Month: February 2013

By The Sizemore Letter

Charles Sizemore was quoted in Karen Talley’s MarketWatch article: Gun Stocks May be Losing Their Firepower:

There are reasons other than gun control to stay away from firearm stocks, some money managers say. “Today, gun stocks are definitely cheap, and they might make a fine short-term trade,” said Charles Sizemore, principal of Sizemore Capital. “But I would not be buying them as a long-term investment.”

What is missing, Mr. Sizemore said, “is the dividend that you find in most other vice industries, and particularly in tobacco and alcohol. The high and rising dividend is what has made ‘booze and smokes’ such great investments over the years.” While the companies may issue special dividends, they have so far shied away from large regular dividends.

To read the full article, follow this link.

Stocks covered in the article: $SWHC, $RGR

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The post Gun Stocks May Be Losing Their Firepower appeared first on Sizemore Insights.

By OilPrice.com

The Mediterranean has joined the shale game, but as most of Europe’s Mediterranean countries drag their feet, all eyes are on Israel, Turkey, and Algeria.

For Israel, it will be a slow road without the majors.

For Algeria, it’s full speed ahead, in theory—but the foreign interest is just dabbling for now due to a lack of shale infrastructure.

For Turkey, the situation is more promising thanks to a renewed interest by the majors and a near-perfect blend of good governance and attractive fiscals.

Here’s what the playing field looks like:

Turkey

Turkey is the best bet here. In Turkey, it’s all about the Dadas Shale, in which the majors have recently expressed a renewed interest, making the game immediately more promising for the North American juniors who are betting heavily on this play.

The Dadas Shale is being compared to Texas’ Eagle Ford shale and Oklahoma’s Woodford shale in both size and potential. What is that potential? Well, those who are investing in it say it has more than 100 billion barrels of original oil in place.

While nothing’s being produced, testing is about to begin and new technology has the majors and juniors highly optimistic.

Positives

• Everyone likes working with the Turkish government—permits are fast and bureaucracy is kept to a minimum. Turkey is too keen to become a regional energy hub to let bureaucracy stand in the way. There’s just too much riding on this.

• Fiscal terms are very attractive: foreign companies get a flat 12.5% royalty tax and a 20% corporate tax rate

• The infrastructure is already there; it’s easy to refine and get to your choice of markets

• Shell has recently renewed its interest in Dadas (it’s about to drill five wells)

• ExxonMobil is in talks with the government right now about a Dadas license of its own

Negatives

• The National Oil Company is holding on to key geological data that would help the industry, but this year should see some new regulations that make exploration even easier

• This is still some way off (but Shell’s drilling in Dadas this year might be the turning point—at least the juniors think so)

Israel

Some think Israel is on the verge of a major energy revolution because of the combination of shale discoveries and a recent conventional natural gas discovery (16 trillion cubic feet).

While Israel doesn’t have much by way of heavy oil, it does have world-class shale oil resources.

Shale can contain both natural gas and oil, and in terms of oil, Israel’s shale plays put it in third place vis-à-vis expected volume, behind the US and China (but ahead of Russia).

Positives

• If these shale oil reserves can be extracted, we’re talking about making Israel a rival to Saudi Arabia

Negatives

• Geopolitical tectonics

• Still in the very early stages of this game

• The regulatory environment isn’t perfect and the government has raised taxes since discoveries; permits are also hard to come by

• For now, this will remain a game for the juniors. The majors aren’t interested: it’s a bit tricky to operate in the Arab world and in Israel at the same time

• Because of the above, exploration and extraction will be SLOW, and the market will ignore it for now

Algeria

Algeria—suffering from a decline in conventional production and foreign investment interest recently–has dived right into shale with its state-backed energy firm, Sonatrach. In fact, Algeria seems to be solely focusing on shale now and all its efforts are directed at attracting foreign partners to its shale plays.

Positives

• Estimated 2 trillion cubic meters of shale gas reserves valued at $2.6 trillion (in three provinces that span 180,000 square kilometers)

• Soon-to-come (progressive) tax laws and regulations governing the industry; these new laws will encourage unconventional exploration (the opposite that is happening in Europe)

• Contractual terms are already favorable and the new tax law, if passed, will adjust royalty fees for levels of production. It will also adjust taxes on oil revenues to be proportionate with exploration difficulty and exploration risk

• Already-in-place: more favorable conditions for potential fracking partners

• The government has outlined an $80 billion energy investment plan; $60 billion of that is earmarked for exploration, the rest for infrastructure (including refining capacity)

Negatives

• Doesn’t have the infrastructure for shale (though that hasn’t stopped the interest—Italy’s Eni, Exxon Mobil Corp., Royal Dutch Shell to name a few)

• Commercial viability is still a long way off and we’re looking at some 400 test wells in the meantime

• The singular focus of the new hydrocarbon law on shale—at the expense of conventional exploration—is not necessarily sending the right message to foreign investors. Algeria needs its traditional oil and gas production to increase in order to fund its shale ambitions, and infrastructure …

• The ongoing hostage crisis at a BP-operated gas field in the Algerian Sahara desert bodes ill for the entire Sahel. This will reverberate throughout Algeria and then on to Niger and across the Sahel.

So where do you put your money? Turkey – no contest. This is a combination package that includes good governance, good fiscals, brilliant infrastructure and a clear pay off as soon as the juniors and majors strike shale. This is a solid, long-term play whose importance to Turkey’s overall energy ambitions cannot be understated.

Source: http://oilprice.com/Energy/Natural-Gas/Betting-on-Mediterranean-Shale-3-Plays-1-Winner.html

By Oilprice.com Analysts.

This report is part of Oilprice.com’s premium publication Oil & Energy Insider . Oil & Energy Insider gives subscribers an information advantage when investing, trading or doing business in the energy sectors. Successful investors, hedge funds and senior executives, have access to high level intelligence and power in ways that you, as an individual investor, are locked out of (the game is and never has been fair.) Let us help you level the playing field by using our network of traders, intelligence assets and high level partnerships to ensure you are making the right investment decisions.

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EURUSD

The beginning of the new trading week was not so iridescent for the single currency at all. Not even trying to resume its growth, the EUR/USD almost immediately started decreaing and the rate dropped to the support at 1.3545. This was not enough for the bears, and they continued selling the euro. As a result the pair is testing the support at 1.3475, whose breakthrough would reduce the price to 1.3415/00. At this stage, the pair’s drop should be considered as the correcting one, at least until the 34th figure is able to constrain the bears’ onslaught. Otherwise, the euro could go back to the support at 1.3265 that will be a major negative moment for it. The immediate resistance is near 1.3520 — 1.3550.

GBPUSD

Despite the EUR/USD pair’s decrease, the GBP/USD continues to trade above the 57th figure due to the decrease in the EUR/GBP cross-rate. As a result of British currency stopped its resumption at the 1.5772 resistance level, and it seems that further increase chances are low. At least for now, the euro remains under pressure. This time, the likely return of demand for the EUR/GBP creates a risk of the GBP/USD decrease below 1.5700, that would be very negative for the British pound. It is possible that we will see the wave’s formation towards the downward direction. Only if there is the increase above this resistance, it can make a substantial difference in the situation.

USDCHF

The USD/CHF managed to recover to 0.9116, and then dropped to 0.9072, and then returned to the top of the formed range. The pair continues to influence movements in the EUR/USD and EUR/CHF, and they pull the pair in different directions that complicates the forecasting. It was much easier when the EUR/CHF sat around near the 20th figure. The problem point for the Bears is that after the breakdown of the support near 0.9080, they failed to keep the USD/CHF lower. On the contrary, the pair passed this level – from the bottom upwards, this time, and it is providing the dollar with the support that opens the way to the 92nd figure. The drop below 0.9080 would give bears another chance to test the 0.9000 level.

USDJPY

Yesterday, the USD/JPY bulls boldly started to move the rate higher, but at the level of 93.17 they were happily met by bears, and the pair corrected to 91.98, where the 20-day moving average runs. The increasing attepts were faced the sales at 92.55. The correction in the USD/JPY pair is rather modest so far, that is in contrast to the EUR/USD correction. However, the pair may well decrease to the level of 91.40, and in case this level has been passed, it will drop to 90.32. It is not necessary to talk about any change in the trend, thus the dollar may resume its growth any time. There, on the 4-hour and daily charts the RSI is in the overbought zone, on the weekly chart — it only started turning downwards, thus that it makes sense to wait for better levels and make purchases afterwards.

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London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 5 February 2013, 07:00 EST

WHOLESALE MARKET gold bullion prices rose above $1680 an ounce Tuesday morning in London, trading close to last week’s high, as stocks, commodities and the Euro also gained and US Treasuries fell, following better-than-expected services sector data from Europe.

Silver meantime touched $32 an ounce for the first time this week.

“We will remain short term bearish [on gold] while resistance [around $1696 per ounce] caps,” says Axel Rudolph, senior technical analyst at Commerzbank.

“Should this resistance zone unexpectedly be overcome, however, our medium term bullish forecast will be reinstated with the 1750 region then being targeted.”

“The January 4 low at $1625 is pivotal,” add technical analysts at Scotia Mocatta,”and there should be good support there…the consolidation since that date may indicate gold is forming a base.”

Sentiment towards gold among western households grew less bullish last month, according to data published by BullionVault Tuesday.

The Gold Investor Index, which tracks buying and selling on the world’s largest physical gold market for private investors online, fell to 54.9 in January, down from a 12-month high of 58.3 a month earlier and its lowest reading since September. A figure above 50 indicates more net buyers than net sellers over the month.

Weekly data published by the Commodity Futures Trading Commission last Friday meantime show the speculative net long position of gold futures traders, a closely-watched measure of futures market sentiment, fell to levels not reported since August during the week ended last Tuesday, indicating reduced bullishness among traders.

Over in India, traditionally the world’s biggest source of private gold demand, the government’s “anti-gold” stance  means Indian gold demand “is going to face a difficult year”, according to Philip Klapwijk, global head of metal analytics at precious metals consultancy Thomson Reuters GFMS.

“Comparing demand last year with 2011, we see this rather strange phenomenon that India was the standout for the country where demand collapsed the most,” Klapwijk told a conference in cape Town Monday.

“In other parts of the world, they shrugged off the 6% increase in gold prices rather well and in other parts we saw growth in jewelry demand.”

Gold bullion imports to China through Hong Kong nearly doubled in 2012, hitting a record 834.5 tonnes, the island’s Census & Statistics Department said today.

Now the world’s largest gold consumer as well as the number one mining producing nation, however, China also trebled its exports of gold through Hong Kong, the data show.

Gold bullion imports net of exports rose 56.0% to 523.6 tonnes on BullionVault’s maths.

China’s central bank meantime injected a record 450 billion Yuan ($72 billion) into the country’s money markets Tuesday ahead of next week’s Lunar New Year holiday.

Bank of Japan governor Masaaki Shirakawa announced Tuesday that he will step down three weeks earlier than scheduled, and will now leave his post on March 19.

At its most recent policy meeting, the BOJ doubled its inflation target from 1% to 2% and announced it will launch open ended quantitative easing once the current round of QE ends next year.

The BOJ’s move was largely expected, having been called for by prime minister Shinzo Abe following his election victory in December, and was described as “threatening an end to central bank autonomy” by the head of Germany’s Bundesbank Jens Weidmann.

“[Shirakawa’s] resignation will likely push forward the timing of bold monetary easing action [by the BOJ,” reckons Akito Fukunaga, chief rates strategist at RBS Securities Japan in Tokyo.

“Shirakawa has probably judged that it’s better for the BOJ to start with a new top three who have similar views.”

In Europe, the services sectors of Germany, Spain and the Eurozone as a whole all saw better-than-expected improvements in conditions last month, according to monthly purchasing managers’ index data published this morning, although the PMIs for Spain and the Eurozone remained below 50, indicating sector contraction.

Italy’s services PMI by contrast was lower than the consensus forecast among analysts, and down on the month earlier, indicating a sharper rate of contraction during the month.

In the UK, January’s services PMI was 51.5, up from 48.9 a month earlier.

“A huge sigh of relief accompanies these numbers, as a return to growth of the service sector in January greatly reduces the likelihood of the UK falling back into a ‘triple-dip’ recession,” says Chris Williamson, chief economist at Markit, which produces the PMI.

Both the Euro and Sterling rallied against the Dollar this morning, although Sterling reversed most of the move by lunchtime. Both currencies remain below where they started the month.

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 can be found on Google+

(c) BullionVault 2013

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 www.CentralBankNews.info     Romania’s central bank held its policy rate steady at 5.25 percent along with the current level of reserve requirements on leu-denominated and foreign exchange deposits.
    The National Bank of Romania (NBR), which has held its rate steady since March 2012, said it would release details of its quarterly inflation report during a press conference on Feb. 7.
    Romania’s inflation rate rose to 4.95 percent in December from November’s 4.56 percent, above the central bank’s target of 2.5 percent, plus/minus one percentage point.
    Last month the bank said the rising inflation trend had been halted and the economy was slowly recovering.
    The country’s Gross Domestic Product contracted by 0.4 percent in the third quarter from the second for annual contraction of 0.6 percent, down from annual growth of 1.7 percent in the second quarter.

    www.CentralBankNews.info

By www.CentralBankNews.info     Serbia’s central bank raised its benchmark interest rate by 25 basis points to 11.75 percent, a surprise to most economists who expected rates to remain steady, with the National Bank of Serbia saying it expects inflation to begin to decline and reach its target by the end of this year.
    The central bank, which last raised its rate in January following total rate rises of 175 basis points in 2012, said inflation should start to ease due to its tight monetary stance, a new agricultural season and the gradual disappearance of the base effect of last year’s higher administered prices.
   A stable foreign exchange rate, lower inflationary expectations and low demand will also have “a strong disinflationary impact,” the central bank said in a statement.
    Serbia’s inflation rate rose to 12.2 percent in December from November’s 11.9 percent, which was down from a recent peak of 12.9 percent but still well above the central bank’s target of 4.0 percent, plus/minus 1.5 percentage points.
     Serbia’s Gross Domestic Product contracted by 0.8 percent in the third quarter from the second quarter for annual shrinkage of 1.5 percent, the fourth quarter in a row with a shrinking economy.

    www.CentralBankNews.info

By www.CentralBankNews.info

By www.CentralBankNews.info     Uganda’s central bank kept its Central Bank Rate (CBR) unchanged at 12.0 percent for the third month in a row, saying an increase in core inflation was temporary and inflation during 2013 should remain around the bank’s medium-term target of 5.0 percent.
   The Bank of Uganda (BOU), which cut rates by 11 percentage points in 2012 as inflation dropped, said economic growth should improve slightly this year with downside risks emanating from continued subdued private sector credit growth and high lending rates, which impact private sector spending.
    “The overall outlook is for subdued domestic demand and the persistence of current excess capacity into the next financial year,” the bank said in a statement from Feb. 4.
    Uganda’s headline inflation rate eased to 4.9 percent in January, the fifth month in a row with single digit price rises, down from 5.4 percent rate in December, due to a drop in food prices.
    But core inflation rose to 5.6 percent from 4.6 percent in December, bringing the rise in core inflation in the last two months to 1.1 percent, month-on-month, the bank said.

     Uganda’s Gross Domestic Product expanded by 1.8 percent in the third quarter of 2012 from the second quarter for annual growth of 2.8 percent, down from 3.2 percent in the second quarter.
    While holding the benchmark rate steady, the BOU said it would narrow the band around the central bank rate by one percentage point to plus/minus 2 percent points to reduce volatility in short-term interest rates. The margin on the rediscount rate and the bank rates will be cut to 3 percentage points and 4 percentage points, respectively.

    www.CentralBankNews.info