“I own more agriculture than most other commodities because the prices are still astonishingly low and in some cases agriculture has been in a terrible situation for 30 years now. Agriculture prices would be the best performers, I think.
Stocks & Equities
“I do not know if they [the Fed] will announce it… I know they are going to print more money. They already are. If you look at their balance sheets, you will see that something is happening, assets are building on their balance sheets and they are not coming from the tooth fairy. So I do not know whether they will announce it or not. They are a little bit embarrassed because they announced QE1 and QE2, and it did not work. So they may try to discuss it. They may just continue to do it without getting egg on their face again, but they are going to print money, they are all going to print money. It is the wrong thing to do, but that is all they know to do.”
When asked about the possibility of more shocks from the Eurozone, Rogers said:
“The worst may be behind us for this week but no, there are going to be more problems coming out of Europe. You have got countries that are essentially bankrupt. Nobody is dealing with the problems in Europe. You look at everyone out there. They all have higher debts and all of their projections, maybe Bulgaria and one or two more countries do not have higher debts in their projections, but everybody has got increasing debt. The solution to too much debt is not more debt. So now you are going to have plenty more problems coming out of Europe.”
Regarding the recent late August 2012 rally in Gold and Silver:
“I am not buying either at the moment, but if I had to buy one, I would prefer to buy silver. Silver is 40% off its all-time high, gold is only 10% to 15% off its all-time high. So on a historic basis, silver is much cheaper than gold. So if I had to buy one, I would buy silver, not gold.”
“Unfortunately all central banks know to do is to print money. Most of them will anyway, and you are going to see more money printing, more debasement of currency and therefore, the price of gold will go much higher over the course of the decade. Whether it goes up this year or not, I do not know. The situation with gold is that it has been up 11 years in a row without a down year, which is extremely unusual. I do not know of any asset that has been up 11 years without a down year. So gold is correcting. It would be normal for gold to continue to correct and have a down year. Such markets are supposed to do so. Whether it is going to do, that I do not know, but I do know that gold is going to be much higher over the decade.”
Jim Rogers on OIl:
“The surprise with oil is going to be how high it stays and how high it goes. We are running out of known reserves of oil. There may be a lot of oil in the world. If there is, we just don’t know where it is. So prices are going to stay high and go much higher. If America goes to war with Iran, they are going to skyrocket. If there is a big surprise, if Spain suddenly goes bankrupt out of the blue, then oil prices will collapse. If the prices collapse, I would suggest you to buy more. If there is anything that makes it go down, I would suggest buying it because until we find a lot of oil, prices will stay high and go much higher.
On the Overall Commodity Markets:
The commodity bull market is going to on until there is a lot of new supply. You do not have much new supply in most commodities. Commodities are determined by supply and demand. You will certainly have corrections. You will have corrections in all bull markets, and you had several corrections in stocks which went up from 1982 until 2000. In 1987, stocks went down 40% to 80%. It was at the end of the bull market and you will certainly have corrections in commodities, but we are going to have shortages. If the world economy gets better, you will have big shortages. If the world economy does not get better, governments and central banks will print more money. It is a wrong thing to do, but that is what they do and that of course when currencies are being debased, the best way to protect yourself is with real assets.
Sugar is down about 70% or 75% from its all-time high. Sugar has been amazingly depressed in the past three-four decades. So sugar is going to go much much higher before this bull market is over. I do not have a clue for what happens this year.”
CRB IndexMonthly Commodity Futures Price Chart
With the Shanghai Composite at a new 3.5 year low, Chinese PMI data slow and Chinese consumers slowing. Rogers had this to say about China:
“China tried tightening for three years. It started back in 2009 or so to try to kill the inflation bubble and the property bubble. Rightly so in my view. Now they are starting to loosen up. I would not loosen up yet if I were China because they need to kill inflation totally and they need to totally pop the property bubble. But I am not China. They are going to do what they want to do and it looks as though since they have transferred to the Chinese public, they are going to start loosening up now which is still soon, if you ask me. Remember China has saved huge amounts of money for a rainy day. Once it starts raining, they are going to spend that money.”
More at the Economic Times HERE
Gold Makes Resistance Key Support
1. Some critical technical events have occurred in the gold markets over the past week. Click HERE or on chart below for larger image.
2. Friday’s price action likely established the $1625-$1645 area as powerful support for the bulls (you). The decline halted at almost exactly $1642.40, and then rocketed towards $1700.
3. Friday’s price action took the gold price about 3% above the upper green HSR line (horizontal support & resistance). Click HERE or on chart below for larger image.
4. This is the first time in almost a year that gold has won a decisive victory against the bears on the “chart battlefield”. Key resistance has become key support.
….read points 5-24 HERE
More on the rally by Martin Armstrong
GoLD THE RECENT RALLY
The computer called for a high at this time a year ago. There is nothing new. The same old news of QE3 will be inflationary is just nonsense. We have massive deflation still going on. The key to what is interest rates. Do a simple correlation and you will see that inflation requires rising interest rates – not declining. However, government is making the perfect mistake to set that stage for the explosive rally in gold. The Fed last year bought 61% of the new debt. That may appear to be inflationary from one side of the coin, but capital is contracting due to the witch hunt for money globally, the continued decline in bank assets, though starting to ease with real estate, and the massive increase in taxation. Even the banks are all moving their back offices now to Poland and India. That even includes banks in Singapore. (more below chart)
Once capital realizes that these trends are forcing it to invest, then you will see assets rise, debt will fall because interest rates are so low, people are not buying other than very short-term. Americans are being chased out of all banks worldwide, The government figures that capital will be forced home and then they can imprison people and confiscate that wealth. Sorry! The solution is to buy assets outside of the banking system – real estate, stocks, & gold (not in France). As capital shifts from banks and public assets into private, then we will see the inflation come home. That appears to hit in 2014 and we will see an explosive move to the upside thereafter. Hence, QE3 is only a confirmation that the trend is still contracting. It will be no more inflationary than QE1 or QE2. The danger these morons are creating is that with interest rates so low, they are likely to find NO BID for the bonds when they do need the cash. They watch what happens! These morons will have created an explosive inflationary spiral. That takes place ONLY when capital shifts away from PUBLIC assets and sees the light.
For now, gold may peak this week by the 7th. The key weeks are 9/17 and then 10/1. We will see volatility rise in October. Europe is still messing things up. Politicians are clueless and still think they can bully the private sector into paying their bills. They will have another thing coming very soon.
For now, the main resistance in gold is at the 18000-18100 area. This is purely a technical move. A low early next year should complete the normal 2 year correction process and from there we will be in a position to change course. The same turning point that the 1987 Crash was on that 1989.95 wave will be next August. From there onward, a change in trend appears highly likely. We will be providing the specific targets for the next year with all the reversals and Cycle Maps at the San Diego Conference 9/23-24.This is going to be a very important event.
by Martin Armstrong of Armstrong Economics
Where is Common Sense When We Need it the Most?
“This whole Sovereign Debt Crisis is starting to look like Nero playing the fiddle as Rome burns. We have to realize that Western society is at the breaking point where Democracy fails, for the majority has discovered they can simply vote themselves the assets of the minority.”
“Obama demonizes the mere possession of wealth as if this is the reason government is faltering and instills hatred against the “rich” while courting Goldman Sachs as his biggest contributor.
“Attacking the rich will cause the VELOCITY of money to decline and with it; government will be unable to sell its bonds.”
“One of the greatest confusing aspects to many is the lack of understanding that this is a global economy. This confusion has led many to constantly propose ideas that are contrary to the way the economy functions.”
“The anti-globalization movement” is seriously misguided” – “This movement is no different than trying to outlaw premarital sex. International trade and deficits have been taking place from ancient times. The Silk Road connecting East and West goes back before recorded history. Cicero stood before the Roman Senate and warned that unless foreign imports were curtailed, Rome would go bankrupt. You cannot outlaw international trade any more than you can ignore international capital flows. To do so, is to court doom. You can outlaw prostitution. That will not prevent the practice. Human nature cannot be changed”
“Here is a Roman prostitute token from the age of Augustus (27BC-14AD) who passed all sorts of moral family laws even forbidding men to remain as bachelors.”
…..read much much more History & Interpretation HERE
These days the future of uranium is quite bullish, despite the decline of the price of uranium from $52/lb to $49/lb over the past 6 months. There are several reasons to believe the near—term trend in uranium price will shift and the price will start rising in 2013. One reason are the strong supply and demand fundamentals; due to the recent decline of the commodity prices, many uranium projects got delayed or shut down, which will translate into a supply shortage over the next few years. The rising demand in uranium will be triggered by industry catalysts such as a strong ongoing demand for nuclear power especially in Japan and China, as well as the expiry of the Russian Highly Enriched Uranium (HEU) agreement to down-blend material from nuclear warheads into reactor fuel. Another industry sign are the recent acquisitions in the sector. Cameco, one of the biggest uranium producers in the world has just acquired BHP’s Australian uranium deposit for $430 million; and others are ready to snap up quality projects too.
All in all, these are compelling and very bullish signs for uranium’s bright future.
A previous blog post on uranium earlier this year showed a slightly positive but reluctant outlook for this commodity.
Sources:
http://resourcescene.wordpress.com/2012/05/22/should-you-be-scared-of-uranium/
http://www.canadianbusiness.com/article/90387–cameco-to-supply-reactors-with-recycled-nukem-warheads
http://seekingalpha.com/article/832021-why-uranium-prices-will-spike-in-2013-raymond-james
About ResourceScene (Canada)
ResourceScene.com is a natural resources blog that covers topics such as mining and exploration, natural resources, global economics, technology, markets and finance, politics and policies, events and company portraits.
The Summer Doldrums: the markets have felt unusually “thin” even for August…volume has been very light…ranges have been narrow…depth has been shallow…it has felt like people don’t want to participate…its been“The Summer Doldrums” in spades for much of August…BUT…I think markets could really start to churn as we get into September.
Jackson Hole: We got a taste of that with the much-anticipated Bernanke Jackson Hole speech. The FT headline declared that, “Bernanke confirms his bias towards easing” and the markets, which had probably not been expecting “much,” reacted….with gold up nearly $40 on the day to its best level in 5 months. (Martin Murenbeeldsays that the “number one reason” for gold to rise is the simulative policies that governments and central banks implement to get their economies going again.)
Bernanke made it clear that the Fed is ready to provide additional stimulus if needed….that he is concerned about the challenges facing the US economy…he is worried about unemployment remaining stubbornly high…under-utilized resources…tepid economic growth…he is aware of the risks of stimulative action…but…he says that those risks are manageable…the gold market seems to think otherwise.
Market reaction: Following his speech the USD was lower across the board, US interest rates were a bit lower, while stocks, foreign currencies, commodities and (especially) precious metals were higher…clearly the market had not “priced in” what he had to say…the market thinks his Jackson Hole speech is foreshadowing more easing action by the Fed on Sept 13.
Europe: The fiscal/economic problems in Europe, and the fractured political/central bank response to those problems, have been “off the radar” for much of August…BUT…those problems will likely be “back with a bang” in September…and the markets will have reason to worry about contagion from the Euro crisis. (Sept 6: ECB policy decisions, Sept 12: Dutch election, German court ruling on ESM.)
Asia: Also “off the radar” during August has been the economic slowdown all across Asia, from India to Japan, with the Shangahi stock index hitting 3.5 year lows…while the DJI remains close to a 5 year high.
The American Presidential Election: The markets will have a keen interest in the polls leading up to the Nov 6 election date. The differences between Obama and Romney became more dramatic with the selection of Paul Ryan…all else being equal…the American stock market will rally if it thinks Romney is going to win.
Trading : I posted a note to my blog on August 21 that I had sold my long position in the US stock market and had moved to the sidelines. I had been long for the previous couple of months on the simple theory that the market looked like it wanted to go up…it was climbing a wall of worry…and I would stay long until the market told me it was no longer going up…I sensed that it was running out of steam and chose to go to the sidelines…I did NOT go short…the short term trends in the market from the June 4 lows and from the Oct 4 lows, and the longer term trends from the March 2009 lows are still clearly up.
Stocks: I thought the stock market had a pretty muted reaction to the Jackson Hole speech (especially compared to gold.) I’m sitting on the sidelines with an open mind…August 21 may turn out to be another key turn date…but the jury is still out on that….
Gold: I should have bought gold but I didn’t…it had a great bottoming pattern from May thru mid August and then broke out of a wedge pattern on rising open interest…up over $100 from the August 15 lows…I think it’s short term overdone.
CAD$: The CAD has only had one higher weekly close (April 23) in the last year. (I think the Friday closing price of any market is very important…it’s the price the market is willing to “live with” over the weekend.) The CAD has been one of the strongest currencies in the world this summer…rising against not only the USD but also against the YEN, the AUD, and the NZD (but falling against gold and the EUR.) I haven’t traded the CAD in my short term accounts but over the past two years I have swapped ~24% of my long term savings from CAD to USD at an average price of ~0.97 USDCAD. I may look to do more of that if the CAD keeps rising…I will probably sell OTM calls against CAD…keeping the premiums if I don’t get exercised and making the swap if I do. This is not a directional bet on the CAD…it’s currency diversification…I don’t want to have all my assets in one currency.
Victor Adair
Senior Vice President and Derivatives Portfolio Manager
Victor Adair is a Senior Vice President and Derivatives Portfolio Manager at Union Securities Ltd. Victor began trading financial markets over 40 years ago and has held a number of senior positions during his long career as a commodity and stockbroker. He provides daily market commentary on CKNW AM 980 radio Vancouver and is nationally syndicated on Mike Campbell’s weekly Moneytalks radio show.
Victor’s trading focus is primarily on the currency, precious metal, interest rate and stock index markets and his clients are high net worth individuals and corporations.
Click HERE to contact Victor.
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