Month: November 2012

Source: ForexYard

The euro fell to a new two-month low against the US dollar during overnight trading, after euro-zone officials failed yesterday to agree on a plan for Greece to receive a new round of bailout funds.

Additionally, investors are still concerned with the prospect that massive tax increases in budget cuts in the United States will automatically occur if congress is unable to reach a budget deal. The threat of the so called “fiscal cliff” resulted in other higher yielding currencies and commodities, including the AUD and crude oil, taking losses during the Asian session.

Main News for Today

German ZEW Economic Sentiment- 10:00 GMT
• Recent fears that the EU debt crisis is spreading to Germany means that this indicator is likely to take on added importance when it is released today
• Analysts are forecasting the figure to come in at -9.9, slightly better than last month’s -11.5
• Any worse than expected data could result in the euro extending its recent losses

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 Central Bank News
Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.)

By MoneyMorning.com.au

What have iPhones, laptop computers, electric toothbrushes, and power-tools all got in common?

They’re all powered by a ‘magical’ element that’s on the British Geological Survey’s Risk List of strategic minerals.

You may have heard of rare earths and tungsten. Both are key ingredients in modern technology. And both are dominated by China.

But there’s another element that’s just as strategic to modern technology. And unlike rare earths and tungsten, this one isn’t dominated by China. In fact, this strategic element is a key Australian export. And it’s now in play as resources companies scramble to get a cut of the action.

What element am I talking about? Lithium.

And specifically, the market for lithium ion batteries.

The once humble lithium ion battery sector is taking off like a stung cat. And if the market moves as I expect, early-mover investors stand to make some very tidy profits indeed.

Lithium reminds me of iron ore about ten years ago. Of course iron ore’s best days are behind us. The trick is to foresee what will drive the next decade’s bull market.

And I’m certainly not alone in seeing how important lithium will be in the future.

Just this morning we heard that Chinese battery maker Chengdu Tianqi Industry Group is making a move on Aussie-based but Canadian-listed Talison Lithium (TSE:TLH).

Things are hotting up in the lithium stakes. This will be the second bid for Talison. Just three months ago, global lithium leader Rockwood Holdings (NYSE:ROC) bid the equivalent of A$700 million.

We don’t know how much Chengdu will offer yet, but they will exceed Rockwood. This is already driving the price higher in anticipation.

The result is some spectacular results for Talison holders, who have seen the share price jump by 133%, from $3 to nearly $7 in just six months. And I don’t think the bidding is over yet.

Talison Lithium – Takeover Bids Raise the Price 133% in Six Months

The irony is that even though the project is in Western Australia, there wasn’t enough investor interest in Talison to list on the Australian market a few years ago, so the company had to list in Canada.

Good News for Aussie Lithium Investors

But the good news for Aussie investors in that when companies start fighting to outbid each other it tends to shine the spotlight on that sector.

So we can expect other lithium stocks to get some attention soon.

Better yet, there is a truly world class lithium stock listed on the ASX. The lithium sector isn’t big, and for my money this stock is next in line for a takeover bid in the future.

The scarcity of lithium (in terms of that which is economically recoverable) means that it is a key part of my ‘strategic mineral strategy’ in Diggers and Drillers.

The bidding war for Talison is a good advert for just how important this sector has become.

Governments are getting anxious about securing lithium as well. The British Geological Survey’s (BGS) has increased lithium’s ‘risk rating’ by 22% in just a year.

Last year it scored 5.5/10. But in this year’s risk it has been pushed right up the list to 6.7/10 – making it more critical than silver, or diamonds.

So what’s all the fuss about anyway?

Lithium is essential for lithium ion batteries, and this market is growing fast.

It might have been out of the spotlight for a few years, but the growth has been staggering in that time. Since lithium was the ‘hot commodity’ of 2009, the size of the lithium ion battery market has increased at around 14.9% annually, or 52% in total.

Lithium ion Battery Market – Growing Fast

The interesting thing here is the red bars are for consumer technology, mostly laptops and phones. Demand from electric vehicles (brown) and hybrid vehicles (purple) are just starting to make an impact now. And you can see this is growing fast. Even so it still has a long way to go.

Watch the Graphite Sector Too

The other big ingredient for a lithium ion battery is graphite.

The growth rate in this sector is creating a lot of new demand for quality graphite. So this has been another key part of my strategic minerals strategy.

And we have more good news here. Just this morning, the graphite stock I’ve tipped has announced two exploration targets, each of which would be larger than the world’s largest graphite mine.

This staggering find makes this graphite stock the likely new king of the sector, and will make it very hard for new players to get a look in.

In fact there is so much graphite in the deposit the company is now talking about a 100-year mine-life!

The nature of the deposit will ensure it will be cheap to produce from, and it’s this type of mega-long life, low-cost project that make sound long term investments.

The reality is that this also makes it a takeover target for bigger players, so it’s possible we could see bidding wars in the graphite space too.

The bottom line is that thanks to the explosion in lithium ion battery demand, there’s plenty happening in strategic minerals stocks.

At a time that the old bull markets of iron ore and coal are a very tough sell, I believe the lithium ion battery sector is building the way for a whole new decade-long bull-market.

Dr Alex Cowie
Editor, Diggers & Drillers

PS. Investing in resources stocks is high-stakes investing. You make small bets, but if they come off you can make big returns. I believe almost every investor should set aside part of their portfolio for small-cap resource stocks.

But aside from that it’s also important to have a balanced side to your investments. That is, you should invest in lower-growth, income-earning stocks too. This is something the office income specialist, Nick Hubble has been researching for the past three years. What he’s come up with is something you should pay close attention to. To find out the details of Nick’s Aussie income strategy, click here…

From the Port Phillip Publishing Library

Special Report:
Retire Rich, Happy and Free From Money Worries

Daily Reckoning:
Accelerando Towards the Fiscal Cliff

Money Morning:
Who Says Gold Doesn’t Pay ‘Interest’?

Pursuit of Happiness:
What’s Your Entrepreneurial Idea?

Diggers and Drillers:
Why Graphite is the High Tech Commodity Driving an Investment Revolution

Why Lithium is Another ‘Rare’ Element on China’s Radar

By MoneyMorning.com.au

Right now, the market is urgently trying to tell us something. In fact it’s been trying to tell us something for the last few years.

In the last decade or so we’ve seen regular bouts of record-busting food prices. This is the market’s way of warning us that our supply of the stuff is running low.

And as the global population grows and also becomes wealthier, demand for food will only keep rising.

Clearly, rising food prices are bad news for consumers, and particularly for the world’s poor. But these food price spikes aren’t entirely bad. In the long run, higher prices encourage farmers and food processors around the world to raise food production.

In turn, that’s going to mean a lot more money will be invested in boosting farm productivity. One region in particular looks likely to capture the lion’s share of the extra investment – Latin America.

Latin America: the Perfect Farmyard Investment

My colleague Merryn Somerset Webb covered the reasons behind booming food prices in a recent Money Morning so I won’t repeat the argument here.

Suffice to say that growing populations and richer diets mean the world’s farmers will need to produce a lot more food in the future. And Latin America is the perfect place to do it.

The first essential in farming is that you need the right conditions to grow crops. Latin America has these in abundance.

Take South America. It’s divided between mountains, jungle, flatlands and coastal regions. This diversity is good for farmers because – aside from extremes such as Chile’s arid Atacama Desert or the frozen southern tip of Argentina – it means that almost anything can be grown there.

To the south, the cool slopes of the Andes provide the perfect conditions for wine production. To the east of the mountains, the temperate prairie-like pampas give Argentina, Brazil and Paraguay excellent land for rearing cattle and growing grains.

Indeed, thanks to the pampas, Argentina and Brazil are two of the world’s ‘big six’ grain growers, and major livestock producers.

As you move north, towards the equator, the four seasons merge into two. This means farmers in Ecuador, Colombia, Venezuela and northern Brazil can plant two harvests per year.

Meanwhile, countries on the west coast benefit from the warm waters of the Pacific and have strong fisheries. Chile and Peru are both in the world’s top ten fish producers.

Once you reach Central America, the tropical climate provides the perfect conditions for sugar cane, coffee and tobacco.

Latin America’s Farmers are Still in Second Gear

Of course, Latin America isn’t the only place in the world with good farming conditions. The US, Eastern Europe, and Australasia are all major food exporters that help keep more densely populated areas – ie Asia – well stocked with food. The reason Latin America stands out is its potential to crank up production.

Victor M. Villalobos of the Inter-American Institute for Cooperation on Agriculture (IICA), says that Latin America has 42% of the world’s potential for agricultural production.

That’s a rather specific number, and I don’t see how anyone could work it out so exactly, but the IICA certainly comes out with strong reasons to back its view.

Firstly, Latin America still isn’t using all of its farmland. For example, the UN’s Food and Agriculture Organisation reckons that Brazil has the most ‘spare farmland’ in the world. The country has 350 million hectares of potential arable land, which isn’t currently being used to produce food.

In total, the World Bank estimates that about a third of the world’s spare farmland is in Latin America. Putting all that into production won’t be easy, but the region has the necessary resources to do it. Latin America also has just under a third of the world’s freshwater resources; more than any other region.

Moreover, as Villalobos notes, Latin American farmers have suffered ‘a great lag in the increase of yields’ over the last 50 years. There are some highly productive farms in Argentina, Uruguay and Brazil, but many of the region’s farms rely on out-dated techniques and machinery.

The problem is that Latin American countries ‘invest little in R&D in agriculture’, says the IICA. But now, thanks to the generous prices on offer, and a more investor-friendly political atmosphere, that’s changing.

Farmers realise that ‘the rise in food prices will create opportunities for exporting countries’. For example, Latin America now supplies around a third of China’s agricultural imports. China’s economy may be slowing, but its population – and therefore appetite for agricultural imports – should continue to grow.

According to the IICA ‘the sectors that will benefit most are those that produce grains, oilseeds, dairy products [and] meat’.

James McKeigue
Contributing Writer, Money Morning

Publisher’s Note: This is an edited version of an article that originally appeared in MoneyWeek

From the Archives…

APRA Spins Another Yarn On Australian Banks
9-11-2012 – Kris Sayce

The Secret Return to the Gold Standard
8-11-2012 – William Patalon

Forget the US Election, This Stock Market Event is the One to Watch For
7-10-2012 – Murray Dawes

The Greeks Giving Economists Nightmares
6-10-2012 – Bill Bonner

Super Fund Results: Whoopdeedoo
5-10-2012 – Nick Hubble

Rising Food Prices Means Latin America is the Place to Invest

USDJPY remains in the short term downtrend from 80.67, the rise from 79.07 would possibly be consolidation of the downtrend. Another fall could be expected after consolidation, and the target would be at 78.80 area. However, the fall from 80.67 is likely consolidation of the longer term uptrend from 77.14 (Sep 13 low), one more rise to 82.00 area is still possible after consolidation. Resistance is now at 79.65, a break above this level will indicate that a cycle bottom has been formed at 79.07 on 4-hour chart, and the short term downtrend from 80.67 has completed, then the following upward movement could bring price to 81.00 zone.

Forex Signals

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Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

America’s money problem is not political. It’s far more sinister.

Finally, somebody has the guts to talk the truth. He didn’t dare do it before the election… too many voters to anger. But now that the results are in and the thoughts and opinions of the American electorate no longer matter… our leaders are free to speak their minds.

Every once in a while, the truth squeaks out.

“This is year two of a 25-year demographic bubble that — wasn’t like anyone couldn’t see it coming,” John Boehner said of Washington’s fiscal woes last week. “10,000 baby boomers, like me, retiring every day; 70,000 a week. It’s 3.5 million this year, and this is just the second year of the 25-year baby boom bubble, and it’s not like there’s money in Social Security or Medicare. This has to be dealt with.”

Yup… somebody needs to do something. The problem, though, is the boomers are a powerful lot. No politician — except maybe a jaded lame ducker — dares mess with the “bulge.” That’s why Boehner can rightfully claim we’ve seen this mess coming for decades, yet nobody bothered to try to fix it.

Now that the great retirement has started, there’s not much that can be done that won’t infuriate at least one segment of the American population. Since there are fewer rich folks and, therefore, fewer voters to anger, we know where Washington’s target lies. Wealthy Americans are in for a rough year.

But the fact is we can tax the wealth right out of the rich, and it still won’t do a lick of good. Our problem is far bigger. Stealing from the rich and giving to the poor won’t cut it. Not with demographics as lopsided as these.

Get this. By the time this year comes to an end, the number of 55-and-older workers will eclipse the number of workers between the ages of 25 and 34. It is a skew that makes the idea of fixing this mess flat-out impossible.

A recent chart from the Fed tells the tale:

View larger chart

This intersection of young and old workers threatens to hammer at the knees of our Ponzi-scheme economy. Without the chance to pilfer the pockets of the nation’s youngest wage earners, everything from the stock market to the mess of federal entitlement programs will collapse.

In a recent report, the Congressional Budget Office took a look at what America’s aging population means for our economy and our tax-and-spend fiscal policy.

The news was not good:

The aging of the baby-boom generation portends a significant and sustained increase in coming years in the share of the population that will receive benefits from Social Security and Medicare and long-term care services financed through Medicaid. Moreover, per-capita spending on health care is likely to continue to grow faster than per-capita spending on other goods and services for many years…

Without significant changes in the laws governing Social Security, Medicare and Medicaid, those factors will boost federal outlays as a percentage of GDP well above the average of the past several decades — a conclusion that applies under any plausible assumptions about future trends in demographics, economic conditions and health care costs.

Now, let me ask you this. How many times over the last few months have you heard any politician utter anything about serious changes to our Big Three entitlement programs? Zip. Zero. Zilch.

The fact is these programs are untouchable. Our leaders refuse to even look at them. It’s a fact Senate Majority Leader Harry Reid reinforced last Wednesday. “We’re not going to mess with Social Security,” he said.

That’s the end of that.

My point here is simple. The markets are acting like we’re at a critical juncture. The herd that drives prices thinks this fiscal cliff mess — no matter how it is resolved — will end in some sort of long-term solution. But we will see nothing of the sort.

What we need is not a policy adjustment. That’s far too easy. Our problem is systemic. Our economy is lopsided, and there is nothing any politician can do about it. The only thing that will fix this mess… is time. And a lot of it.

Our problems will stretch on for generations… not weeks. You portfolio and your investment strategies had better reflect that idea. If not, it’s a slow and steady march to the bottom.

I hope you have the guts to admit it.

Disclaimer

By The Sizemore Letter

Listen to Charles Sizemore discuss the re-election of Barack Obama and what it means for investors with Peggy Tuck on Mike Robertson’s Straight Talk Money.

If you cannot view the embedded media play, you can’t listen to the interview here.

The post Charles Sizemore Discusses The Election and What It Means for Investors on Straight Talk Money appeared first on Sizemore Insights.

Related posts:

• Charles Sizemore on Straight Talk About Money
• Charles Sizemore Discusses Bernanke’s “Big Bazooka” on Straight Talk Radio
• Charles Sizemore Discusses Germany and the Paul Ryan Nomination on Straight Talk About Money

London Gold Market Report
from Ben Traynor
BullionVault
Monday 12 November 2012, 08:00 EST

SPOT MARKET gold prices hovered just below $1738 an ounce Monday morning in London, close to three-week highs, while stocks and commodities were broadly flat and the Euro traded near two-month lows against the Dollar, as the US and Greece both contemplated upcoming fiscal difficulties.

Silver prices traded around $32.70 an ounce, also near three-week highs.

Bullion importers in India, meantime, which sees the celebration of Diwali tomorrow, slowed their purchases of gold Friday as the Rupee weakened and gold prices rose, newswire Reuters reports.

“Jewelry makers may have to wait before they come back to buy again,” says one physical bullion dealer in Hong Kong.

“People are digesting the rebound in prices.”

“Worries about the fiscal cliff continue to drive [international bullion market] sentiment,” says Nick Trevethan, senior metals strategist at ANZ, referring to the combination of tax rises and government spending cuts currently due in the US at the start of January.

President Obama is due to hold talks this week with labor and business leaders to try to build a consensus on avoiding the fiscal cliff.

“We are [also] seeing some signs of compromise between Democrats and Republicans,” says ANZ’s Trevethan.

“That may take some of the steam out of the upside story for gold, but the prospect of negative real interest rates and longer-term inflationary risks remain positives for bullion.”

“The lesson of Europe,” says Congressional Budget Office founding director Alice Rivlin, “is don’t wait until you’re in a crisis to act. Do it now. The other lesson is that austerity is not a good prescription for weak economies.”

Here in Europe, the Greek parliament passed its 2013 budget Monday by 167 votes to 128, less than a week after it the Greek government narrowly won a vote in favor of around €13.5 billion of austerity measures.

“Just four days ago, we voted the most sweeping reforms ever in Greece,” said Greek prime minister Antonis Samaras.

“The[se] sacrifices will be the last. Provided, of course, we implement all we have legislated.”

Greece may be unable to meet a €5 billion debt repayment that comes due this Friday. Eurozone finance ministers meet later today to discuss whether Greece should be paid the delayed next installment of its bailout funding, worth €31.5 billion.

The latest report on Greece by the so-called troika of lenders – the European Central Bank, European Commission and International Monetary Fund – has been completed, Eurozone finance ministers’ chief Jean-Claude Juncker confirmed, although there will be no decision today on whether Greece gets its funding.

“Greece has done what it was asked to do and now is the time for the creditors to make good on their commitments,” said Greek prime minister Samaras.

Greece is hoping to raise funds to cover Friday’s repayment through an auction of Treasury bills tomorrow, the Financial Times reports, although the report adds that Greek banks that would buy the debt can only raise €3.5 billion of collateral to post with the ECB in order to fund their purchases.

Japan’s economy shrank by 0.9% in the third quarter, and 3.5% year-on-year, according to provisional GDP figures published Sunday.

The Bank of Japan “is committed to continuing with aggressive monetary easing” its governor Masaaki Shirakawa said Monday.

The United States is set to become the world’s largest oil producer by 2017, largely thanks to shale production, the International Energy Agency reports.

Elsewhere in the US, the so-called speculative net long position of gold futures and options traders on the Comex – measured as the difference between bullish and bearish contracts – fell for the fourth week running in the week to last Tuesday, weekly data published Friday by the Commodity Futures Trading Commission show.

“[Gold] prices have recently been supported by official sector [central bank] buying,” London Bullion Market Association chairman David Gornall told the LBMA’s annual conference in Hong Kong this morning.

“Will the gap between the amount of gold held in reserve by the developing markets and that of the developed world close?… comparing China to the US, it would seem that in China, gold asset allocation can only go in one direction.”

“Gold plays a very important role in the formation of the financial market system,” Xie Duo, general director of China’s central bank, told the LBMA conference Monday.

“[There has been] big progress in the Chinese gold market…but there is still a long way to go.”

The Agricultural Bank of China, one of nine Chinese banks licensed to import gold, has said it plans to start trading precious metals overseas.

“We will start trading globally in the next year or two, most likely in London and New York,” said Wang Xinyou, head of precious metals at AgBank, which currently enables retail investors to buy and sell gold on the Shanghai Gold Exchange.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox.com (Dublin) – The greenback and the yen rallied last week as fears of fiscal cliff triggered demand for safety. This week, the worries about Europe and the fiscal cliff in US will sediment the risk-off mood in the market. Here is a brief overview of major events in the market.

Tuesday 13

At 0930hrs, the market will be focusing on the UK inflation data. The annual inflation gauge for UK in September rose by 2.2 percent according to the previous data. The market is expecting another rise to 2.3 percent this time round.

On the same day, the Euro zone German ZEW Economic Sentiment report will be released at 1000hrs GMT. Economic sentiment gauge in Germany improved in October but remain in the negative territory. With the ECB committed to buying government bonds, the economic sentiments in Germany are expected to increase to negative 10.1 in November.

The last major event on this day will be the US Federal Budget Balance report which will be release at 1900hrs GMT. The market is expecting a deficit of 126.2 billion.

Wednesday 14

The first report will be the UK Employment report at 0930hrs, which is expected to show a decline of 5,100 in the number of employed people in UK. This will be followed by the US Retail Sales report at 1330hrs. The market predicts a rise in core sales to 0.3 percent while the retail sales is expected to remain the same at 1.1 percent.

The US PPI and the US FOMC Meeting Minutes will be the other major events of the day. The US PPI is expected to increase marginally by 0.2 percent while the market wants to know the FOMC stand on asset purchases and interest rates.

Thursday 15

The US inflation data at 1330hrs will be the first major report. The market is predicting a rise of 0.1 percent this time round. He US Unemployment claims data will be released at the same time and it is expected to show a rise of 362,000.

At 1500hrs, the US Philly Fed Manufacturing Index will be released. The index rose to 5.1 percent in October from a minus 1.9 percent in September. The market is expecting a drop to 2.3 percent this time round.

The positive reports from the US will boost risk-on mood which may weaken the dollar. However, events from Europe and Japan may keep the dollar strong against major peers.

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. 

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