Month: April 2012

By MoneyMorning.com.au

It sounds like science fiction – mining for metals at the floor of the Pacific Ocean, at a depth of four kilometres.

More people have been to the moon than the depths of the ocean. So how on earth could we mine the ocean floor?

How would you operate machinery at that depth? Get the minerals to surface? Or avoid causing environmental damage?

And, more importantly, how are the drill rig operators supposed to have a smoko break?!

When it comes to mining in such extreme places, there are many challenges.

But the relentless global demand for minerals – communicated by higher prices for those minerals – forces us to look for answers to those challenges.

For example, the relentless demand for gold has led a South African gold mine, TauTona, to an incredible depth of four kilometres into the ground. It is so deep into the earth’s crust that the rock they mine is 60′C. They have to refrigerate the air in the mine to avoid cooking the miners alive. Refrigerating large spaces costs a great deal, and is only possible because of ever-rising gold prices.

“Easy to Get” Resources Disappearing

The fact is that all the easy gold has gone. It is getting harder – and therefore more expensive – to mine gold. So if buyers want gold, they need to pay more to cover the costs of getting it from increasingly extreme places.

It’s the same story with oil. The global economy now uses over a billion barrels every fortnight. Our economy’s addiction to it forces companies to operate in some very unstable countries in the world, such as Iraq, Sudan, and Libya. We have also had to become more inventive, and develop new technologies to access unconventional oil.

This demand pushes explorers into challenging terrain. Karoon Gas (ASX:KAR) is drilling for oil in the Tupi field off the Brazilian coast. Floating two kilometres above the ocean floor makes things hard enough. But once drilling starts, there are five kilometres of rock to get through.

This is the reality of modern exploration. Our favourite commodities are getting harder to find. We have to go to greater extremes to get them. We have to become more inventive.

The evolution of hard rock mining took us from surface rock, to open pits, and then deep underground.

But land only takes up about a third of the planet’s surface. And we have explored a great deal of it already.

The ocean floor, however, takes up two thirds of the planet.

The next logical step in the evolution of hard-rock mining is to head for the ocean floor.

This may sound impossible, but mining companies trialled this successfully in the 1980s.

But this stopped when the United Nations (UN), which controls these international waters, wouldn’t grant the miners title.

However in 2001 the UN implemented its ‘Law of the Sea’, and started signing exploration contracts for prospective miners and governments. So getting ‘title’ is now possible.

And thanks to progress in the offshore oil and gas industry, mining the ocean floor is not the massive technological leap it once was. A growing number of players have been focusing on this ‘frontier’ in recent years, and things are gaining traction.

Underwater Ocean Mining – A New Frontier

In some ways, the deposits found on the ocean floor are easier to access than on land. Deep-sea vents leave large mineral deposits behind that stand for millennia, like giant termite hills, and can be very rich in minerals such as copper and gold. No actual sub-surface mining is needed. The machinery just needs to break bits off.

A Canadian-listed company, Nautilus Minerals (TSE:NUS), has been exploring and mining these old deep-sea vents around Papua New Guinea and Fiji. The results are impressive. The copper grade of its underwater deposits is 7.3%. To put that in context, the average grade of the land-based copper mines is just 0.5%.

Australia’s highest-grade copper project, Sandfire Resources (ASX:SFR), is lower at 5.6%. True, Sandfire also has 1.9 grams of gold per tonne as well. But Nautilus outdoes it here too, as it has 3.6 grams per tonne of gold. This is virgin territory. And because of that, these underwater deposits can have the kinds of grades you can only dream of from a land-based mine.

But Nautilus does face some daunting challenges. It still needs to break down the deposit using heavy machinery underwater. And at the moment this is only possible by using modified versions of what you would find on land.

When operating underwater there is no control of where the rock chips and debris go, which makes it messy. But one other deep-sea mining company that caught my attention will have a much simpler mining method.

Deep Green Resources, which is not listed yet, is targeting deposits at the bottom of the Pacific Ocean. It plans to collect the mineral-rich nodules (tennis-ball-sized rocks), scattered across the ocean floor. It will be more like harvesting potatoes underwater than mining.

Due to the unique combination of currents, pressure, and depth, these nodules form over time from the minerals dissolved in the water. And they are distributed evenly over a wide area between Hawaii and Mexico.

What makes these nodules so valuable are the metals, such as manganese, nickel and copper, within them. The value of these minerals combined would be the equivalent of having a deposit with a 10% copper grade. This is exceptional, and is 20 times the global average for copper projects.

It is estimated there could be almost 500 million tonnes of these nodules scattered across the company’s title. This puts Deep Green in the giants league, and would make it competitive with each of the biggest manganese, copper and nickel miners in the world.

If a project this big, at this grade, was on land, BHP or another major would have bought it already.

Mining the Ocean Floor – Sound Too Hard?

That’s what many experts thought when oil drillers first suggested floating oil rigs to target offshore deposits. Today offshore rigs accounts for a third of the world’s oil production.

The bottom line is that this would be commercially viable if the value of the minerals covers the cost of sucking the pebbles up from the ocean floor to a boat, and then transporting it to land to process them to a saleable product.

Compared to the immense cost of moving billions of tonnes of rock just to get to a land-based deposit, it may even be cheaper.

It is early days, but this is clearly the pointy end in the evolution of mining. The opportunity is there, and so is the technology. All that is needed is some risk-appetite, hard work, and pioneering spirit.

I’m not sure where we go next once we are mining the ocean floor…

Next stop, the moon?

Dr. Alex Cowie
Editor, Diggers & Drillers

From the Archives…

Disruptive Technology Stocks For Smart Small-Cap Investors
2012-04-06 – Kris Sayce

ASX 200: This Market is Toast
2012-04-05 – Murray Dawes

Why Every Bank Will Soon Be a Tax Collector for Every Government Everywhere
2012-04-04 – Merryn Somerset Webb

Not Even Saudi Arabia Can Save Us From High Oil Prices
2012-04-03 – Jason Simpkins

Good News For Oil and Resource Investors
2012-04-02 – Dr. Alex Cowie

The Deep Ocean Frontier For Mining Profits

EURUSD’s bounce from 1.3033 extends to as high as 1.3212. However, the rise is treated as correction of the downtrend from 1.3385, another fall to re-test 1.3003 support would likely be seen after correction, a breakdown below this level will signal resumption of the longer term downtrend from 1.3486 (Feb 24 high), then deeper decline towards 1.2624 (Jan 13 low) could be seen.

Daily Forex Forecast

A peaceful and stable Pakistan is integral to western efforts to pacify Afghanistan, but Islamabad’s obsessions with its giant eastern neighbor may render such issues moot.

Since partition in 1947, Pakistan and India have fought four armed conflicts, in 1947, 1965, 1971 (which led to the establishment of Bangladesh, formerly East Pakistan) and the 1999 Kargil clash.

With the exception of the 1971 conflict, which involved rising tensions in East Pakistan, the others have all involved issues arising from control of Kashmir.

But now a rising new element of discord threatens to precipitate a new armed clash between southern Asia’s two nuclear powers – water.

Lahore’s “The Nation’ newspaper on Sunday published an editorial entitled, “War with India inevitable: Nizami,” the newspaper’s Editor-in-Chief and Nazaria-i-Pakistan Trust Chairman, Majid Nizami, asked his fellow citizens to prepare for a war with India over water issues. Nizami told those attending the “Pakistan-India relations; Our rulers- new wishes” session at Aiwan-e-Karkunan Tehrik-e-Pakistan, which he chaired, “Indian hostilities and conspiracies against the country will never end until she is taught a lesson.”

While The Nation is a conservative daily, part of the Nawa-i-Waqt publishing group, with a circulation of roughly 20,000, it has a website, and what’s more, close ties to Pakistan’s highest military circles, so Nizami’s comments should hardly be rejected out of hand.

Furthermore, Niazmi’s audience included some high ranking Pakistani officials, including Nazaria-i-Pakistan Vice Chairman Dr Rafique Ahmed; Pakistan Movement Workers-Trust Chairman, retired Colonel Jamshed Ahmed Tareen; former Foreign Secretary Shamshad Ahmed Khan; Jamiat Ulema-e-Pakistan Secretary General Qari Zawar Bahadur; retired Air Marshall Khurished Anwar Mirza; retired Brigadier Hamid Saeed Akhtar and Jamaat-e-Islami Lahore Chief Ameer-ul-Azeem, among others.

At issue are Pakistan’s concerns over India’s ongoing construction of two hydroelectric dams on the upper reaches of the Indus River. Islamabad is concerned that the 45 megawatt, 190-foot tall Nimoo-Bazgo concrete dam 44 megawatt Chutak hydroelectric power project will reduce the Indus River’s flow towards Pakistan, as they are capable of storing up to 4.23 billion cubic feet of water, violating the terms of the bilateral 1960 Indus Water Treaty. The Indus, which begins in Indian-controlled Kashmir, is crucial to both India and Pakistan, but is currently experiencing water flows down 30 percent from its normal levels. The Indus is Pakistan’s primary freshwater source, on which 90 percent of its agriculture depends. According to a number of Pakistani agriculture and water experts, the nation is heading towards a massive water shortage in the next couple of years due to insufficient water management practices and storage capacity, which will be exacerbated by the twin Indian hydroelectric projects, as they will further diminish the Indus’ flow.

So, if push comes to shove, who’s got Pakistan’s back?

China.

During the Boao Forum for Asia, on China’s southern Hainan island on 1 April, Pakistan and China agreed to support each other “in all circumstances” and vowed to uphold their sovereignty and territorial integrity at all costs. Pakistani Prime Minister Syed Yousuf Raza Gilani told Chinese Executive Vice Premier Li Keqiang, “China’s friend is our friend, and China’s enemy is ours,” adding Pakistan considers China’s security as its own security and supports China’s position on Taiwan, Tibet and Xinqiang. Li replied that China would support Pakistan’s sovereignty and territorial integrity in every situation, telling Gilani, “No matter what changes take place at international level, we will uphold Pakistan’s sovereignty and territorial integrity.”

It might be noted here that in October 1962, coinciding with the Cuban missile crisis, India and China fought a brief but bitter war along their disputed Himalayan border.

Fifty years later, China and India have yet to resolve their border issues over Kashmir and China continues to claim most of India’s Arunachal Pradesh to the base of the Himalayas in the absence of any definitive treaty delineating the border. Kashmir remains the site of the world’s largest and most militarized territorial dispute with portions under the de facto administration of China (Aksai Chin), India (Jammu and Kashmir), and Pakistan (Azad Kashmir and Northern Areas).

No guesses therefore as to whom Beijing might back should Pakistani-Indian tensions continue to rise.

Accordingly, to keep the peace, one might paraphrase Ronald Reagan in Berlin – “Prime Minister Singh, tear down those dams!”

But don’t bet on it.
Source: http://oilprice.com/Geopolitics/Asia/Pakistan-and-India-to-go-to-War-over-Water.html

By. John C.K. Daly of Oilprice.com

EURUSD Daily Technical Analysis Update

Source: ForexYard

Good day for the Bullion market as both gold and silver traded up during Thursday’s trading partially due to a weakening dollar as well as the fact that U.S Stocks are on the rise.

The yellow metal saw gains of 1.2% to reach the level of $1,680 whilst silver also followed with sharp gains.Other metals also  made gains during Thursday’s trading including copper,platinum and palladium

When the U.S dollar weakens we tend to see an opposite reaction with Gold as the metal is a dollar-denominated commodity.Silver also has a correlation with the yellow metal and tends to move in similar patterns, and showing similar trends.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By The Sizemore Letter

Americans hitting the bar scene this weekend will have their choice of two basic beer options. They can order a bottle of a mass-market brand like Budweiser or Miller Lite. Or, if they style themselves as beer snobs, they might enjoy an import or a good microbrew.

(As a native Texan, I find myself partial to Shiner Bock, though it is debatable whether Shiner still qualifies as a “microbrew” given its popularity in the state.)

Beer investors also have the same basic options. Suds stocks fall into one of two categories:

1. Megabrews with world-dominating brands — companies like Anheuser-Busch InBev (NYSE:BUD), Molson Coors Brewing Company (NYSE:TAP) and SABMiller (PINK:SBMRY).
2. Smaller companies that produce mostly craft beers, such as the Boston Beer Company (NYSE:SAM), the maker of the popular Sam Adams, and Craft Brew Alliance (NASDAQ:BREW), which makes smaller brands Kona and Red Hook.

Either option can make a fine investment choice, but you should understand that the rationales for buying are very different.

BUD, TAP and SBMRY essential operate a megabrand beer cartel. Their businesses are safe and relatively stable, though not particularly exciting. They also tend to be fairly recession-resistant. If anything, consumers often trade down from more expensive craft beers to cheaper mass-market beers when times are hard. For investors just looking for consistent returns, this kind of consistency is attractive.

SAM and BREW, being smaller and nimbler, are better growth stories. SAM in particular has enjoyed fantastic earnings growth in recent years, and its niche placement as a seller of premium beers allows it to generate higher returns on equity.

Both SAM and BREW also benefit from demographic shifts that have seen the gentrification of the beer market. True beer aficionados won’t be caught dead holding a Bud Light bottle, though a Sam Adams will work just fine.

One thing nearly all of the brewers seem to have in common, however, is lofty stock prices.

Anheuser-Busch InBev, SABMiller and Boston Beer all trade at valuations far higher than the broader S&P 500, and Craft Brew’s forward P/E is more than 35.

Of the entire lot, Molson Coors would appear to be the only one trading at an attractive price. The stock sells for just 11 times earnings and pays 3.1% in dividends. Not bad, given that the 10-year Treasury just slipped under 2% again.

Those dividends also happen to be growing at a decent clip. Last year’s TAP payout rose by 14%, and this was on top of the 16% rise the year before. And with the dividend payout ratio at just 34% of earnings, there is plenty of room for additional hikes.

Molson Coors also is conservatively financed and trades below its book value. There is not much here for an investor to complain about.

But while I like Coors’ stock, I won’t be drinking a Coors Lite this evening. I’m afraid Shiner Bock will always be my favorite.

Alas, I will not be buying Shiner Bock stock, however, because it is not a publicly traded company. This is a real shame. I’ve spent enough money on the company’s products over the years; I might as well benefit financially as a shareholder.

Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter, and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he did not hold a position in any of the aforementioned securities. Sign up for a FREE copy of his new special report: “Top 3 ETFs for Dividend-Hungry Investors.”

Article by Investment U

Blend some of this new Indonesia small-cap fund (NYSE: IDXJ) into your portfolio, but don’t forget your trailing stop to protect yourself.

If there’s one country I’ve been consistently bullish on during the last five years, it’s Indonesia.

When I speak at investment seminars and discuss Indonesia, you can see the eyes widen and the pens picked up to jot down notes.

I think it’s because Indonesia is so far off the radar screen. Most people just have a vague idea of a group of islands near Australia.

The country actually spans on area from east to west longer than America. Its land mass is three times the size of Texas and equal to the size of Greenland. While on the board of the Asian Bank in Manila, I explored the country from tip to tip, and was amazed at the beauty, resources, potential and the people of Indonesia.

With a population of about 250 million, Indonesia is the fourth largest in the world and the planet’s fastest-growing middle class. Java alone has 124 million people in a land area the size of the state of New York. And many of these citizens are plugged into the global economy. Indonesia is the third-largest user of Facebook after the United States and the U.K.

Once a member of OPEC, Indonesia has ample natural resources and is a major exporter of natural gas, rubber, palm oil and coal, and is home to 30% of the world’s rainforests.

With all this good stuff, why doesn’t Indonesia get more attention from investors or the media?

The key to unlocking Indonesia’s mystery is to remember how hard it was hit by the 1997 to 1998 Asian financial crisis. This trauma, coupled with a move to a democratic form of government, has since led to much better fiscal policies and attracted much needed capital.

It may surprise you that Indonesia is the only one of the 20 largest economies in the world (G-20) to have a budget in balance and a declining debt to GDP. No wonder its debt was upgraded to investment grade last year.

All of this has also been good for its stock market. Over the past decade, it’s been the second-best performer amongst emerging markets, powering ahead with an average annual return of 25.2%.

Like some of the countries I follow in the Pacific Rim, the chief challenge is to find ways to capture the growth and returns. There are only two Indonesian companies that trade on the NYSE or Nasdaq, and a couple dozen Indonesian “pink sheet blue chips” I follow that trade over the counter (OTC).

The Aberdeen Indonesia Fund, Inc. (AMEX: IF) has been a favorite of mine, and there’s also the Van Eck Indonesia ETF (NYSE: IDX). These funds favor the biggest companies in Indonesia.

So you can imagine my glee in seeing Van Eck come out with its new Small Cap Indonesia ETF (NYSE: IDXJ). It’s a basket of 27 companies with an average market value of $688 million. These are the companies growing at a faster pace than the big boys with the flexibility to turn on a dime. The top 10 companies represent more than 50% of the baskets value.

Like any emerging or frontier country, Indonesia has its challenges, such as corruption and infrastructure. Fifty million people don’t have access to power and 50% of Jakarta’s 10 million people don’t have running water.

I see these as opportunities going forward. Blend some of this new Indonesia small-cap fund into your portfolio, but don’t forget your trailing stop to protect yourself.

Good Investing,

Carl Delfeld

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – Janet Yellen, the Federal Reserve Vice Chairman indicated in a speech yesterday that the accommodative policy adopted by the Federal Reserve is necessary in the present economic circumstances. This is in line with the Fed’s view that the borrowing costs should be held low until 2014 to allow the economy to make full recovery. The Fed Vice Chairman Janet Yellen was talking in New York in a round of Fed speeches which have been going on throughout the week. Federal Reserve Chairman Ben S. Bernanke spoke on Monday and he is expected to give another speech on Friday.

Yellen said that said that the Fed’s program to extend the maturity of the assets to expire in June should not be taken as tightening of the policy. Her speech came barely two weeks prior to Fed’s meeting. She echoed the Fed Chairman’s sentiments that the unemployment is expected to decline gradually hence the need for the accommodative monetary policy. Further, she added that the housing prices weakness, the government spending cuts, and the European debt crisis are some of the factors that will slow the economic expansion in the US.

Yellen was also pessimistic about achieving the maximum employment in the near future as it is projected in the Fed’s monetary policy. She added that she is ready to change her monetary view if the circumstances change citing the numerous uncertainties surrounding the current outlook prospects. Financial economists have indicated that the Vice Chairman’s comments indicate that the Fed is not ready to change its outlook on “exceptionally low” interest rate.

Despite the comments, Yellen expressed confidence in the Fed’s ability to deal with any scenario in the future. Her confidence was also shared by the Atlanta Fed President Dennis Lockhart who in his speech said that despite the disappointing job report for March; his view about the economy remains unchanged. Lockhart holds the view that the economy is growing at a moderate pace and would not support a third round of quantitative easing. The data that has been released since the Fed’s last meeting has not been consistent pointing to a mixed outlook for the US economy.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
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Article by Investment U

By focusing on the top economies and giving you separation from Brazil-centered funds, the Global X FTSE Andean 40 ETF (AND) is building a profile you can’t help but notice.

You could forgive me for making a mountain out of a molehill. After all, I’m from eastern Kansas, where you can often see the horizon from your roof.

Now I admit that my plains upbringing may change my perspective, but I still can’t figure out how so many investors are missing an opportunity the size of a mountain range!

I’m talking about the Global X FTSE Andean 40 ETF (NYSE: AND). It’s one of the most promising and least appreciated exchange-traded funds out there.

It’s a great option for investors who want a path to South American emerging markets without putting half of their money in the Brazilian side of the continent.

And this is a trend I think we’re going to see a lot more of.

What’s happening reminds me of the Asia and Pacific ETFs and mutual funds that add “ex-Japan” on the end. That doesn’t mean the managers of funds like the WisdomTree Asia-Pacific ex-Japan ETF (NYSE: AXJL) had a nasty breakup with the Land of the Rising Sun…

It means the stock pickers in charge know that Japan is a giant! Allocating money there could dampen returns from fast-moving companies in Asia’s emerging markets.

These days, funds are going “ex-Brazil,” too.

The FTSE Andean 40 Index follows just three countries along the Andes mountain range. The same way the Andes gave us so many iconic images of the continent, the three countries in the Andean ETF highlight the most splendid parts of the South American economy.

Chile rules the Andean ETF with just over half of the fund’s investment going to the Pacific Rim power.

Touching the Amazon, the Andes, the Pacific and the Caribbean, Colombia is second in strength at 29.00%.

Peru is last in weight, but definitely not in its potential to drive this fund’s returns. A total of 19.90% of the Andean 40 pie is devoted to Peru, and its Peruvian holdings are rock solid.

Now, let’s take a look at some of the stocks coming from each country.

AND holds Banco Santander Chile (NYSE: STD) and industrial company Sociedad Quimica y Minera (NYSE: SQM). For an interesting twist, it also gives you global wine giant Vina Concha y Toro (NYSE: VCO). Chile’s diverse climate and copper production make it a key driver of growth for this ETF.

Colombia used to mean drugs and violence. Now two of its companies are up on the New York big board: national oil company Ecopetrol (NYSE: EC) and bank Bancolombia (NYSE: CIB) represent the country well.

From Peru, Southern Copper Corp. (NYSE: SCCO) and Compania de Minas Buenaventura (NYSE: BVN) highlight Peru’s deposits of copper, gold, iron ore, lead, zinc, tin and molybdenum, which is a key component to iPods and many clean energy devices.

Now, don’t think just living in the shadow of the mountains means a country or company is cut out for Andean 40 ETF— this fund keeps you out of Ecuador and Bolivia, both Andean nations with troubled economies.

By focusing on the top economies and giving you separation from Brazil-centered funds, AND is building a profile you can’t help but notice.

Good Investing,

Sam Hopkins

Article by Investment U

Source: ForexYard

The U.S dollar experienced further declines after a report regarding jobless claims produced figures of 380,000. the Jobless claims report is one that involves individuals who filed for unemployment insurance for the first time during the previous week.

The 17-nation Euro took advantage of the dollar set back and made gains to $1,3161 from the lower rate of approximately $1,3100 which it was trading during Wednesday’s late session. The Bullion market has also taken advantage of the weakening U.S dollar as both gold and silver have strengthened today.

Elsewhere, the Canadian Dollar appreciated over its U.S counterpart today due to positive news out of Australia after releasing an improved employment report. The Canadian currency also know as the “loonie”  will benefit from positive movements from commodity currencies such as the Australian Dollar.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.