7 lead mines in the world to provide it.

Silvercorp wil perform its own due diligence before the deal is officially completed in a couple of days.

Silver Standard Resources (NASDAQ:SSRI) Silvercorp Metals (NYSE:SVM)

Charlie Munger Warns on America

Charlie Munger on Economics and America

Anyone reading Charlie Mungers parable over at Slate over the weekend should come away very sober, with the realization why precious metals like gold and silver, along with other commodities, will do well over the years ahead.

The parable by Charlie Munger attacked on two fronts. The first was the outrageous practices of the U.S. government which is out of control with its spending and taxation, and discourages entrepreneurs from flourishing when all they do is take wealth away from them and redistribute it like the growing socialist government and administration we now have.

On the private business side, Munger blasted the derivative trading of the banks which were a major part of the underlying problems many of us face.

While this is all true and accurate, we still face the consequences of the actions of the U.S. government and major banks no matter what is done in attempts to deal with the root causes.

This is why commodities will continue to be the major success story over the next decade or more, as real things will continue to be in demand, rather than things most people can't begin to understand.

Charlie Munger on Economics and America

API: Crude Oil Inventories Drop

Crude Oil Inventories Drop

The American Petroleum Institute said yesterday that crude oil inventories in the United States dropped by 3.14 million barrels last week to 334.4 million.

Distillate fuels fell by 834,000 barrels to 158.7 million, which inventories for gasoline increased by 1.74 million barrels to 232 million.

Today the Energy Department will release their inventory report as 10:30 a.m. EST.

It'll be interesting to see if the report from the API lines up with the Department of Energy report, as they do move in different direction about 25 percent of the time over the last several years.

The major reason for the discrepancy is the API collects data on a voluntary basis while the DOE does on a required basis.

With consumer sentiment dropping to 46, people are starting to be concerned over the alleged economic recovery, which most really aren't feeling in their pocketbook, and are starting to doubt as being real.

With that in mind, we'll probably find out inventories have in fact risen, as people again hold back on spending and travel.

Crude Oil Inventories Drop

Jim Rogers: India and Agriculture

Jim Rogers and why India is Failing at Agriculture

Jim Rogers stated in a recent interview with the Economic Times that India should be an agriculture powerhouse, but because of water issues and endless government regulations, the nation continues to suffer when they should be one of the leading agricultural nations in the world.

In the short term, Rogers said if India doesn't do something about the water challenges in the northern part of India, there won't be an Indian agricultural story.

Rogers continues, saying everything in India is conducive to successful farming, as they have great land, soil and weather. The solution to Rogers is the government needs to get out of the way with its regulations and then the farming sector will thrive.

India has unfortunately had to import much of its food rather than be an exporter.

Jim Rogers and why India is Failing at Agriculture

Tuesday, February 23, 2010

Marc Faber, Jim Rogers: Buy Farmland and Gold

Marc Faber, Jim Rogers, Farmland and Gold

There are two things Marc Faber and Jim Rogers have been telling investors for a long time, and that has been to buy farmland and invest in gold, with a portion of that being in physical gold.

Faber repeated that mantra recently in Tokyo when talking to a group of institutional investors in Tokyo.

Faber added that fund managers need to take into account what the effects of major disruptions could have on the assets they hold, as there is sure to be unpredictable major events beyond simple volatility in the market.

Saying if those events happen to be attackes, they're almost sure to happen in the cities, making buying a home in the countryside somewhere an important part of their personal investment strategy; beyond only making money.

As far as regular investment strategies, Faber said agriculture is a good bet along with companies providing water treatment technology, as he sees both having the potential for major shortages in the future, especially in Asia.

Faber reiterates what others are saying, and that it the uncontrollable debt of the American government is a disaster, and he believes the U.S. is on the verge of bankruptcy in the not too distant future.

Marc Faber, Jim Rogers, Farmland and Gold

Yamana Gold (TSE:YRI), Barrick Gold Corp. (TSE:ABX), Goldcorp (TSE:G) All Down

Yamana Gold, Barrick Gold Corp., Goldcorp

Yamana Gold (TSE:YRI), Barrick Gold Corp. (TSE:ABX), Goldcorp (TSE:G) were all down today as they helped lead a pullback in gold prices after nice gains earlier in the session for gold futures.

Some believe this is over the concerns that governments are removing stimulus measures which have been helping artificially prop up the markets.

As far as gold goes, this really doesn't have much if any effect on gold mining companies, but it's part of the pychology of investing, as we all know.

Yamana Gold, Barrick Gold Corp., Goldcorp

Rio Tinto (LON:RIO) and Raw Materials in Big Gains

Raw Materials Producers

Those companies producing raw materials experienced strong gains as companies like Rio Tinto (LON:RIO) and BHP (ASX:BHP) enjoyed stong surges in price.

This was also reflected beyond commodity companies and raw material producers, as the London Metal Exchange Index increased by almost 2 percent, and crude oil for March delivery increased by 0.4 percent.

A number of oil exploration companies moved in synch with the index movements and other raw material upward price movements as well.

Raw Materials Producers

Managed Commodity Assets Fall

Managed Commodity Assets Fall

Managed commodity assets fell for the first time in over a year, said Barclay's Capital, evidently based on worries over the global economy.

Overall commodity assets under management dropped to $245 billion, a $12 billion fall from the $257 billion from last month.

In what I think is a strange response to uncertainty, investors took close to $500 million out of exchange-traded funds, with the majority of that being funds backed by gold and a variety of other precious metals.

At a time when uncertainty should drive smart investors to gold, the idea that taking it out of gold and moving it to something else is ignorant and bizarre, although obviously a lot more was happening than only that in the overall commodity managed assets picture.

Managed Commodity Assets Fall

BHP Billiton (ASX:BHP) Japan Coal Prices

BHP Billiton (ASX:BHP) (NYSE:BHP) Japan Coal Prices

A proposal from BHP Billiton (ASX:BHP) to Japanese steelmakers to increase the price of coking coal provided by the company by 55 percent was greeted with luke warm response from the Japanese, to say the least.

BHP has held its coking coal prices down over the last couple of years, probably the reason it through out such hig percentage increase in prices to test the Japanese response. It also could be an attempt to secure higher prices than they hoped for by presenting such a large increase in the first place.

The Japanese have reportedly rejected the prices asked for, and BHP will now start to negotiate in earnest concerning the prices. This was probably BHP telling the Japanese they'll have to pay a lot more this year for the coking coal.

BHP Billiton (ASX:BHP) (NYSE:BHP) Japan Coal Prices

Monday, February 22, 2010

India Major Agriculture Commodities Producer

India Agriculture Commodity Production

India has been quietly growing a strong position in agricultural commodities while China gets the majority of the attention because they're such a strong consumer of most commodities.

While some of the top commodities India produces aren't that used in the western world, other than bananas and lemons, they still are the world leader in the following: safflower, bees wax, goat milk, castorseed, mangoes, guavas and mangosteens, chickpea, pigeon pea, lemons, bananas and buffalo milk, among others.

Unless you think India is only the king of the secondary agricultural commodities in the world, they have held the No. 2 position with major crops like sugarcane, wheat, rice, onions, green peas, cauliflower and garlic. They have been 3rd in cashews, rapeseed, sorghum, linseed and tomatoes.

Although India has a lot more bureaucratic problems than China, and internal challenges they will have to work through, the agricultural production of the country is one of the more positive signs economically for them.

Figures above were primarily based on the production numbers of 2007.

India Agriculture Commodity Production

George Soros' Gold Contradictions

George Soros and Gold

Why is it that George Soros has said recently gold was "the ultimate asset bubble," and then not long before pour a ton of his money into it?

It think it's a little game Soros is playing in an attempt to throw investors off his trail, throwing out some confusion to keep them from putting some skin in the game.

There isn't a gold bubble right now, and historically a bubble of any sort is when the everyday person is throwing their money at something for the sole reason that everyone else is doing it. Until we see the average person on the street investing in gold, it won't be in a bubble.

This of course doesn't mean there won't be any corrections, just that a bubble is something that is going to burst, and until conditions change drastically, gold will be as solid as a performer as any other investment sector.

It's obvious George Soros is playing a little game by saying one thing while doing another, and he has to do that because of the requirements to report what he is investing because of rules related to companies with over $100 million in available to invest.

George Soros and Gold

Jim Rogers: Britain Bankrupt

Jim Rogers on what to invest in

In a recent interview, commodity investor Jim Rogers stated that Britain is bankrupt, and there's not a bank in the country that's not in trouble.

Other than oil and banking, the UK hasn't had much going for it, and oil is depleting while the UK banking industry is in shambles he said.

Jim Rogers reiterated that investing in real assets is the way to go over the next 30 years, and those that produce "real things," will dominate the business landscape.

Rogers recommends, as mentioned, real assets, raw materials, commodities, and to stay away from the U.S. dollar and sterling for sure. The currency Rogers says he's investing in now is the yen.

He also said he is buying China shares again, signifying he things they are near a bottom.

Jim Rogers on what to invest in

Saturday, February 20, 2010

Canpotex Deal Helps Potash Corp (TSE:POT), Mosaic Co (TSE:MOS) and Agrium Inc (TSE:AGU)

Canpotex India Deal

The deal by Canpotex with Indian buyers to buy potash will help Canadian potash producers Potash Corp (TSE:POT), Mosaic Co (TSE:MOS) and Agrium Inc (TSE:AGU), which together own the exporting and negotiating unit of the trio.

Potash demand was down strongly in 2009, so even though this will help the companies going forward. The price of $370 a ton was in line with expectations and reveals the rebound will be one step at a time and not a large move. The deal was for 600,000 tons of potash.

Being the largest producer of potash, Potash Corp. will especially benefit from deal, accounting for 54 percent of the potash provided by Canpotex. Mosaic supplies close to 37 percent and Agrium 9 percent.

This announcement follows on the heels of 350,000 deal with China by Canpotex just a week ago. Details of that deal weren't announced.

Canpotex India Deal

Peter Schiff Still Likes Gold

Peter Schiff Gold

In a recent interview, Peter Schiff maintains that he still like gold and expected it to go much higher. Schiff added it doesn't matter which currency you look at gold through, it still looks strong going forward.

While liking gold in general, Schiff also mentioned gold miners will do well during the time goes up as well.

The primary impetus of gold says Schiff is fears over inflation from the fiat money being created.

Peter Schiff Gold

Friday, February 19, 2010

Southern Copper (NYSE:SCCO) Upgraded to Neutral by Bank of America (BAC)

Southern Copper

Bank of America (BAC) upgraded its outlook for Southern Copper (NYSE:SCCO) from Underperform to Neutral, while still maintaining its $38 target price.

In afterhours trading the stock was at $30.80, an increase of 0.51 and 1.68 percent; still down from the day before.

Southern Copper recently changed its ticker from PCU to SCCO.

Southern Copper

Peter Schiff: Buy, Hold Gold

Peter Schiff on Gold

Most of us know that Peter Schiff has championed buying and holding gold for some time, as the economic circumstances around the world show there needs to be a haven for our money when everything around us has the potential to collapse.

The most recent economic disaster is the PIIGS from Europe, which all are in danger of sovereign default, and which would crush the global economic system before we begin a true economic recovery.

Some seem to think Greece would only have an effect on Europe, rather than the world, but it depends on who is holding the debt and how much. Banks will fall if Greece does, and Greece knows it, and holds the upper hand in that regard.

Either way, gold should be a key player in the years ahead, not only because of this hanging sword over the head of Europe and the euro, but because it would have been a key player based on the decisions of central banks and their futile policies which are causing more harm than good.

As Peter Schiff has said in the past concerning gold, when you own gold, you have something that has lasting value. Most of the currencies is this world can no longer say that.

Peter Schiff on Gold

Pan American Silver (Nasdaq: PAAS) Gets No Respect

Pan American Silver

The management at Pan American Silver (Nasdaq: PAAS) seem to be quietly building a solid company while most investors in silver and other precious metals look elsewhere for their profits. That, I think, is a mistake.

When talking about increasing their silver production by 31 percent in the third quarter, while generating 6.4 million ounces of silver - a record - they are more than poised to perform strongly for years ahead, and that doesn't even include the acquisition of Aquiline Resources Inc., which has an estimated 632 million ounces of silver in its Navidad project in Argentina.

For all of 2009 the company produced 23 million ounces of silver at a reported $5.53 an ounce; a very good number.

But Pan American Silver isn't only into silver, as its gold production skyrocketed in 2009 by 331 percent.

The best part though, is even with their increased production and available resources, they are being managed well with cost being shaved significantly during the year.

With these facts and other numbers showing a company growing and expanding, while maintaining its handle on costs, and you have all the pieces for a great investment.

For some reason many people simply miss this with Pan American, and that's to their detriment over the long haul.

Pan American Silver

Dollar Surge on Greece Fears

U.S. Dollar Sovereign Default

Although both faulty currencies, the U.S. dollar has been getting the better of the euro lately, especially in light of concerns over sovereign default be Greece continue.

Another factor is it seems the Federal Reserve could tighten up its money policy a little sooner than expected, also giving the U.S. dollar an upward thrust.

Of course Greece is far from the only concern in Europe, as the PIIGS Portugal, Ireland, Italy, Greece and Spain, are considered to be in a similar situation, with any of them exposed to sovereign default.

While long on talk and short on ideas, other than saying they're prepared to help Greece, there is growing concern on how that could be done, especially if the other exposed countries look to be, or need to be, bailed out as well.

If they collapse, there may no longer be a European Union, or a euro for that matter.

An interesting potential anomaly in all of this is gold and the U.S. dollar may increase in price and strength as a result of all this, making the usual movement of gold in opposite direction of the dollar no longer the case.

U.S. Dollar Sovereign Default

Jim Rogers: China Cutting Treasurys

China Treasurys

China bull Jim Rogers commented on the inevitable move by China to cut its holdings in U.S. Treasurys, saying the emerging economic giant will probably continue to do this for some time to come.

The appetite for Treasurys from foreign investors dropped by the largest amount in history in December, as concerns over the long-term viability of the U.S. dollar continues on.

Cuts by China resulted in Japan now being the largest holder of U.S. Treasurys, as China cut holdings by $34.2 billion to $755.4 billion. Japan holds $768.8 billion in Treasurys at this time.

Expectations are with foreign holding dropping from many different countries, the Federal Reserve may have to increase interest rates to attract investors, a highly difficult scenario when considering the extraordinary spending by the Obama administration and the resultant budget deficit as a consequence.

Rogers predicts this trend will continue once the fears over the euro are over, which he says could take some time.

China Treasurys

Sims Metal Management (ASX:SGM) First Half Results

Sims Metal Management

Sims Metal Management (ASX:SGM) reported a profit for the half year ending on December 31, 2009 of $35.9 million after taxes, as the Sydney-based company, even as overall sales dropped by 39 percent for the same time a year before. Sims Metal is the largest scrap metal recycler in the world.

Even with higher revenue last year, the company had looses of of A$79.4 million. Sales for the period dropped by A$3.4 billion. Diluted earnings per share stood at 21.2 cents for the first fiscal half year.

The company seems positioned strongly going forward, as it hasn't tapped any of its lines of credit and has $225 million cash on hand.

They may use that in the next months to grow it share in the North American scrap market, which they now have 13 percent of. They may try to increase that to 22 percent sometime soon.

Sims Metal Management

Thursday, February 18, 2010

George Soros, Marc Faber, John Paulson, Jim Rogers All Buying Gold

George Soros, Marc Faber, John Paulson, Jim Rogers

One thing I learned a long time ago was to ignore most the chatter and look at what people are really doing with their money, rather than what they assert.

In that regard, George Soros, Marc Faber, John Paulson and Jim Rogers, based on their actions and holdings, think gold is an extremely valuable asset to hold during these turbulent economic times.

George Soros is the latest to put his money into gold, specifically via the world's largest gold exchange-traded fund (ETF) - SPDR Gold Trust. Paulson is also known to have large holdings in SPDR as well.

Faber and Jim Rogers have both stated they have significant gold holdings, and while not selling any, are always waiting for gold market corrections to invest more, which I would think they did recently.

So even though some say we're in a gold bubble, even Soros, look at where he placed his money to see if he in fact really believes that. If he did, he wouldn't have took the actions he did.

George Soros, Marc Faber, John Paulson, Jim Rogers

Soros, Paulson Large Gold Stakes

George Soros and John Paulson like gold

George Soros and John Paulson revealed in their required 13-F filings that they held significant gold investments in their funds, led by the SPDR Gold Trust (NYSEArca: GLD).

The commitment by Soros Fund Management reveals Soros believes gold will continue to climb in price, as it increased its holdings by 152 percent in SPDR Gold Trust, which brings its total to $663 million. That's the largest holding of the entire fund.

For Paulson & Co., they have a $3.38 billion stake in SPDR, which is over 11 percent of the value of the fund. Paulson has invested a quarter of billion of his own money in the hedge fund.

George Soros and John Paulson like gold

Nasdaq OMX Majority Owner Agora-X

Nasdaq OMX Controls Agora-X

Nasdaq OMX is now the majority owner of Agora-X, the electronic commodities market based in Kansas City.

While the terms of the deal weren't revealed, after it was through Nasdaq OMX had its stake in Agora-X rise from 20 percent to 85 percent.

The founder of Agora-X, FCStone Group, still has a 15 percent ownership, but that fell from the 80 percent they previously owned.

Agora-X caters to over the counter commodity trades, as distinguished from the exchange-traded commodities at the Kansas City Board of Trade.

Nasdaq OMX Controls Agora-X

Wednesday, February 17, 2010

Gold Bull Market Over?

Gold Bull Market

I find it hilarious when clueless people attempt to make assertions like those I've been hearing lately that the bull market in gold is over.

The primary ignorance of some of those making these assertions is that the recent increase in gold prices has been because of gold bugs, rather than market forces, or in this case: lack of force in the market.

For some reason, people seem to resent or reject the fact that gold performs strongly when adverse economic and world conditions are uncertain, and we have been in that situation for several years, and will continue to be for many more.

Anyone who asserts gold bugs are behind the run up in gold prices understands nothing about historical responses to tough economic circumstances, the extreme printing of money, and the inevitable inflation that follows.

Add to that the sovereign risk associated with a growing number of countries, along with rising inflation, and you have a perfect economic storm for the rise in gold prices to continue, and they will.

What about the so-called gold bubble some think we're in? There's no evidence of it, on the contrary, for the most part institutional investors are the primary investors in gold, and until the general population enters into the sector, there will not be, neither can there be, a gold bubble.

Gold has a great future over the next several years, and possibly longer, depending on the rate of inflation and how long it'll take to realize we are still in the middle of a recession.

Once that happens, we'll see gold surge even higher, and those positioned to take advantage of that should enjoy strong profits from gold investing for a number of years to come.

Gold Bull Market

$1.4 Billion Anadarko (NYSE: APC) Marcellus Shale Deal

Anadarko Petroleum Corp. Marcellus Shale

Anadarko Petroleum Corp. (NYSE: APC) sells Stake in $1.4 Billion U.S. Gas Deal Marcellus Shale natural gas project to Japanese trading company Mitsui & Co. for $1.4billion.

Mitsui says it'll invest a minimum of $3 billion to help move the estimated $25 billion gas project forward. The goal is to get gas production levels up to 460 million cubic feet a day.

As a result of the agreement, Mitsui will have a 32.5 percent stake in the assets of Anadarko, which is about 15.5 percent of the gas production project.

The lifespan of Marcellus Shale is projected at about 60 years, with production expected to peak sometime between 2018 and 2020.

Anadarko Petroleum Corp. Marcellus Shale

Gold Futures Explode Past $1,100 an Ounce

Gold futures prices surge

Gold futures shot up almost $30 an ounce. Gold for April delivery ended at $29.80 to finish the day at $1,119.80 an ounce, a gain of 2.7 percent for the session. It went as high a $1,121.90 an ounce during the day before pulling back.

Other metals did well too, as silver increased by 71 cents for March delivery, while copper rose 14 cents to $3.22 a pound.

Another factor helping commodities throughout the day was the news that manufacturing had increased at a quicker pace than expected, although that could largely be due to the replenishing of stockpiles rather than growth.

Either way, gold looks to take off again, with $1,125 being what is looked for for the next breakthrough needed.

Gold futures prices surge

Barrick Gold (TSE:ABX), Goldcorp (TSE:G), Kinross Gold (TSE:K) Should Generate Strong Fourth-quarter Profits

Barrick Gold, Goldcorp, Kinross Gold

The top three Canadian mining companies, Barrick Gold (TSE:ABX), Goldcorp (TSE:G) and Kinross Gold (TSE:K), are all expected to announce strong profits in the fourth quarter, with estimates for Barrick Gold and Goldcorp expected to double from the year before, and Kinross looking for an increase in earnings of around 75 percent.

The companies have just about everything going for them at this time, as precious metal prices continue to rise, gold bullion is rising, and the cost of doing business has been managed well by the three.

It doesn't hurt that the price of gold hit highs during the quarter either.

Even so, the even better news is the companies managed costs very well during this time, which ultimately be the deciding factor in how high the earnings will be for them.

The cost margin was a hefty $652 an ounce, a strong increase over the third quarter, which stood at $504 an ounce.

Barrick Gold, Goldcorp, Kinross Gold

Mobius Likes Latin American Stocks

Mark Mobius Latin America

Mark Mobius is in Santiago, Chile, and in his overview of that market, and other Latin American markets, he's extremely bullish, and is looking for potential record gains in that region in 2010 for its equity indexes.

Although he's doing research on Chile, Mobius has already had invested in a number of Latin America countries, including Brazil, Mexico, Peru and Colombia.

Of all of these, Mobius particularly likes Brazil, which bodes well for commodities, as that's the primary driver of the Brazilian market.

After the current Latin American market correction, Mobius expects things to take off once again, which will be reflected in a number of the indexes tracking stocks and commodities in the region.

While in the midst of a correction, a number of people believe there will be more to go before the upward climb begins again in the region.

Other things Mobius is looking into for his Templeton Asset Management is in regard to private equity opportunities, specifically for smaller private or public companies in need of infusion of capital.

Mark Mobius Latin America

Tuesday, February 16, 2010

Pan American Silver (TSE:PAA) Posts Profits

Pan American Silver Quarterly Report

After a disappointing fourth quarter last year, Pan American Silver (TSE:PAA) came roaring back to post a profit in the fourth quarter ending December 31.

The factors contributing to the profits according to Pan American Silver was increased production and the increase in the price of silver.

Earnings for the quarter came in at $27.8 million, or 31 cents a share. That was in comparison to the same quarter last year where the mining company lost $33.3 million or 41 cents a share.

Overall revenue grew to $154.4 million, a 234 percent gain. Production during that time resulted in another 6 million ounces of silver, a 30 percent surge. A portion of that was attributed to the expansion of the San Vicente mine in Bolivia.

Gold also enjoyed increased production, as it gained by 425 percent.

The company estimated that silver production should reach 23.4 million ounces for 2010.

Pan American Silver Quarterly Report

Gold Gains on Haven Investing

Gold Futures Prices Going Up

As the fiasco in Europe continues to expose the weak underside of the alleged economic recovery, investors are again shifting their assets to gold as a place of safety as unsurety as what to do about Greece and the potential domino effect it could have on other parts of Europe.

The euro has been a disaster during this time as well, and the U.S. dollar and whether it is weak or strong is being overwhelmed by safety concerns, making it less of a factor during these times, as far as it relates to the movement of gold prices.

Gold in London reached as high as $1,102.55 an ounce, the highest it has been since February 4.

Growing pressure for finance ministers in Europe to lay out exactly what they're going to do to help Greece other than assert that they're going to continues on, and I know they are worried about that, as anything could go wrong in these economic circumstances that include corruption and typical creative accounting which made the country and its sovereign debt in much better shape than it actually was and is.

Just a short time ago people were projecting a major pullback in gold prices, I think those projections can be tossed aside, as the Greek problem and other related economic issues aren't going to go away for a long time.

Gold is going to roar back to life, and should start its inevitable climb once again. It looks like this will be a support for gold futures prices for some time to come.

Gold Futures Prices Going Up

Monday, February 15, 2010

BHP (NYSE:BBL), Vale (NYSE: VALE), Iron Ore Contracts

BHP Billiton, Vale, Rio Tinto Iron Ore Prices

According to BHP Billiton (NYSE:BBL) CEO Marius Kloppers, “The market price (for iron ore) is what the benchmark price is supposed to be.” Kloppers added that the benchmark today is about twice what it was last year. Vale (NYSE: VALE) concurs, wanting to see iron ore prices at the annual level reflect spot market levels.

The contentiousness of negotiations between China and BHP Billiton, Vale and Rio Tinto have continued from last year, with the producers expected to want up to 50 percent in annual increases, trying to move away from the benchmark system of pricing.

So far there has been some temporary agreements between some Chinese steelmakers and BHP for a 40 percent in contracted iron ore prices.

With steel prices not rising as quickly as iron ore, it's thought that could decrease the amount the producers are looking for, although the demand and supply factor is again in play this year, which could even temper that scenario.

One way or the other, China as a strong demand for iron ore, and if they want it they're going to have to be willing to pay for it.

Kloppers also made an interesting insight in that he believes that steel production in China will continue to rise in demand over the next 20 years, seeming to signify a bull market in iron ore and steel for some time to come.

“We did a bottom-up analysis, how many buildings, what is the steel

intensity and so on and we think that this trend is going to go on for

the 20 years that we’ve forecast,” he said.

BHP Billiton, Vale, Rio Tinto Iron Ore Prices

Mining Industry: Energy Prices Rising

Commodity Prices Going Up

The mining industry has come out in force saying there is no doubt energy prices will continue to rise over the next five years, with oil increasing to over $100 a barrel.

While this will probably be true, with at least price increases at some level, the mining industry added that energy is far from the only raw material or other commodity sector poised to increase in price.

Almost every single future factor will confirm that prices for most commodities will continue to rise based on emerging markets, China, and an increasing population.

Those elements alone will push commodity prices up, even if nothing else happens.

It's only a matter of when it'll happen and with what commodity. To me, the recent tightening in China will only have an effect upon those commodities not that high in demand, as the iron ore price negotiations reveal.

Commodity Prices Going Up

Silver Wheaton (TSE:SLW) Augusta (TSE:AZC) Gold, Silver

Silver Wheaton (TSE:SLW) Augusta (TSE:AZC)

Silver Wheaton Corp (TSE:SLW) announced it has made an agreement with Augusta (TSE:AZC) to acquire the gold and silver produced from the Rosemont Copper project for close to $230 million cash.

Silver Wheaton is a reseller of silver byproduct which it acquires from mining companies. With this particular deal the company is looking an annual production rate of 2.4 million ounces of silver and 15,000 ounces of gold.

Operating permits for Augusta are expected to be finalized in the fourth quarter of 2010, which at that time Silver Wheaton will begin payments.

Silver Wheaton (TSE:SLW) Augusta (TSE:AZC)

NovaGold Resources (AMEX:NG) Uncertain Future

NovaGold Resources

NovaGold Resources (AMEX:NG), like its gold mining cousins, must be considered risky investments, and those sinking their money into them should be sure they are able to lose it, as the valuations of the companies are highly subjective, and it's a toss of the dice from the beginning, even with the most respected experts making the call on how much recoverable gold can be extracted at a profit.

The share price and futures of companies like NovaGold Resources is completely based on the estimates of geologists hired to make the estimates. They admit that their estimates, while to the best of their abilities, is still a highly subjective discipline and are only guidelines, not true assessments, which in fact can't be made by anybody, the reason smaller gold mining companies can swing back and forth in price to such large degrees.

It's not only the estimates of profitably recoverable gold in the mines that is the only factor, but also the cost related to extracting the gold where it can make money, which can be more accurately assessed, and which is more able to be measured by those evaluating the company, assuming management is forthright with investors and potential investors.

NovaGold Resources

Sunday, February 14, 2010

Commodities and Sovereign Default = Opportunity

Commodities and Sovereign Default

It's interesting to read what some think will be the ruin of commodities because of the potential sovereign default from a growing number of countries, including Greece, Ireland, Spain and Portugal.

Of course the problem with ignorant writers on commodities is they're clueless as to how you make money with commodities, which is when they're on the way up or on the way down, so whether the price is going up or down for commodities is irrelevant from that point of view.

These writers only think in terms of whether or not those trying to make money on commodity prices going up are going to get clobbered, not realizing or even in some case - even knowing, that you make money either way.

For those investing in commodities, it doesn't make any difference whether you make the money on upwards or downwards price movements.

So don't forget to include that in your decision making going forward, as potential significant price movements in commodities one way or the other are always potentially great opportunities to make a lot of money.

Commodities and Sovereign Default

Jefferies Launching New Commodity ETFs

Jefferies New Commodity ETFs

Jefferies is about to launch two new commodity ETFs which will be based on derivatives.

Names given the two new commodity ETFs are the Jefferies TR/J CRB Commodity Index ETF and the Jefferies Commodity Real Return ETF. Both of them will be listed on the NYSE Arca.

How the new commodity ETFs will operate is they'll invest in futures contracts for 19 specific physical commodities, including energy, soft commodities and grains.

Jefferies also runs another commodity ETF named the Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF.

Jefferies New Commodity ETFs

Saturday, February 13, 2010

Cocoa Drops While Coffee Rises

Cocoa and Coffee prices

Cocoa and coffee prices moved in opposite directions as events outside demand drove cocoa prices down and coffee prices up to end the week.

Most of the commodity price movement was in relationship to the strengthening of the U.S. dollar against the euro, which seems to motivated some commodity investors to hold back on commodities in the latter part of the week.

Cocoa future prices for may dropped a little, while coffee prices moved in the opposite direction, for the first weekly gain in about a month.

Cocoa prices are expected to resume their upward climb based on demand in the near future.

Cocoa and coffee prices

Friday, February 12, 2010

Coffee Production Mixed in 2010

Coffee Prices Going Up?

Coffee may have one of those up and down years depending on what story you're reading or listening to.

When taking into account quality coffee, there are real concerns there will be a shortfall for the rest of 2010, possibly putting upwards pressure on the prices.

Particular problems seem to be coming form Colombia where the crop is expected to be smaller than last year, and there is also the insect problem causing production problems as well.

Overall, the real story for coffee could be over the next decade, where estimates are supply of coffee could plunge by over 30 million bags because of strong demand and the need of investment of plantations, which take time to produce from scratch.

Coffee Prices Going Up?

Monsanto (NYSE: MON) Will Meet Profit Targets

Monsanto (NYSE: MON)

Monsanto Co. announced this week that the profit targets they set for themselves should be reached for the year.

After taking charges for restructuring, the company said they're on track for earnings of $3.10 to $3.30 a share in 2010.

Thomson Reuters analysts had estimates at the high end of those Monsanto projections, with expectations of $3.28 a share.

As for their crop strategy, they are focused primarily on soybean and corn products going forward, and are continuing to look forward to increasing growth in Latin American countries; their major growth markets.

Monsanto (NYSE: MON)

Silver Standard Resources (TSX:SSO) Public Offering

Silver Standard Resources (TSX:SSO)

Silver Standard Resources (TSX:SSO) (NASDAQ:SSRI) announced in a press release they have filed a with the securities commissions of each providence of Canada, along with the Securities and Exchange Commission (SEC) in the United States in relationship to a public offering of its common shares.

The company said it is looking to raise about $100 million through the offering " to fund the exploration on and development of mineral properties, for working capital requirements, to repay indebtedness outstanding from time to time or for other general corporate purposes."

Silver Standard Resources (TSX:SSO)

Marc Faber: China and Commodities

Marc Faber on China and Commodities

Normally I'm very close to the majority of conclusions made by Marc Faber, but in the case of his assessment that the Chinese economy may crash, I'm not so sure he has that correct.

One thing I want to see is if China is really going to tighten its domestic lending policies, or if it's using that as leverage as it continues negotiating prices for a number of commodities it needs this year, like iron ore, molybdenum and other raw materials.

Those are related to steel of course, and that goes beyond the slowdown in their infrastructure projects which had been financed by the Chinese government's stimulus package.

With steel being related in a large degree to exports for China, it does have some counter to the cut back in raw materials needed domestically. Copper on the other hand has a good chance to be vulnerable to downwards price pressure.

There is no doubt China is attempting to cool of its economy, and to some degree with a number of commodities it'll be interesting to see if they start dipping into their stockpiles which they built up over the last couple of years to have more control over commodity prices.

Short term it is quite possible China will encourage a downward pressure on some commodity prices, it's a matter of how long and how much which is what none of us can know.

Marc Faber on China and Commodities

Gold Moving Up on Sovereign Risk

Gold and Sovereign Risk

Gold futures roared back to just under $1,100 as concerns over Greece and uncertainty coming out of Spain have overcome the usual move in the opposite direction of the dollar and gold took on a life of its own in response.

April delivery for gold increased by $18.40 to end the session at $1,094.70 an ounce on the Comex division of the New York Mercantile Exchange.

What all of this says when you come right down to it is gold is trading on risk alone during these days, and the other factors are largely being set aside until the Greek and European situation is cleared up.

With no easy or quick fixes, only announcements they're going to do this or that, this could be an extra catalyst to drive gold up which wasn't being looked at by many investors in gold.

Sovereign risk will from now on be considered a key part of the gold story, and that will definitely shore it up even more, no matter what happens with the U.S. dollar.

Unsurprisingly, silver futures also responded to the situation by rising in price, along with a number of other commodities in relationship to the same circumstances.

Gold and Sovereign Risk

Cocoa Demand Exceeding Supply 2010

Cocoa demand and supply 2010

As the year goes on, it seems cocoa demand will not be able to be met by supply, and prices have started to respond to those circumstances, with cocoa prices increasing the most in eight weeks.

At this time, it seems the markets have taken the challenge into account in its current price, and should support it through the year.

On ICE Futures U.S., May delivery for cocoa surged $76 to $3,116 a metric ton, a 2.5 percent lift.

Over the last 12 months cocoa has increased in price by 16 percent.

Cocoa demand and supply 2010

Pan American Silver (NASDAQ:PAAS) Silver Reserves

Pan American Silver Corp. Silver Reserves

Pan American Silver Corp. (NASDAQ:PAAS) (TSX:PAA) announced in a press release that they increased their silver reserves by 36.8 million contained ounces, which the company said was more than sufficient to replace the 26.6 million contained ounces mined last year.

As of the quarter ending December 31, 2009, probable silver reserves increased by about 5 percent to 234 million ounces. These are reserves measured at their operating mines.

The best producing mine for 2009 for increasing the reserves was the La Colorada mine, with over 16 million ounces found when they extended the NC2 Vein.

Pan American Silver added they will continue to focus drilling on that vein throughout 2010.

Pan American Silver Corp. Silver Reserves

Thursday, February 11, 2010

Soybeans Up on Storage, Cash Market

Soybean Futures

With soybean futures prices dropping over 9 percent already in 2010, farmers have been storing their crops for better prices, while cash markets have also tightened up.

Weather in the midwest has also played a role as roads are so bad that the soybeans which want to be sent to processors or elevators are kept from being delivered, helping press prices higher over the last couple of days.

Consequently, 143 soybean contracts were canceled which had been ready for delivery, according to the Chicago Board of Trade. Supplies at elevators and processors will now have to be held going forward, although some being stored at those places have already been taken out to be used.

Soybean Futures

Silver or Gold for 2010?

Gold or Silver?

While silver is different from gold in that it isn't only a safety investment but an industrial one as well, under normal conditions it does tend to move in tandem with it, although no always in a straight line.

According to Asian investment firm Hang Seng Financial, they believe silver could very well outperform gold over the next several years by investing in the precious metal physically, through mining companies, ETFs and other means.

I don't think we have to make that distinction so much, as more than likely gold and silver over the next several years will both perform well, with quite possibly gold being the winner in general, although it would depend on how you invest in gold to determine that for each individual investor.

Now long term I think silver could break away form gold when it is largely looked upon for its growing industrial use and demand, but that could take a little while, and the slow (if any) economic recovery over the next several years could easily keep it from doing so.

For 2010, again depending on how you choose to invest in the two precious metals, gold will probably outperform silver, at least in futures trading.

Gold or Silver?

Silver Wheaton (TSX:SLW) Stock in 2010

Silver Wheaton Stock

Silver Wheaton (TSX:SLW) has a great thing going for itself, and that will last as long as the commodity bull market in metals continues.

One major reason Silver Wheaton is such a solid company is its business model, which in essence acts more like a company generating royalties than an actual silver mining company; which it isn't.

In other words, Silver Wheaton has nothing to do with mining or the costs and uncertainties related to it, Silver Wheaton's business model is to buy silver byproduct at below market and sell it at spot prices. This is a fantastic business model that works especially well in the types of conditions we're in.

Silver Wheaton Stock

Commodities Fall on Bernanke Statement

Commodities and Interest Rates

Commodities fell today as Ben Bernanke stated in House Financial Services Committee testimony that the interest rates on direct loans to banks may be raised sometime soon.

Bernanke was quick to add that the low interest environment overall isn't going to go away, and there will continue to be an "extended period" where that is the case.

Some commodity companies like Exxon Mobil (NYSE:XOM) and Freeport-McMoRan (NYSE: FCX) fell, along with copper, which dropped for the first time in the trading week.

Gold also fell as the U.S. dollar climbed slightly on the news.

Commodities and Interest Rates

Agrium (NYSE: AGU) Says Potash Demand Rising

Potash Demand

The comments by Agrium (NYSE: AGU) that potash demand is rising must be taken with a healthy measure of a grain of salt, as they are just following up on the deal their partnership with Potash (NYSE: POT), and Mosaic (NYSE: MOS) called "Canpotex" where they scored a decent but not great sale of potash to China.

According to reports, the deal was for 350,000 tons of potash, but no price was given per ton, possibly a nod toward not making that great of a deal per ton, as Belarussian Potash recently dealt potash to the Chinese for $350 a ton.

Either way, 350,000 is largely a non-event, and while helpful, doesn't have any long-term meaning to the companies involved.

With spring coming their should be an obvious increase in demand for potash, but in the end will it be the usual spring replenishing or will demand truly grow beyond seasonal adjustments?

We'll literally have to wait to see, as there are mixed signals being sent from potash companies, and that always means uncertainty going forward.

Potash Demand

Future of Silvercorp Metals Inc (TSX: SVM)

Future of Silvercorp Metals

It seems like Silvercorp Metals Inc (TSX: SVM) has a bright future ahead of it as the primary producer of silver in China. The have high-grade ore operations in several mines in the country.

They are protected a lot from wide swings in the market, and have proven to be able to make money under a variety of market conditions and add great value to its shareholders.

Along with silver, the mines the company is working also have lead and zinc in them to extract.

The most profitable mine at this time for the company the Ying Mining Camp.

Silvercorp. also pays a dividend.

Future of Silvercorp Metals

Citigroup (NYSE:C) Names Stuart Staley Commodity Head

Citigroup Commodities

With John Casaudoumecq retiring at the ripe old age of 50, it took Citigroup (NYSE:C) a very short time to replace him with Stuart Staley.

Staley is stepping up from his current role as deputy head of commodities and will take over the department immediately, said Citigroup in a memo. Staley will move to London in April as part of the deal.

Staley was also the former CEO of AEP Energy Services based in London, and has been with Citigroup for about six years.

The commodity unit at Citigroup entails over 200 employees, and also has offices in Houston, Calgary and Singapore.

Citigroup Commodities

Marc Faber on China Commodities

China Commodities

Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.

Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.

Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.

This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.

But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.

China Commodities

BHP Billiton (NYSE: BHP) Doubles First Half Profits on Commodity Demand

BHP Billiton (NYSE: BHP)

BHP Billiton (NYSE: BHP) had a tremendous first half to their fiscal year as profits doubled on continuing demand for commodities, largely fueled by China and India.

While some try to tout this as also being fueled by European and American demand, that's not true in general, as least from the point of view of being sustainable, as many manufactures, particularly in America, were simply replenishing supplies, a major reason the recent data haven't been that exciting to economists or analysts.

That is probably reflected in the lower dividend than expected from BHP, as the one-off results in the United States won't be repeated any time soon. The company reported a divident of 42 cents for the first half, while expectations were it would come in at 44 cents. That's usually an indicator of uncertainty and unpredictability, and I would say that would largely come from slowing demand from Western countries.

Even so, some commodities will continue to flourish as growth in emerging markets resumes, and as China especially focuses on relying less on imports and more on domestic growth, which is fueling numerous infrastructure projects which will continue for years and require numerous raw materials.

“Physical demand for bulk commodities continues to be very strong in most regions,” BHP said in the statement. “Commodity markets will continue to be largely dependent on Chinese and Indian demand. In the short term, it is critical to monitor the pace of monetary tightening and the rate of loan growth for commodity intensive sectors in China.”

BHP Billiton (NYSE: BHP)

China Copper Imports Plunging

China Copper

According to the largest metal-trading company in China, Minmetals Nonferrous Metals Co., Chinese imports of copper in 2010 could be half of what they were in 2009, setting up a potential plunge in copper prices if that assessment is true.

The Chinese are winding down the spending on infrastructure from the stimulus money, and also tightening up their credit somewhat to cool down growth.

Estimates are refined copper imports may stand at about 1.5 million metric tons for 2010, a 53 percent decrease for 2009. That is more the norm on real demand, as it's close to the 2008 numbers of 1.46 million tons of refined copper imported.

In the Chinese markets copper is mostly in a contango where buyers can get it cheaper right now than they can in the intermediate term.

Another reason for cutting back on copper imports by China is they stockpiled far more than they needed last year, and numerous empty buildings built from the artificial stimulus are largely empty and standing there with no immediate use, making more building in that sector largely irrelevant and not fueled by market forces.

China Copper

Wednesday, February 10, 2010

Steel Demand Driving Commodity Prices Higher

Iron Ore, Molybdenum

Demand for steel should help a number of companies connected to providing raw materials and other things related to the production of steel have some good years ahead.

Two particular commodities which will derive strong benefits from it are iron ore and molybdenum, and those producing and providing it; both play a key role in the steel market.

One seller of molybdenum, Sojitz Corp., based in Japan, is one such company, which says over the next three years sales of molybdenum should double what they are today based on steel demand alone.

The demand for molybdenum in China, like many things, has skyrocketed, and imports have increased to 80 million pounds in 2009, of which 19 million pounds was exported, a huge jump from 7 million imported in 2008. Demand in Japan also increased in 2009, coming in at 50 million pounds, while the country sold 20 percent of that.

With mine production for molybdenum, for some new mines, not scheduled to produce until 2012 and 2013, the demand for steel continues to surge while supply can't keep up with it.

Molybdenum stands at about $10 a pound at the time of this writing, and could go as high as $20 based on low supplies some believe.

Molybdenum is primarily used as ferromolybdenum or oxide in alloy or stainless steel. It is used as a steel strengthener in the oil industry for things like oil drills and oil and gas pipelines.

For iron ore, there's no doubt the price has strong support, and even with the Chinese attempting to negotiate lower prices, they're not having an easy time of it with the major producers like Vale, Rio Tinto and BHP Billiton.

The demand is so strong they couldn't keep their own domestic businesses from ordering it a going prices because they have to have it. Now that it has been publicized, it undercuts what appears to have been a strategy by the Chinese of attempting to make it look like they were going to cut back on stimulating their economy by tightening credit. That seems to have failed, and I don't think the Chinese want to end up doing what they did last year by paying even higher iron ore prices than they would have had to if they had made a deal with the big companies.

Either way, steel demand is now out in the open, and it'll be difficult for anyone to get great prices on iron ore or molybdenum with the demand seeming to outstrip supply at this time, and what looks like for some time to come.

Iron Ore, Molybdenum

Dutch Gold Resources (DGRI.PK) Claims Mine That Could Produce $3 Billion

Dutch Gold Resources in Possible $3 Billion Find

Dutch Gold Resources (DGRI.PK) claims they are sitting on a gold mine in Montana which has the potential to produce over $3 billion in gold during the lifetime of the mine.

The location of the mine, according to the press release of the company is about two miles from Rock Creek in Granite County, Montana. They called it a large open-ended gold and silver system, although no mention of the silver potential was mentioned.

Sometime in February the company says they will file the required preliminary applications with the Montana Department of Environmental Quality, which is the next step in the process to be allowed to mine the gold.

Also filed by the company has been the necessary forms with the U.S. Securities and Exchange Commission, which will help potential investors to take a look or do more research concerning the big claims asserted by the gold mining company.

Dutch Gold Resources in Possible $3 Billion Find

Mark Mobius Likes Commodity Stocks

Mark Mobius Likes Commodities

While most of us that know Mark Mobius understand his focus and investment strategy concerning emerging markets, we also need to include his take on the commodity market as well.

For emerging markets, what all of us need to understand is commodities will continue to play a big part in their growth, whether its a large country or not, as for the most part it'll be stuff that generates growth for them majority of them, not high-tech products and services to start off with.

With that as a background, Mobius recently said that "Commodity stocks look good because we expect the global demand for commodities to continue its long-term growth. Consumer stocks are also favoured. With rising per capita income and strong demand for consumer goods, the earnings growth outlook for these stocks is positive."

Mobius added we must be good risk managers during this period of time, as there will continue to be huge fluctuations in all markets, of which commodities are usually always like, even in the best of times.

Some of the things Mobius advises to look out for and the risks he's talking about are:

"Risks such as the inability of governments to control the derivatives markets, loss of confidence, over or poor regulation and abandonment of the market economy philosophy do also exist. Therefore, we must pay attention to valuations and long-term earnings growth prospects in order to avoid buying or holding expensive stocks as a result of dramatic price rises that we have seen."

Mark Mobius Likes Commodities

Jim Rogers Joins Marc Faber on Leopard Capital Adivisory Council

Jim Rogers and Marc Faber, Sri Lanka

Jim Rogers and Marc Faber has been asked to sit on the advisory council of Leopard Capital, a private equity business which has launched one fund focusing on Sri Lanka, and is ready to launch another, which is what they're looking for the advise of Marc Faber and Jim Rogers on.

Jim Rogers is connected to a number of commodity ventures and indices, while Marc Faber is of course widely known for his Gloom, Boom and Doom Report newsletter, which focuses on unique investments around the globe.

This is interesting if for no other reason than very few people know a thing about Sri Lanka in the investment world, and it's not exactly near the top of places people and institutions are looking to to generate wealth.

At least some of what is offered in Sri Lanka will be known with the names of these two guys associated with it, and that will probably be good for Sri Lanka, and will definitely be good for Leopard Capital, as both investors has strong and committed followers who will definitely take at least a peek under the hood of the market now that Rogers and Faber are connected to it.

For Jim Rogers, he's been an evangelist for the Asian market for many years, but I can't recall him ever mentioning Sri Lanka in any of his talks or communications. Interesting news as to why both of these investors chose to respond to Leopard Capital in this, and I think we'll find out sometime fairly soon if it was only the money paid to do it or there's something in the country attractive to invest in.

Jim Rogers and Marc Faber, Sri Lanka

Tuesday, February 9, 2010

Exxon Mobil (NYSE: XOM) Contracts with Praxair (NYSE: PX)

Praxair (NYSE: PX) has landed a deal with Exxon Mobil (NYSE: XOM) to construct and operate an air separation unit for the giant oil company for its gas processing plant in Hawkins, Texas.

The air separation unit will also be owned outright by Praxair will be used to increase the supply of nitrogen for enhanced oil recovery.

Consequently, the installation of the new production facility is scheduled to be operational sometime in the second half of 2011. About 85 million cubic feet of high-pressure nitrogen will be produced by Praxair for Exxon Mobil on a daily basis.

Praxair already supplies nitrogen gas to Exxon Mobil, but this will increase the amount of nitrogen used in order to improve the recovery of it natural gas and oil reserves.

Praxair Exxon Mobil Air Separation Unit

Exxon Mobil (NYSE: XOM) Rejected for Ghana Oil Deal

Exxon Mobil (NYSE: XOM) Kosmos Energy

After several months of negotiating between Exxon Mobil (NYSE: XOM) and Kosmos Energy, the Ghana government has refused to allow Exxon to acquire the approximate $4billion stake they would have bought from Kosmos.

Frustration was expressed by an unnamed person close to the deal who stated the government of Ghana or its state-owned oil company shouldn't be able to "withhold consent for a technically qualified and financially capable company."

Jubilee is one of the largest oil finds in recent history, and contains the highest quality of oil the market looks for, and the stake held by Kosmos, which is funded by private-equity firms, comes in at about 1.8 billion barrels of oil.

What I found somewhat odd was that Morgan Stanley (NYSE:MS) is evidently the adviser of the Ghana government, and this smells of corruption (as usual with African governments), and it's strange that the investment banker would connect their name to the situation.

While there were a lot of assertions and excuses thrown around, in the end it was revealed that the only company that would be allowed to buy the stake owned by Kosmos would be the Ghana National Petroleum Corp., the company run by the government of Ghana.

Something is obviously wrong here, and we'll watch to see how the leaders of Ghana go forward and if Kosmos ends up really getting screwed in the end.

Exxon Mobil (NYSE: XOM) Kosmos Energy

Petrobras (NYSE: PBR), Vale (NYSE: VALE) Gain as Commodities Rebound

Petrobras, Vale

Many of the Brazil stocks, including Petrobras (NYSE: PBR), Vale (NYSE: VALE) ended higher as commodity prices rebounded

The major stock index in Brazil, Ibovespa, was up by 0.62 percent on the day.

Giant miner Vale S.A. rose 1.10 percent to BRL41.25, while the state-owned oil company Petrobras gained 0.70 percent for the day.

Petrobras, Vale

Monday, February 8, 2010

Is Vale (NYSE: VALE) About to Explode Upwards in Price?

Vale Iron Ore Prices

I don't think there's any doubt Vale (NYSE: VALE) is positioned and poised for an extraordinary upwards run in its share price, as their 80 percent exposure to iron ore has them ready to partake in the increasing demand for iron ore, from which steel is made.

Probably the best example of this was the recent attempt by China to dampen down the price of iron ore in the market, which they failed to do because domestic Chinese companies had such a high demand for it that they were willing to pay the asking price even as the Chinese government attempting to pressure the major three iron ore producing companies - including Vale - to drop the price.

China attempted this last year and it backfired on them as the spot price was higher than the negotiated prices other companies paid for a contract for iron ore.

Anyway, Vale should have a nice, long run going up as the demand for iron ore should outstrip the supply for some time to come. Of course any of the major three iron ore producing companies should participate in that upward run, it's just that Vale's 80 percent exposure puts them in an enviable position.

Vale Iron Ore Prices

Grain Prices Rise on Short Covering

Grain Prices Going Up

With the crop report about to come out, grain prices rallied some as investors raced to cover their positions in case something unexpectedly changes which would tear into their short positions.

Wheat, corn and soybeans were all up as the shorts were covered, as the crop report from the Department of Agriculture is due.

With grain prices having downward pressure for a month on large inventories, they are due for an upward move, and grain traders want to protect themselves from that.

The concern is if for some reason the supply of grain has declined in any way; an unlikely scenario, but you never know in the markets.

If nothing has happened to change the grain levels, we should see a lot of short positions entered into again.

Wheat for March delivery rose 10.75 cents, a 2.3 percent gain, to settle at $4.84 a bushel. Soybeans increased 16 cents to $9.295 a bushel, and corn increased 4.5 cents to $3.56 a bushel.

Grain Prices Going Up

XSTRATA (LSE: XTA.L) CEO: Commodities Boom Coming

Xstrata: Commodity bull run to continue

According to Xstrata (LSE: XTA.L) CEO Mick Davis, commodities are set to resume their bull run as demand for raw materials outstrips the ability to supply them.

Davis said: "In my opinion, the medium term outlook for commodity demand remains very promising, driven by the ongoing urbanisation and industrialisation of high-growth, populous economies, with China and other industrialising countries taking active steps to rebalance their economies towards domestic consumption-led growth over the next decade."

While I believe that's a true statement, Davis is obviously communicating it in response to the huge drop in annual profits it reported for 2009, which plunged by 41 percent from the year before.

Much of his hope and optimism stems from China and other emerging markets which in the building up of their domestic infrastructure which will require huge amounts of materials to accomplish.

Of course if there is more demand than supply can meet, there will be an inevitable rise in prices, which would be a huge positive for the company.

Overall revenue declined by 16 percent to $23.53 billion from 2008, showing it was the low prices of commodities which caused the 41 percent drop in prices, although demand was an ongoing part of the picture, while managing costs weren't able to turn profits around.

Xstrata: Commodity bull run to continue