THE PAINTED PIGS TUESDAY CHOICE PORK CHOPPERS

THE PIG WAS ENJOYING A LITTLE OF OUR FABULOUS SPRING SNOW STORM WEATHER TODAY. IT BROUGHT TO MIND THE WEATHER AND ITS EFFECTS ON THE MARKETS. IT ALSO BROUGHT TO MIND ITS EFFECTS ON OTHER DISASTERS, LIKE THE GULF OF MEXICO. ITS GETTING INTO THE HURRICANE SEASON DOWN THERE AND NO ONE REALLY SEEMS IN TOO MUCH OF A RUSH TO CARE. I WONDER THOUGH, IF AND WHEN THOSE PRISTINE BEACHES AROUND THE GULF START TO BECOME LADEN WITH TAR BALLS AND OIL DEPOSITS, NO DOUBT DISTRIBUTED BY SOME HIGH WINDS AND CHOPPY SEAS, SOMEONE FROM HIGH UP WILL FINALLY TAKE NOTICE.

SPEAKING OF OIL, THE PIG NOTICES THAT WZR.V CAME OUT WITH A LATE DAY NEWS PIECE ON THEIR WELL IN KURDISTAN. APPARENTLY THEY HAVE STABILIZED THE WELL AND ITS GOOD TO GO. WATCH FOR A POP ON THAT ONE TUESDAY AM. ANOTHER CURIOSITY,AN OTC RECOMMENDATION FROM A PIG READER, SWSR OR SOUTH WEST RESOURCES IS EXPECTED TO HAVE A BIG DAY TUESDAY AS THE COMPANY BEGINS A SHARE BUY BACK TO BATTLE ILLEGAL (NAKED) SHORTING, SHOULD BE AN INTERESTING DAY. BMK.V HAD A BIG DAY ON NEWS THAT THEY MAY HAVE DISCOVERED A NEW DEPOSIT, THE STOCK SHOULD HAVE A BIG DAY AGAIN TOMORROW

WELL THAT'S ABOUT IT FOR NOW.....

ON WITH THE SHOW....

HUI.V...ONE OF TWO BIG SCANS ON THE NIGHT, LOOKS LIKE A TURNAROUND HAS BEGUN. THIS CHOICE CHOP SCANNED HIGH IN MOMENTUM, MOVING AVERAGE AND DISTRIBUTION AREAS. BUT THE REAL INTRIGUING SCAN VECTOR WAS THAT THIS MINI RALLY WAS STARTED AND SUSTAINED WITH VIRTUALLY NO LIQUIDITY. IMAGINE WHERE IT WOULD GO IF SOME BUYING CAME IN....

GDR.V....SECOND BIG SCANNER OF THE NIGHT AND MAY THE PIG SAY...... VERY LARGE IN THE MOMENTUM, NET CAPITAL INFLOW, AND LIQUIDITY AREAS. NOT SURE WHAT, IF ANY STORY, IS CIRCULATING, BUT THE PIG LIKES THE SCANNER NUMBER AND SEES A GOLDEN FUTURE FOR THIS CHOP. SHORT AND LONG TERM.....

STOCK ALERT

LATER THIS WEEK, THE PIG WILL REVEAL A STOCK HE HAS BEEN TRACKING WITH THE SCANNER THAT LOOKS READY TO EXPLODE. 

THE PIGS PRICKLY PORK VIDEO OF THE WEEK......

http://www.wimp.com/secretpowers/

May 31, 2010

The close: Commodities boost TSX

By David Berman
Globe and Mail Update

But will strong economic growth mean higher interest rates?

Canadian stocks rose on Monday, ahead of the Bank of Canada's decision on interest rates on Tuesday morning.

The S&P/TSX composite index closed at 11,762.99, up 91.55 points, or 0.8 per cent. U.S. markets were closed for Memorial Day.

Commodity producers led the way higher. Energy stocks showed the biggest gains, with Suncor Energy Inc. up 1.3 per cent and Canadian Oil Sands Trust up 1.7 per cent. Materials were also strong, with Teck Resources Ltd. up 2.1 per cent.

Financials were mixed, though, after some disappointing second quarter results last week. Royal Bank of Canada fell 0.5 per cent but Canadian Imperial Bank of Commerce rose 0.5 per cent.

Statistics Canada reported that the Canadian economy grew by 6.1 per cent in the first quarter, topping expectations among economists. According to Bloomberg News, economists believe that the Bank of Canada will raise its key lending rate to 0.5 per cent from 0.25 per cent, and this latest snapshot of growth - the fastest in more than a decade - appears to support that forecast.

Meanwhile, the backdrop in Europe remains grim. The European Central Bank warned that banks in the euro zone will report substantial loan losses into 2011, totalling €195-billion. These writedowns will put a lid on profitability.

"Heightened sovereign risks and possible second-round effects of the fiscal consolidation that is necessary in most euro area countries could pose some downside risks to economic growth in the area," the central bank said, via the Wall Street Journal. "Should these risks materialize, loan-loss provisions should most likely be higher in the period ahead." 

Dude, where’s my bike?

The great Paul Tracy mystery finally solved 25 years later

By DEAN McNULTY, Toronto Sun

 May 30, 2010 1:10am

Paul Tracy won’t be in Sunday’s Indy 500 but he did solve a 25-year-old mystery recently.

Tracy failed to qualify his No. 15 KV Racing Technology car last Sunday after withdrawing an earlier attempt that would have gotten him onto the grid.

But on a visit to Toronto to announce Honda Canada sponsorship for races in his home town and in Edmonton, Tracy said he found out what happened to a dirt bike that went missing when he was in high school.

He said while he was waiting last week to renew his Canadian passport, he ran into a former neighbour.

“There’s this hippie-looking kid with dreadlocks and army shorts, about my age,” Tracy said. “He looks at me and goes, ‘Paul?!?’ He says, ‘I went to Moet,’ a high school near my house. I went to one close to there. And then he asks, ‘Did you ever get a dirt bike stolen about 1986?’

“I’m like, ‘You know what, I did. I had a Honda dirt bike.’ So yeah I did lose one about 25 years ago. He’s like, ‘Yeah, my buddy did it.’ ”

Tracy said at first he didn’t know what to think.

“I turned to him and said: ‘Tell him he can keep it.’ ”

Car of tomorrow

Five car builders have put forward concepts to construct a brand new IndyCar chassis for the 2012 season.

The Indy Racing League formed a committee of experts to decide on how to pick the new design.

Team owner Roger Penske thinks the possibility of returning to multiple engine and chassis suppliers after several years of a Dallara-Honda spec formula could be a good thing for IndyCar.

The mockup of one of them — the DeltaWing — has been prominently displayed at Indianapolis Motor Speedway this month.

“I think the fact that the committee is looking today at an engine formula that will hopefully attract multiple suppliers, will be good for the sport,” he said.

“We’ve got to be sure that the specifications on whatever it is are realistic because we can’t get into all fancy metals and things and I think that’s got to be important or we get the cost out of sight on the chassis side.

“If there’s the ability to have one chassis supplier, I’d like to see multiple. But again, we’ve got to be sure that the price of the race vehicles is at a level that everybody can afford them.

“I think that’s got to be the ceiling.

“If someone wants to buy one and subsidize it, fine, but it costs the same whether Chip buys it or I buy it or someone wants to get in the series.”

Football anyone?

Al Unser Jr. was at Indianapolis Motor Speedway on Saturday and was asked what sport he thought was most like motor racing. He surprised more than a few when he said it was football.

“Rick Galles was my car owner the first time I won the Indianapolis 500 and he modelled our team after a football team with the driver being the quarterback and the pit crew being the linemen, and so on,” Unser said.

“It was all modelled after how a football team operates. I never played football or anything, but I did ‘quarterback’ my team and talk to them and so on. When things were down, it was we or the team who had to bring things backup again.”

Art imitating life

The Art Institute of Indianapolis has joined the FAZZT Race Team and Canada’s Alex Tagliani in their goal to reach out to younger IZOD IndyCar Series fans, as students at the institute were asked to design a logo, website and autograph card for children.

Graphic design students Alex Noonan and Angie Fields created a logo for FAZZT Kidz and a hero card that was distributed this week during American Family Insurance 500 Festival Community Day at IMS. The website, once completed, will include puzzles and games for young children to play and photos and videos by Tagliani.

“This is a great project the art institute and their students have undertaken for me and the team,” Tagliani said.

“It’s nice to be able to have something that appeals to the kids and hopefully gets them interested in racing and learning about motor sports, as they are our future as fans.”

    

THE PAINTED PIGS MONDAY MORNING MUNCHERS

THE PIGS BEEN A LITTLE UNDER THE WEATHER THIS PAST WEEK. SWINE FLU YOU SAY ? WELL MAYBE, BUT THE PIGS COMING OUT OF IT, HE DOES NOT FEEL LIKE HES JUST BEEN HIT BY A TRUCK ANYMORE.  

THE PIG SEES THAT THE GULF MESS IS STILL A MESS AND GETTING TO BE A BIGGER MESS. A BRUTAL SHAME. THE PIG RECEIVED A HEADS UP FROM A READER ON A STOCK .......GNO.V WHO HAS SOME TYPE OF OIL/WATER REMEDIATION TECHNOLOGY THAT WOULD BE WELL SUITED FOR THE GULF CLEANUP. MORE READERS SENT THERE CONCERNS IN REGARDING THE PIGS ABSENCE (THANK YOU FOR THOSE) AND FEW OF MY AMERICAN READERS SENT TIPS IN FROM THE US MARKETS INCLUDING SOME OTC STOCKS. THANKS FOR ALL THE TIPS AND WELL WISHES.

THE PIG WILL LOOK INTO THESE. INCIDENTALLY ONE OF INTEREST WAS A PINK SHEETS LISTING (YIKES) ..SWRS. I WILL LEAVE IT UP TO YOU TO DECIDE WHAT YOU THINK.

WELL ITS GREAT TO BE BACK.......SO..........

ON WITH HE SHOW....

SEK.V...A PREVIOUS PIG PICK FROM APRIL 30. THE SCANNER PICKED UP A SIGNIFICANT MOMENTUM CHANGE AND HERE WE ARE. IT APPEARS THE ACCUMULATION PHASE IS COMPLETE AND THEY ARE READY TO RUN WITH IT. THE PIG FIGURES A MOVE IS IMMINENT. THE SCANNER TELLS HIM SO...

FYI.V...SECOND BIG SCANNER AND COINCIDENTALLY....... MOMENTUM REVERSAL OF THE WEEKEND...THE PIGS NOT SURE OF THE STORY BUT REALLY IS SURE OF THE DRAMATIC REVERSAL READINGS...WILL IT CONTINUE ? LIQUIDITY SAYS YES...SCANNERS SAYS A TREND HAS REVERSED AND GOING NORTH.

AMK.V...GETTIN THE PICTURE HERE ? SEEMS TO BE A THEME OF REVERSALS FOR THIS WEEK COMING. ANOTHER HIGH SCANNER AND LARGE SENTIMENT REVERSAL...PATIENCE IS GOOD...SAYS THE PIG....LIQUIDITY AGAIN, IF IT KEEPS UP IT GO'S UP..... 

Canadian commodities up 31.4 per cent in April

Financial PostMay 29, 2010

Canadian commodities posted solid growth in April, climbing 4.2 per cent over March, according to the Scotiabank Commodity Price Index, which measures price trends in 32 of Canada's major exports.

Commodity prices were up 31.4 per cent over the cyclical low of April 2009, the report said, led by metals and minerals, which jumped 10.3 per cent on the strength of base and precious metals.

All of the index's sub-components were ahead in April except for oil and gas, which were pulled down by lower export prices for natural gas.

"While commodity prices surged in early April, this strength may have represented the high-water mark for 2010, though not for the business cycle, with investors fleeing risk in May," said Patricia Mohr, vice-president economics and commodity market specialist at Scotiabank.

A rally in prices for building materials and pulp and paper is helping the forest products index to recover, the report says, while gains in canola prices helped boost the agricultural index by 0.2 per cent.

The report notes that despite fears China's economy would slow down, bringing commodity prices down with it, "China's steel output, more dependent upon business and capital spending and infrastructure development (ports, railways, oil storage facilities) actually rose to a record high in April."

© Copyright (c) The Victoria Times Colonist

THE PAINTED PIG THURSDAY MORNING THUNDER

THE PIG  SAYS....HAH !!!  "MARKETS" ......
WHO CAN FIGURE EM' OUT. BOTH GCR.V AND GAP.V CAME OUT WITH A STELLAR NEWS RELEASE ON WEDNESDAY MORNING. IN PHARMAGAP'S CASE, THE SECOND IN AS MANY WEEKS AND STILL A SELL OFF.......????....SOMETIMES THE WORLD MAKES NO SENSE.

WHO OF US OUT THERE CAN REALLY SAY THEY KNOW WHATS ON THE MIND OF THE RETAIL INVESTOR ? THE PIG LIKES TO USE THE TERM "LEMMING" FOR MOST OF THEM. A NARROW MINDED, SHORT SIGHTED, EASILY PANICED BEING THAT RUNS EN MASSE OVER THE CLIFF AT THE FIRST SIGN OF TROUBLE. CONFUSING TO SAY THE LEAST, BUT THE PIG WILL SOLDIER ON. A COUPLE OF PICKS TONIGHT, ONE NEW AND ONE PREVIOUS PICK, AND A COUPLE OF GOOD, CONTREVERSIAL ARTICLES TO STOKE THE FIRES OF YOUR MIND TODAY.

LETS HAVE A GREAT DAY, RUMOURS AROUND WE "MAY" SEE AN UP DAY TODAY.
DON'T TELL THE LEMMINGS.

ON WITH THE SHOW.........

GXM.V...PATIENCE OR PASSING. THIS PREVIOUS PIG PICK SCORED HIGH ON THE SCANNER TONIGHT. SINCE THE FIRST RECCO' IN APRIL ITS SEEN SOME IMPATIENT SELLERS AND HAS SINCE REBOUNDED. IS THERE SOMEHTING FINALLY ON THE HORIZON ? THE PIGS NOT SURE, BUT REACCUMULATION USUALLY MEANS A NEW CROP OF CASH INCOMING. SO THE QUESTION IS....WHY WOULD YOU PUT MONEY INTO A DEAD SITUATION ? MAYBE SOMEONE KNOWS SOMETHING WE DON'T.......

IAX.V...SECOND HIGH SCANNER ON THE NIGHT AND A REAL ODDITY. THE PIG LIKES GROUND FLOOR OPPORTUNITY, AND THIS SEEMS TO BE ONE. SOME BIGGER NUMBERS OUT ON THE MOVING AVERAGES CHANGEOVER SIDE AND SENTIMENT CHANGES. NO REAL STORY HERE ...."YET"....IT SEEMS....BUT WITH A NICE LOW FLOAT AND ADD IN SOME LIQUIDITY, THERE MAY BE A STORY. THE PIG LIKES A GOOD SUCCESS STORY...

James Turk Predicts
$1,800 to $2,000 Gold this Year
and $8,000 Gold by 2015

LONDON - In the closing keynote on the first full day of the 2010 World Mining Investment Conference in London yesterday, James Turk, founder of Gold Money, opened by reaffirming his prediction made at the end of last year that gold could reach $8,000 an ounce by 2015, based on past patterns of surges in the gold price. What may be even more encouraging for the general investor is that his forecast also suggests that the Dow Jones Index would rise to similar levels as the world finally pulls out of recession, with the gold price matching the Dow index number. When asked at the end of his talk where he felt the gold price would be at the end of the current year, he reckoned around $1,800 to $2,000 – and also predicted that the more volatile silver price would achieve a level of $30 this year.


Turk bases his forecasts very much on past performance – but even as the prediction may seem extreme, to some, the sting in the tail is that he does not see these levels in the gold price, or Dow, as suggesting real increases in wealth. Rather, such an increase would serve only as wealth preservation as the purchasing power of most currencies is devalued in a hyper-inflationary environment due to the huge volumes of fiat money being pumped into the market by governments in an attempt to stave off global recession. He affirmed that he felt it was folly for governments to think they could spend their way out of trouble.


Turk pointed out that over the past years gold has been rising at double digit percentage levels against all major currencies – or perhaps rather that all major currencies have been devaluing against gold which he feels represents the only real money. Silver too has risen on average against all the currencies in double digit annual percentage increases, but with rather more volatility, as proof of this Turk points out the sharp fall silver experienced in 2008 and its subsequent strong recovery in 2009.

He calls gold the ‘canary in the monetary coal mine’ and he agrees with GATA that governments and Central Banks have been trying to limit gold price increases over the years, in the same way that they try to control currency fluctuations. Turk illustrated his talk with charts and tables illustrating his key points and makes an impressive, but overall worrying, case for gold and silver given that despite the big increases he sees ahead, all he feels this will do is protect asset values, rather than increase them in real terms, which is really bad news for savers!  In other points during the presentation, Turk pointed out that there may be gains to be made in gold stocks as his charts show that the gold stock XAU index looks cheap, but cautions that gold mining stocks are not gold, but investments which brings both upside and downside risk into play in relation to the metal itself.


He also showed that over 60 years, the oil price which has risen sharply in all major currencies, has effectively been absolutely flat in terms of both gold and silver, apart from very minor short term fluctuations, as an indicator of the precious metals’ wealth preservation characteristics.


Gold bulls claim price could double to $3,000 in five years


Fears that American, British and other governments intend to inflate their way off the rocks of excessive debt prompted record inflows into gold this week.

By Ian Cowie

Published: 7:35AM BST 20 May 2010

Now some fund managers claim the price could more than double to $3,000 (£2,080) per ounce within five years. Heavily indebted governments throughout the developed world are struggling to fill deficits of black-hole dimensions in public finances by imposing spending cuts and tax rises. Both are expected in Britain's emergency Budget on June 22 and neither will be popular.


Investors buy gold, as fears of inflation rise


Gold price could hit $1,500But keeping interest rates lower than inflation and letting the currency take the strain is another way to reduce the real value of debt. You can see why politicians may feel that is the ''least worst'' option. Stealthily robbing savers by eroding the purchasing power of money is less likely to cause riots in the streets than spending cuts, because inflation tends to hit older people hardest while unemployment hits the young.  Governments can devalue their own currencies, but it is harder for them to make more gold. That fact helped prompt record inflows of $484m (£336m) into gold exchange-traded commodities this week, while gold trading volumes peaked at $2.1bn (£1.45bn). However, the precious metal is not a one-way bet and it slipped back below $1,200 (£830) on Thursday as some investors took profits amid anxiety about an unsustainable bubble in the gold price. Graham French, manager of the M & G Global Basics Fund, was undeterred. He said: "In a scenario of rising sovereign risk, where government finances are hugely overstretched and central banks have been systematically devaluing paper money, gold's value as a safe haven and a stable physical currency can only increase over the medium term. "Against this backdrop, the gold price could go much higher than these already elevated levels. It wouldn't be too far fetched to see it rising above $2,000, or even up to $3,000."


Mr French's strategy is based on the belief that things that emerging markets sell will fall in price over the next five years, while things that emerging markets buy will rise in price. The explanation is that demand from the heavily indebted developed world may remain subdued, while demand from largely debt-free consumers in emerging markets will rise. Rupert Robinson, chief executive of Schroders Private Bank, said: "Gold is setting record highs in almost every currency, despite headwinds including a strong dollar and monetary tightening in India and China, the main end markets for gold. Today's economic environment makes gold a must in any client portfolio. "Interest rates are at historically low levels; central banks are bailing out the system; we have seen a huge amount of quantitative easing; currencies being debased and governments around the world are short of money.


Nothing goes up in a straight line, indeed there are signs that gold may be becoming over-owned and too fashionable in the short term, but I think that over the long term gold is a good asset to hang on to. It could easily reach $2,000 per ounce within the next five years," Mr Robinson said. Richard Davis, of BlackRock's Natural Resources team, added: "Gold always does well in times of uncertainty, and this week is no exception. Lingering concerns over the Greek bail-out, uncertainty over global economic growth, and an inconclusive election result in Britain have all created nervousness in stock markets, and risk-averse investors are looking to gold as a store of value. The fact that gold bullion is a real asset, which does not depend for its value on any company or government, makes it compelling as a 'safe haven' investment. Gold bullion is particularly popular in Asia and the Middle East and investors in these regions have continued to pile money into the asset class.

"It is worth noting that, adjusted for inflation, gold is still some way off its all-time high of $850 per ounce in 1980, equivalent to more than $2,200 in today's terms." Adrian Ash, of BullionVault.com, said: "Inflation alone is not the driver. It's real interest rates that matter, because if cash is beating inflation, no one needs gold. Whereas when cash loses value, year after year – and if the major productive alternatives, such as bonds, shares and property, also fail investors as well – then gold really comes into its own.
"Cash is being actively devalued – and not just in Britain; the Eurozone crisis is only the latest prime mover. Underlying the decade-long upturn in gold is a repeated attack on the virtue of savings," Mr Ash said.
Gold's fundamental appeal remains that it is a store of value that is largely immune to government intervention.


Mr French observed: "The great Irish dramatist George Bernard Shaw said: 'You have to choose between trusting the natural stability of gold or the natural stability and intelligence of members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.' I have to say, I'm with Bernard Shaw on this."

THE PAINTED PIG WEDNESDAY MORNING PORK PIES

THE PIG STILL WATCHING GAP.V FOR A REVERSAL. THE CHART SIGNS, THE RUMOUR MILL, AND THE SENTIMENT ALL STILL STRONG ON IT. I BELIEVE THE COMPANY IS GEARING UP FOR A STRONG STRING OF NEWS AND A SUBSTANTIVE PROMO CAMPAIGN. STAY TUNED. CHOPPY WATERS ON THE MARKETS AS MANY ANALYSTS (WE'LL CALL THEM THAT- WITH A HEAVY EMPHASIS ON THE FIRST FOUR LETTERS !) ARE CALLING FOR CRISIS AFTER CRISIS COMING, GOLD LAUNCHING TO $2000 AN OUNCE (OR MORE DEPENDING ON WHO YOU READ) AND MANY OF THE WORLDS AVERAGE JOES BEING FINANCIALLY WIPED OUT. THE PIGS NOT INTO THIS STUFF, AND HAS NO EXPERTISE TO REALLY COMMENT ON IT EITHER. IS IT BLOW HARD, BLOW FAST,  BLOW DOWN ? OR IS IT FACT BASED RANTING ? YOU CAN ALL DEDCIDE, BUT AS THE PIGS MOTHER USED TO TELL THE PIG, SAVE THE PENNIES AND THE DIMES AND DOLLARS LOOK AFTER THEMSELVES. BE PATIENT, BE AWARE, AND BE LEARNED, AND YOU WILL ALWAYS PROSPER. ADD IN A HEALTHY ASSET BALANCE IN YOUR INVESTMENTS TOO. THE PIG BELIEVES THIS TO BE TRUE.....THERE MAY BE A COMING STORM...........SURE.............BUT IF YOUR REASONABLY WELL PREPARED........THE SUN WILL SHINE. ALWAYS DOES AND ALWAYS HAS, AFTER TIMES OF TUMULT. BELIEVE ME THE PIG KNOWS CATASTROPHY.

ON WITH THE SHOW....(A LITTLE READ FIRST)

http://www.financialsense.com/stormwatch/geo/pastanalysis/2010/0514.html

A Word to the Wise


by J. R. Nyquist

Weekly Column Published: 5.14.2010

Last December I received a curious email from a friend in South Africa who wrote, "Some kind of psychological war is raging, causing paranoia and hysteria in your country." Accustomed to the tricks of the Russian-backed Communists within South Africa's ruling ANC Party, my friend added, "Some days I ask myself if Russians want to successfully start a Right Wing rebellion in the USA. In other words, Left supports Right against the liberals while at the same time Left plays the liberals too. In other words, supporting both sides so that strife becomes a reality." This remark, though outlandish to most readers, cries out for elaboration. But first we should consider the overall economic crisis which serves as fuel to this very fire.






We have reached yet another phase in the global financial crisis. There has been unrest in Greece, and Europe is greatly troubled. More bad news for America is inevitable, as well. There is a strong impulse to blame somebody for what is happening: to blame big business, to blame America, to blame capitalist greed or socialist subversion. It is important to realize that most of our problems, throughout the world, are due to an inborn human propensity to self-destructive behavior, corruption and dishonesty. Theologians have long referred to man's "fallen nature." We see this fallen nature most obviously in common criminals, but also in those who have perpetrated the financial frauds of our time. With our lust for consumption and our growing tendency toward unethical acquisitions, we have done great damage to ourselves, day by day, and predictably so. But there is something more, as well.






Clever people, called Marxists, have long talked about a coming "crisis of capitalism," predicating their revolutionary ideology on the inevitable crash of markets, the resulting bankruptcy of nations, and subsequent political unrest. Did anyone notice how the hammer and sickle appeared by the Acropolis in Greece last week, along with a banner that reads: "PEOPLES OF EUROPE RISE UP"? This is something that deserves our attention. At the same time, however, the revolutionaries who want to overthrow capitalism and replace it with socialism are not the cause of the crisis. Since 1917, the Communist movement has represented a measure of our overall corruption, and makes a fair contribution to the same. It is no wonder that Communist intelligence services have made alliances with organized crime groups, narcotics traffickers or corrupt financiers. The destructive side of human nature now demands a reversal of our fortunes, taking advantage of our own wickedness, by its very nature and its self-chosen path to power.






As Vilfredo Pareto pointed out in his masterwork, The Mind and Society, wealth does not increase at a steady 4 percent rate throughout history. Economic growth only applies to those periods when society is healthy, not to those periods when society becomes sick. There are not only periods of wealth creation in history, says Pareto, "History is replete with descriptions of numberless causes for the destruction of wealth. Some of them bear upon total wealth: wars, revolutions, epidemics, plunderings and burnings, wastage of all sorts. Others bear upon the distribution of wealth and prevent protracted accumulations in ... given communities, not without indirect reactions upon total wealth; and such are individual attacks upon private property ... and transfers of wealth resulting from force or from prodigalities."






Prodigality is a good word, and readily applies to America as well as Europe. But returning to the theme of my opening paragraph, the coming word is even more negative and regressive; and that word is "paranoia." Considering the political divide that separates those who want a revolution, and those who advocate capitalist principles, the future is far from bright. Both parties are focused on the acquisition of political power, increasingly worried that the other side's policy will bring about general impoverishment. While the capitalist system has proven to be a good system in the past, it now proves to be a fragile system insofar as society itself has become less ordered, less honest, and more corrupt. Anyone who has studied crime statistics gathered over the last sixty years will see that something akin to a breakdown has occurred. This breakdown is in our dutifulness, our honesty, our integrity. And so, with this breakdown far advanced, we naturally demonize others -- forgetting that the peace is fragile, and trust is fragile. The system can break entirely.






Our manners and kindness have already declined to an alarming extent. But even more alarming, our judgment has declined. Yes, the capitalists have made terrible mistakes. Bankers and financiers have figured out ways to steal enormous quantities of money. Welfare frauds, shirkers and common thieves daily exploit the system as well. Whether you have socialism or capitalism, common decency will be your only salvation. The difference between the two systems, and my own preference for capitalism, has more to do with putting too much unchecked power into the hands of government officials. A financial Ponzi scheme can make you poor, but a socialist dictatorship is -- as George Orwell described it -- "a boot stomping on a human face forever."






The experience of loss tends to generate its own system of accountability, although our present system appears utterly without accountability. As troubles increase, the corrective will become more and more irresistible. It will also become increasingly unpleasant. The more we deny responsibility, the more we want to blame somebody else, the more paranoid we become, and the closer to civil war. As our emotions are increasingly engaged, we will tend to accuse others even as they accuse us. The danger to liberty and to our national unity becomes great. Enemies abroad would take advantage of our disunity. A propaganda which blames the world's problems on America already energizes an envious multitude toward new totalitarian horizons.






There is danger from the Right as well as danger from the Left. How do we realistically navigate between this Scylla and Charybdis? We must remember three things: first is the Golden Rule, which calls us to justice; second is to recognize the frailty of all human reason when subjected to passions; and third, is adherence to constitutional government and the non-violent resolution of disputes. Regarding this last point: once our system of peacefully resolving domestic differences is broken, the loss of money and the crash of markets will be the least of our worries.






Copyright © 2010 Jeffrey R. Nyquist


Global Analysis Archive

AZG.V...REVERSAL OR REHEARSAL ? ONE OF THE THREE TOP SCANS PF THE NIGHT HERE FOLKS. THE SCANNER IS TELLING US THAT ITS READY TO BREAK UPSIDE ANYTIME. SO THE PIG SAYS THIS COULD BE AN OPPORTUNITY IF LIQUIDITY PERSISTS AND INCREASES. A WATCH LIST PRIORITY !

GCR.V...HOW THE MIGHTY HAVE FALLEN. LOOKS LIKE A NEW MOVE PENDING FOR THIS OLD PIG FAVORITE. A PERENNIAL TRADING MONEY MAKER. THIS CHOICE CHOP HAS EXCELLENT PROPERTIES, MANAGEMENT AND EVEN SOME MONEY. A LONG TERMER BUT A LIKABLE ONE. THE PIG SAYS TUCK SOME AWAY. FOR A RAINY DAY.

AAA.V....POTASH OR BUST....A PIG LONG TERM FAVORITE HAD NEWS TODAY THAT WAS A BIT LUKE WARMLY RECEIVED BY THE MARKET. NEVERTHELESS, THE POWERS WITH EYES ON THE PRIZE ARE WATCHING (AND ACCUMULATING) INTENTLY. THE PIG SAYS THE SMART MONEY IS WAITING FOR BUYOUT/JV ANNOUNCEMENT TO COME. PATIENCE IS A VIRTUE AND A "P" WORD. COME TO THINK OF IT SO IS POTASH..............

THE PIGS "RUMOURS DU JOUR"......

THE PIG DOES NOT HAVE MUCH OF A KNOWLEDGE BASE FOR OTC STOCKS THEREFORE AVOIDS THEM. THATS NOT TO SAY THERE ARE NOT TRADING OPPORTUNIIES WITH THEM. IN THE LAST FEW DAYS SOME SUGGESTIONS FROM THE PIGS READERS FOR A COUPLE OF OTC SYMBOLS THAT ARE "READY TO BUST". LOTS OF RUMOURS OF DEALS ETC PENDING ON THEM BOTH. DO YOUR OWN DD AS ALWAYS...........BUT THEY COULD BE GOOD GAINERS.....AND THANKS FOR THE TIPS ! KEEP THEM COMING.... 

GLER

QASP

THE PIGS WEBSITE OF THE WEEK......

http://ml-implode.com/

Absolute Return Partners Trashes Commodity ETFs and Warns of Bubble




MineFund.com

Published 5/7/2010





ST. LOUIS (MineFund.com) -- Absolute Return’s Niels Jensen took a billy club to commodities generally and exchange traded commodities (ETCs) specifically in the firm’s May newsletter.



Entitled “The Commodities Con”, the Jensen authored letter launched a strong attack on the run up in commodities that has pushed many metals toward or through their 2008 peaks. He cites three specific risks to commodities in the near term:



* Financial demand is growing much faster than industrial demand;



* The Chinese have aggressively stockpiled over the past 12-15 months;



* Most investors do not understand the complex nature of commodity investments.





It is hardly a novel thesis, but it reflects the bearish consensus against commodities. What was unique was the extent of the assault on ETCs.



Jensen is quite right that financial investors (code for speculators) have pumped up commodity prices. But it’s largely a function of the vast oceans of loose credit and free money that has been pumped into financial markets, and the condition of the US economy. There is a remarkably strong relationship (93%) between US inflation and US unemployment, and broad commodity indices. They are not buying commodities for the intrinsic value, but for their reciprocation.



Jensen goes on to say that as a result of the growth in ETCs, commodities have become financial rather than “real” assets.



Jensen wants commodities to be yeoman assets - priced by the sweat of the miner’s brow and the savings of the industrious Shenzhen housewife.



Commodities have not become financial assets, but have instead reverted to their traditional role as quintessential “hard assets” in the face of determined efforts by several governments to melt if not dissolve traditional financial assets.



Jensen accuses investors of not knowing they have become the market. That’s ridiculous.



Like any asset, investors know that there is no divine providence underwriting commodities. And it is similarly ridiculous to suggest that “real” commodity prices can only be formed in one-to-one supply and demand relationships; which is Jensen’s inference.



It’s a very poor understanding of the enormous commodity value chain which has “financial” considerations spliced into every segment of every market. By Jensen’s purist definition, “real commodity prices” shouldn’t carry any financial overheads either - no debt, no insurance, no hedging; nothing ‘artificial’ please.



Perhaps he would also like to chastise buyers of platinum jewellery as less worthy than buyers of platinum catalysts? Vanity assets vs real assets?



Just because an investor bids up a commodity price in the course of avoiding taking physical delivery doesn’t render that portion of the price or trend any less valid. Where is it written that commodities cannot be used as a liquid asset, substituting for conventional cash if necessary?



Jensen is also guilty of conflating OTC commodity derivatives with ETCs. The former have a very different function since they are largely linked with “wholesale” activity whereas ETCs are more suited to the retail and conventional institutional (hedge funds, investment banks) side of the market.



To say that prices are “distorted” by hard asset seeking investors is preposterous. And yet he does it with an especially bad example: “because commodity markets are tiny compared to the size of financial markets, prices are easily distorted. In this respect, it is worth paying particular attention to the behaviour of the largest nation on earth – China. The bull market in commodities is intimately linked to the growth story of China; hence commodity investors are well advised to listen to the signs of policy change emanating from the political leadership in China.”



That results in a full-blown contradiction. Chinese infrastructure spending is being slashed. Ergo lead, zinc, copper and nickel are going to get walloped. Hold on, but isn’t infrastructure “real”? At least you can say a resulting price tumble would be “real”.



Jensen does a covering maneuver by pointing out that China stockpiled commodities at a ferocious pace last year (see chart). It’s certainly not news, and the market has been desperately calling a catastrophic end to Chinese stockpiling for more than a year! The better explanation is one that RBC pointed out a year ago: “China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concern that the value of its dollar assets may decline”.



Not only did stockpiling provide diversification, but the Chinese knew a bargain when it stared them in the face. What better opportunism than to buy raw materials essential to sustained long-term growth at multi-year lows? However, in Jensen’s world, Chinese contributions to commodity pricing should apparently be discounted if not disqualified.



To be fair, Jensen does acknowledge this hard asset strategy as well as a geopolitical one. However, that doesn’t negate his earlier claim that commodities are afflicted by a “financial” malady. And he reinforces it with a chart showing a 72% correlation between the CRB Commodity Index and Shanghai stock index - since 2006! Talk about cherry picking your period to make a point!



We can agree that the risk for commodities being overpriced right now is high, but that doesn’t invalidate the reasons for arriving at this point. Where’s the con?



Well, as it turns out, Jensen is accusing ETCs of conning investors. He highlights the underperformance of the United States Oil Fund (USO) relative to WTI crude.



The ETF has underperformed the benchmark WTI spot price – against which it is pegged – by a whopping 68% since January 2009! Investors have been conned into believing that if they invest in USO, they effectively buy the WTI oil price. In reality they buy an ETF which is so far off the mark that it is almost criminal. And USO is by no means the only ETF which has consistently underperformed, although it is probably one of the worst of its kind. Nobody cared to explain to hopeful investors about a subtlety called contango.



It’s an excellent point, although we have to note that Jensen admits to investing in commodity derivatives - and rolling them! Gasp! Such ‘financial’ activity...



His warning is necessary and useful:



[With a persistent contango] Not only do you suffer from a negative roll yield every time the market is in contango but, as a passive investor, you are a sitting duck for more active investors keen to take you out. It is simply too easy for professional traders to jump in front of these large passively managed funds every time they need to roll their positions. Many ETPs have clearly defined – and publicly stated – trading patterns which are only too easy to take advantage of.



Obviously, the theoretical solution to the problem is to invest in the spot market rather than the futures market; however, this is not easily accomplished in most commodity markets. If you buy spot, you need to be prepared to store the physical commodity. This is relatively easy when it comes to non-perishable commodities such as metals but industrial metals would require storage space beyond what most investors have access to. Therefore, typically, only precious metals are traded spot, whereas most other commodities are bought in the futures markets.



Many ETF sponsors are aware of the problem and have taken various initiatives to address it, for example by making trading patterns more opaque by spreading out the rollover trades. However, based on the performance of many commodity ETFs, such initiatives have only been partly successful (please note: this is not a problem for ETFs operating in spot markets such as stock index linked ETFs).



The problem does not affect the leading precious metals ETCs which are priced at spot rather than in futures. Jensen warns investors in some gold ETCs to be sure there is physical product behind the fund.



Jensen’s solutions for indirect commodity investors:



* Invest only in commodities when they are in backwardation (not recommended as it may keep you out of the market for long periods of time);



* Treat ETPs as short term trading instruments, not long-term holdings, which will eliminate much of the problem associated with contango (may be an appropriate strategy for some investors although it has its limitations); or



* Invest through active managers who can handle this highly complex problem on your behalf.







ST. LOUIS (MineFund.com) -- Absolute Return’s Niels Jensen took a billy club to commodities generally and exchange traded commodities (ETCs) specifically in the firm’s May newsletter.



Entitled “The Commodities Con”, the Jensen authored letter launched a strong attack on the run up in commodities that has pushed many metals toward or through their 2008 peaks. He cites three specific risks to commodities in the near term:



* Financial demand is growing much faster than industrial demand;



* The Chinese have aggressively stockpiled over the past 12-15 months;



* Most investors do not understand the complex nature of commodity investments.





It is hardly a novel thesis, but it reflects the bearish consensus against commodities. What was unique was the extent of the assault on ETCs.



Jensen is quite right that financial investors (code for speculators) have pumped up commodity prices. But it’s largely a function of the vast oceans of loose credit and free money that has been pumped into financial markets, and the condition of the US economy. There is a remarkably strong relationship (93%) between US inflation and US unemployment, and broad commodity indices. They are not buying commodities for the intrinsic value, but for their reciprocation.



Jensen goes on to say that as a result of the growth in ETCs, commodities have become financial rather than “real” assets.



Jensen wants commodities to be yeoman assets - priced by the sweat of the miner’s brow and the savings of the industrious Shenzhen housewife.



Commodities have not become financial assets, but have instead reverted to their traditional role as quintessential “hard assets” in the face of determined efforts by several governments to melt if not dissolve traditional financial assets.



Jensen accuses investors of not knowing they have become the market. That’s ridiculous.



Like any asset, investors know that there is no divine providence underwriting commodities. And it is similarly ridiculous to suggest that “real” commodity prices can only be formed in one-to-one supply and demand relationships; which is Jensen’s inference.



It’s a very poor understanding of the enormous commodity value chain which has “financial” considerations spliced into every segment of every market. By Jensen’s purist definition, “real commodity prices” shouldn’t carry any financial overheads either - no debt, no insurance, no hedging; nothing ‘artificial’ please.



Perhaps he would also like to chastise buyers of platinum jewellery as less worthy than buyers of platinum catalysts? Vanity assets vs real assets?



Just because an investor bids up a commodity price in the course of avoiding taking physical delivery doesn’t render that portion of the price or trend any less valid. Where is it written that commodities cannot be used as a liquid asset, substituting for conventional cash if necessary?



Jensen is also guilty of conflating OTC commodity derivatives with ETCs. The former have a very different function since they are largely linked with “wholesale” activity whereas ETCs are more suited to the retail and conventional institutional (hedge funds, investment banks) side of the market.



To say that prices are “distorted” by hard asset seeking investors is preposterous. And yet he does it with an especially bad example: “because commodity markets are tiny compared to the size of financial markets, prices are easily distorted. In this respect, it is worth paying particular attention to the behaviour of the largest nation on earth – China. The bull market in commodities is intimately linked to the growth story of China; hence commodity investors are well advised to listen to the signs of policy change emanating from the political leadership in China.”



That results in a full-blown contradiction. Chinese infrastructure spending is being slashed. Ergo lead, zinc, copper and nickel are going to get walloped. Hold on, but isn’t infrastructure “real”? At least you can say a resulting price tumble would be “real”.



Jensen does a covering maneuver by pointing out that China stockpiled commodities at a ferocious pace last year (see chart). It’s certainly not news, and the market has been desperately calling a catastrophic end to Chinese stockpiling for more than a year! The better explanation is one that RBC pointed out a year ago: “China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concern that the value of its dollar assets may decline”.



Not only did stockpiling provide diversification, but the Chinese knew a bargain when it stared them in the face. What better opportunism than to buy raw materials essential to sustained long-term growth at multi-year lows? However, in Jensen’s world, Chinese contributions to commodity pricing should apparently be discounted if not disqualified.



To be fair, Jensen does acknowledge this hard asset strategy as well as a geopolitical one. However, that doesn’t negate his earlier claim that commodities are afflicted by a “financial” malady. And he reinforces it with a chart showing a 72% correlation between the CRB Commodity Index and Shanghai stock index - since 2006! Talk about cherry picking your period to make a point!



We can agree that the risk for commodities being overpriced right now is high, but that doesn’t invalidate the reasons for arriving at this point. Where’s the con?



Well, as it turns out, Jensen is accusing ETCs of conning investors. He highlights the underperformance of the United States Oil Fund (USO) relative to WTI crude.



The ETF has underperformed the benchmark WTI spot price – against which it is pegged – by a whopping 68% since January 2009! Investors have been conned into believing that if they invest in USO, they effectively buy the WTI oil price. In reality they buy an ETF which is so far off the mark that it is almost criminal. And USO is by no means the only ETF which has consistently underperformed, although it is probably one of the worst of its kind. Nobody cared to explain to hopeful investors about a subtlety called contango.



It’s an excellent point, although we have to note that Jensen admits to investing in commodity derivatives - and rolling them! Gasp! Such ‘financial’ activity...



His warning is necessary and useful:



[With a persistent contango] Not only do you suffer from a negative roll yield every time the market is in contango but, as a passive investor, you are a sitting duck for more active investors keen to take you out. It is simply too easy for professional traders to jump in front of these large passively managed funds every time they need to roll their positions. Many ETPs have clearly defined – and publicly stated – trading patterns which are only too easy to take advantage of.



Obviously, the theoretical solution to the problem is to invest in the spot market rather than the futures market; however, this is not easily accomplished in most commodity markets. If you buy spot, you need to be prepared to store the physical commodity. This is relatively easy when it comes to non-perishable commodities such as metals but industrial metals would require storage space beyond what most investors have access to. Therefore, typically, only precious metals are traded spot, whereas most other commodities are bought in the futures markets.



Many ETF sponsors are aware of the problem and have taken various initiatives to address it, for example by making trading patterns more opaque by spreading out the rollover trades. However, based on the performance of many commodity ETFs, such initiatives have only been partly successful (please note: this is not a problem for ETFs operating in spot markets such as stock index linked ETFs).



The problem does not affect the leading precious metals ETCs which are priced at spot rather than in futures. Jensen warns investors in some gold ETCs to be sure there is physical product behind the fund.



Jensen’s solutions for indirect commodity investors:



* Invest only in commodities when they are in backwardation (not recommended as it may keep you out of the market for long periods of time);



* Treat ETPs as short term trading instruments, not long-term holdings, which will eliminate much of the problem associated with contango (may be an appropriate strategy for some investors although it has its limitations); or



* Invest through active managers who can handle this highly complex problem on your behalf.





© 2009-2010, MineFund.com