Gold & Precious Metals

Peter Schiff told CNBC this morning that Gold at $1,200 is not expensive “considering all the money that we’ve created and all the money that we are going to create”. According to Schiff investors should invest in Gold because the yellow metal will at some point, perhaps prior to Obama leaving the White House, hit $5,000 per troy ounce. Here’s Schiff on how high Gold & QE3:

Schiff: I think a minimum of $5,000. But it could go a lot higher than that. A lot of it depends on future actions of central banks. We’re on a trajectory right now to send gold a lot higher, but central banks could do the right thing, and that would limit gold’s gains. But the more they keep printing money and the more they keep interest rates low to artificially prop up the economy, the higher gold is going to go.

Regarding the Fed and  QE3: 

Schiff: No. I think they’re going to do it. The Fed always does the wrong thing, and QE3 would be the wrong thing, so they’re going to do it. If you look at what the Fed says, they say we’re going to do QE3 if the economy needs it, and the economy is going to need it, from their perspective, because without QE, the economy will lapse into a worse recession than the one we just finished. That’s because we still have a lot of problems to correct because the last recession was cut short by the stimulus.

So the stimulus interfered with the market’s attempt to correct all the imbalances that were built up over the phony boom that was a function of prior Fed mistakes. If you understand that the economy is basically floating on a sea of stimulus, then when the stimulus goes away, we’re back in recession. The Fed saying we’re only going to do QE if the economy needs it is like a heroin addict saying he’s only going to take more heroin if he needs it.

 

The interview above came from Vette350’s Junior Mining Blog

Jim Rogers: Buying Commodities Now Guarantees Success for Investors

Posted by Jim Rogers via OilPrice.com

on Wednesday, 18 July 2012 15:36

Jim Rogers says the investing game is simple these days. Rogers said this week, “I do believe I could count on one hand the number of times I’ve been presented with an investment opportunity that guarantees success no matter what direction the economy takes.”  Rogers adds, “If the world economy gets better, I earn my money on commodities. If the global economy gets worse, then they will print more money and I will make money in commodities.”

Although we have featured comments by Rogers many times on the site, Jim Rogers, who ran money with Mr. George Soros way back when, is one of the few investors with an investment record that substantiates his expertise and provides answers supported by both the fundamentals as well as detailed research.

Put simply, according to Jim Rogers, CEO and Chairman of Rogers Holdings, we should invest in commodities.

….read more HERE

Picture 1

Corn Prices Soar as Mid-West Bakes … Why One Sector Is Poised to Profit

Posted by Tom Essaye via Money & Markets

on Wednesday, 18 July 2012 15:06

One of the biggest stories in the media over the past week or so has been the tremendous drought affecting the nation’s Corn Belt. The spike in crop prices has been dramatic …

Corn has rallied more than 50 percent since mid-June as the condition and size of the crop is consistently downgraded. 

chart

Drought conditions are some of the worst in nearly twenty years. And it’s a sharp reversal from just two months ago when it was generally expected that the corn crop would be a “bumper crop.”

Just last week, the USDA reduced the expected corn production this summer by 1.8 billion bushels, and reduced the per acre crop yield to 146 bushels/acre this month, from 166 last month.

Trading corn in this market is a risky venture because at the first sight of rain the contract will fall hard, but there’s no telling how high it can go before that happens. Moreover, higher grain prices can impact other sectors in the market, too.

Normally, when grain prices are this high it’s bullish for agricultural equipment manufacturers like John Deere (DE). The general thinking is that farmers, with a lot more money in their pockets from the higher prices, will buy new tractors, plow new fields, and upgrade old equipment. But what we’re seeing now isn’t a typical price rise in the grains …

Prices are rising because the general thought is that the crop will be much smaller than anticipated. So while farmers who are lucky enough to have their corn survive will receive a better price, many more farmers will simply have no crop to sell. As a result, we have to be cautious about investing the same old way.

Taking the Contrarian Approach …

As I think about the potential effects of this drought and the investment opportunities, there is one sector in agriculture that will likely benefit — seeds.

Farmers are not simply going to let their crops fail without trying to get something out of the ground. Consequently, a lot of them will replant certain fields in soybeans or other crops where corn might have failed. In fact, I’ve read multiple reports of farmers already replanting soybeans where they had just planted corn, in an effort to have something to bring to market at harvest time.

The point is that we can expect increased demand for seeds as we enter the later parts of the summer, and to a lesser extent see an increased demand for fertilizer as well.

In particular, there should be a higher spot demand for drought resistant seeds made by companies like Monsanto (MON).

However, if you prefer the diversification of an exchange traded fund, you might consider the Market Vectors Agribusiness ETF (MOO). It holds some of the largest seed and fertilizer companies in the world, companies that should benefit from additional demand as unlucky farmers try to salvage what they can from a difficult growing season.

As contrarian investors we must always look at an event in the market from multiple angles, and look beyond the typical response. Higher grain prices due to a drought are not a blanket “good thing” for all agricultural companies. But savvy contrarian investors who look deeper can identify the sectors that do stand to profit.

Best,

Tom

Source:http://www.moneyandmarkets.com

About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our //www.gliq.com/cgi-

Coming US Selling Bonanza Will Be Worse Than 2008

Posted by Peter Schiff - Europacific Capital

on Wednesday, 18 July 2012 14:27

Schiff, who famously warned investors about the housing and financial crisis in his 2007 book Crash Proof, says the Fed’s palliative efforts during the housing meltdown have made the next crisis inevitable.

The picture Mr Schiff paints is depressingly clear and plausible. It might be different this time, then again probably not. Holding real assets like gold and silver and staying out of the US dollar are his main recommendations… (Ed Note: scroll Down for his Top 3 Recommendations).

According to Euro Pacific Capital‘s CEO Schiff, the U.S. economy is heading for an economic crash that will make 2008 look like a walk in the park. Stimulus programs can delay this day of reckoning, but only for so long and only at the expense of making the eventual meltdown much, much worse.

“We’ve got a much bigger collapse coming, and not just of the markets but of the economy,” Schiff says in the attached clip. “It’s like what you’re seeing in Europe right now, only worse.”

In this nightmare scenario detailed in The Real Crash: America’s Coming Bankruptcy, the current economic pause is actually the beginning of a material slowdown or recession into year end. At that point, the Federal Reserve will unleash a third round of Quantitative Easing — weakening the dollar without jump-starting the economy. As a result of dollar weakness, import prices rise, pressing the margins of corporate America. Lower margins lead to heavy layoffs, sending millions of workers into unemployment during a time when they can least afford it. Banks fail, housing collapses, and taxes are raised in a futile effort to give the tapped-out government the capital to try yet more futile stimulus.

“That’s when it really is going to get interesting, because that’s when we hit our real fiscal cliff, when we’re going to have to slash — and I mean slash — government spending,” says Schiff.

Those cuts will not be at all unlike the draconian austerity measures in Greece, with programs like Social Security and Medicare being dramatically cut or possibly disappearing entirely. The easiest way to put it, is that everything you don’t think could possibly happen in America will come to be.

“Alternatively, we can bail everybody out, pretend we can print our way out of a crisis, and, instead, we have runaway inflation, or hyper-inflation, which is going to be far worse than the collapse we would have if we did the right thing and just let everything implode,” he offers.

So what should investors do to protect themselves? Schiff has three suggestions:

1. Get Out of Treasuries

The U.S. dollar is going to get trashed in Schiff’s scenario. Locking in a yield on a government 10-year bond of 1.5% is a paltry return in the first place. Should inflation tick up to even 5%, a level much lower than that seen in the early 1980s, bond owners would have 3.5% less buying power at the end of every year. If they go to sell the bond, they’ll only find buyers at a much lower price than what they paid.

2. Own the Right Stocks

With bonds and the dollar bearing the brunt of the pain, Schiff says stocks will outperform dramatically, provided you own the right ones. Exporters and multi-national corporations will benefit from a weak dollar. Better still would be to buy foreign stocks and avoid the U.S. entirely.

3. Buy Silver and Gold

Schiff says the recent weakness in these precious metals is just a pause as we wait for the other shoe to drop. Most of those on Main Street haven’t even taken positions yet in gold or silver. Once they start dropping bonds and looking for a place to hide, the price of these metals will soar.

Are you preparing for a major U.S. market and economic meltdown?

 

161008top

FAIR USE NOTICE: This video may contain copyrighted material. Such material is made available for educational purposes only. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law.

 

Ignore the Libor scandal at your own risk

Posted by MarketWatch via Peter Grandich

on Wednesday, 18 July 2012 7:00

Maybe you’ve seen the headlines mentioning “Libor” or Bob Diamond or the fixing of interest rates. Perhaps you vaguely know that banks were tinkering with the rates for their own advantage.

Big deal, you say. So what?

So, basically investors, including your mutual fund, were hosed. So, the banks essentially stacked the deck so they would be guaranteed to win. So, it was an organized effort that included more than a dozen participants. And who orchestrated it all? The cops who were supposed to regulate them.

You should care because of all the missteps of the financial crisis, this one can’t be explained away by Wall Street’s excuses: “We were just stupid.” “It was the borrowers’ fault.” “We misjudged the risk.” “We didn’t see it coming.”

….read more HERE

Libor-Scandal