Month: October 2013

AUDUSD breaks below the upward trend line on 4-hour chart, suggesting that consolidation of the uptrend from 0.9280 is underway. Deeper decline is still possible and the target would be at 0.9550 area. As long as 0.9550 support holds, the uptrend could be expected to resume, and one more rise towards 1.0000 could be expected after consolidation. On the downside, a breakdown below 0.9550 support will suggest that lengthier consolidation of the longer term uptrend from 0.8847 (Aug 5 low) is needed, then the target would be at 0.9500 area.

Provided by ForexCycle.com

By MoneyMorning.com.au

A common phrase we’ve heard over the past five years is that the world’s bankers ‘haven’t learnt the lessons of the 2008 financial meltdown’.

The argument is that they’re making the same mistakes now that they made during the 2000s leading up to the meltdown.

Of course, that’s not true. The bankers have learned their lesson. They’ve learned they can take as many risks as they like, because governments and central banks will ultimately bail them out of any problems.

And besides, let’s not just blame the bankers. They are after all just responding to investor demands in a low interest rate environment. In order to give investors bigger returns the bankers have to create riskier and more complex investment products.

So it shouldn’t surprise you to hear that after nearly six years of record low interest rates, risky investments are making a comeback…

Now, if you’re looking for us to tell you not to invest in risky investments, you’re out of luck.

Remember that aside from penning these notes to you each day, our full time job is seeking out some of the riskiest investments on the market – tech stocks and small-cap stocks.

So the last thing you’ll hear from us is the idea that you shouldn’t take risks.

Our view is that every investor should have exposure to varying levels of risk in their portfolio depending on their attitude to risk and their desired return.

But that doesn’t mean you should invest in any old risky asset. In fact, there are some investments you should stay away from whatever the potential reward.

Hungry Investors Want More

Take this as an example. If you want any proof the bankers are back in business with risky asset, check out this report from the Financial Times:

‘Risky lending practices that were a hallmark of the boom years before the financial crisis are staging a comeback in the US as companies take advantage of investor hunger for higher returns.

‘The issuance of payment-in-kind [PIK] toggle notes, which give a company the option to pay lenders with more debt rather than cash in times of squeezed finances has surged in recent months.‘

As we understand it, these deals in effect capitalise interest payments. If a company can’t – for instance – make a repayment on a $10 million loan, it has the option to increase the size of the loan instead, without receiving the increased loan amount from the lender.

Regardless of how they work, the reason they exist is undeniable. Even the banker-loving, mainstream Financial Times admits it. It’s because of ‘investor hunger for higher returns.‘

But as we say, while the bankers create them, the ultimate cause is the zero and near-zero central bank interest rate policies. If central banks didn’t keep rates artificially low in order to induce inflation, investor ‘hunger‘ would be satisfied by higher yielding and less risky assets.

That said, the current market conditions are what they are. Us bleating about it 24/7 won’t help. And neither will completely ignoring risky assets when the alternative is earning less (next to nothing when you take inflation into account) in supposedly ‘safe’ assets.

Simple Stocks Have Simple Risks

However, there are risks and then there are risks.

We prefer calculated risks. We like risks that are easy or fairly easy to identify. That’s why our risk of choice is the small-cap and technology markets.

One of the speakers at the 4th Annual Australian Microcap Investment Conference made a key point that we hadn’t really ever thought about. He said that he prefers investing in small-cap stocks because they have very simple structures.

He said that in most cases, small-cap stocks have a single or limited line of business. That makes it easier to analyse them and identify potential risks.

That’s spot on. It’s partly why small-cap and technology stocks can be so volatile. They can rise and fall on a single piece of good or bad news. But because the business structure is usually so simple you can anticipate those risks in advance.

You can then decide if the risk is worth taking based on the potential for reward.

By contrast, who really knows how these PIK loans work? Are the risks easily identifiable? If not, how can you possibly anticipate them?

Taking Risks to Boost Your Returns

The really scary thing about these debt products is that many investors buy them assuming they’re as safe as a corporate bond or some other structured investment.

That means investors probably invest more than they should, as they look for any possible way to boost their income and growth returns.

In short, we’ve said for the past two years that investors can’t afford not to take risks in this market. Back in 2011, interest rates were nearly twice as high as they are now, but the market was just as volatile and risky.

Today it’s risky in a different way. The main risk is that low interest rates have pushed investors into making investment decisions they otherwise wouldn’t make. Many are investing in risky assets not because they like risk, but because they believe they are safe or they have no choice but to invest in them.

Bottom line: we encourage you to take risks with your investments. But be careful. We advise taking calculated risks, and most of all, making sure you understand the risks before you make the investment.

If you do that, and manage your risk taking sensibly you stand a great chance of getting a boost to your returns, and minimise the odds of getting a nasty surprise.

Cheers,
Kris+

From the Port Phillip Publishing Library

Special Report: UNAVOIDABLE: Australia’s First Recession in 22 Years

By MoneyMorning.com.au

Huawei is one of the biggest communication companies in the world. They do everything you can think of that has anything to do with communication. Mobile phones? Yes. Cellular Towers? You bet. Internet infrastructure? It’s a specialty.

When it comes to communication Huawei is a global leader. They’ve rolled out their services all over China, Europe and Asia. But not the US and not Australia. You can buy their consumer products in Australia and the States…but you won’t find anything else branded Huawei.

What’s worthy of note is the UK has just given Huawei the green light to build a £125 million R&D facility. And the UK is renowned for being US ‘yes men’.

You see, the US isn’t a big fan of Huawei. And hence by default neither is Australia. It all stemmed from a congressional investigation about a year ago. Effectively the US wanted some sort of formal report to back up their refusal to let Huawei in on a couple of takeovers of US companies.

The report was self-made ammunition to throw cyber-espionage accusations at Huawei.

Here are some of the ‘findings from the report:

‘Chinese telecommunications companies provide an opportunity for the Chinese government to tamper with the United States telecommunications supply chain.‘
‘Huawei would not fully describe their history, structure, and management of Huawei and its subsidiaries to the Committee’s satisfaction. The Committee received almost no information on the role of the Chinese Communist Party Committee within Huawei or specifics about how Huawei interacts in formal channels with the Chinese government.‘

The US believes Huawei actively conducts cyber-espionage on behalf of the Chinese government. Or at the very least provides the technical assistance to allow it.

Well if the pot isn’t calling the kettle black… I’m pretty sure last time I checked the Chinese government hadn’t publicly investigated AT&T.

AT&T Might Be the US Version of Huawei

But hang on, how is that the same you ask? Well the current US Secretary of Defence, Chuck Hagel, has something to do with it.

After serving in the Vietnam War Hagel returned to the US a war hero. He turned his hand to business, co-founding a small phone company, Vanguard Cellular. Hagel took Vanguard on to be the second largest communications provider in the US. In the first quarter of 1999 AT&T purchased Vanguard Cellular in a deal worth $1.5 billion.

Now admittedly Mr. Hagel cashed out. But really when you found and build a billion dollar business how far away do you ever stay? Either way surely that’s sufficient grounds for China to ask the same questions of AT&T?

My point is the US is great at pointing the finger while using their other hand to hack China’s online systems. This is the kind of behaviour that’s typical of warring parties in World War D.

For a year the accusations have flown thick and fast about Huawei. And the US doesn’t look like changing their mind on the company any time soon. But things have started to take a turn for the positive (or negative?) in Australia.

The former Labor government put a kibosh on Huawei last year. It was a classic move straight out of the US Homeland Security playbook. Labor’s excuse was something to do with the NBN and cyber-espionage. But really what they were saying was, ‘Because the US told us to.’

However, we’ve got a new government now. And being the ‘progressive’ mob they believe themselves to be, they’ve decided to review the ‘Huawei Ban’.

Could Huawei be the NBN’s Saviour?

Initially Communications Minister Malcolm Turnbull came out and said in an interview with BRW:

‘Even if you accept the premise that Huawei would be an accessory to espionage – I’m not saying they will be, I’m just saying that’s the premise – if you accept that, you then have to ask yourself, does the equipment that they would propose to sell have that capacity?‘

And then yesterday in relation to Huawei Trade Minister Andrew Robb said,

‘I strongly support the review and I’ve said it to Malcolm.‘

Huawei themselves even released a white paper over the weekend. The topic? None other than cyber security. It reinforced their innocence in all this to-ing and fro-ing. Part of the paper said (take a deep breath):

‘We will support and adopt any internationally agreed standard or best practice for cyber security in its broadest sense; we will support any research effort to improve cyber defences; we will continue to improve and adopt an open and transparent approach enabling governments to review Huawei’s security capabilities, and finally, as we have done to date, we warmly welcome the assistance from our customers in enhancing our processes, our technology, and our approach to cyber security so that we can provide even greater benefits to them and their customers.‘

Obviously a security expert wrote that, as it’s possibly the longest sentence of all time.

But the point to all of this is who do you trust? On one hand the US is saying, ‘these guys are cyber spies’. On the other hand Huawei are saying, ‘c’mon guys we’re just trying to run a legitimate business here’.

Then you’ve got Australia kind of stuck in the middle thinking, ‘Maybe Huawei can help us get this pesky NBN project finished.’

This is the dilemma that we face in World War D. There’s no doubt the US and the Chinese lob digital attacks on each other daily. If you’re at all doubtful of that go to Google’s Digital Attack Map. And with both playing the innocence card, who can you trust? That’s the big question facing the Aussie government now.

To be fair in World War D you can’t trust anyone. But you can do a lot to protect yourself. It might mean using the Deep Web to browse the web in ‘Stealth Mode’.

It might mean employing technologies from pioneering companies to keep your personal networks safe. It might even simply be investing in companies that are set to profit from a cyber-security market predicted to grow to over $120 billion in the next four years.

For what it’s worth I hope Australia drops the ban on Huawei. Even if there are some dubious elements to how they run the business. Besides, I said it yesterday when I wrote about Google’s foray into Cyber Security…keep your friends close and your enemies closer.

Sam Volkering+
Technology Analyst, Revolutionary Tech Investor

Ed Note: Sam recently produced a video where he explores inside the ‘Deep Web’. It’s only available to Revolutionary Tech Investor subscribers. To find out how to access this video and find out more about the revolutionary ideas shaping the world, click here…

Source: Brian Sylvester of The Gold Report (10/23/13)

http://www.theaureport.com/pub/na/kerry-smith-the-miners-that-made-haywoods-quarterly-cut

There are no easy answers in this market. Companies and investors alike have to hunker down and make tough calls, but that doesn’t mean companies and investors can’t make money, even in the short term, says Kerry Smith, a research analyst with Haywood Securities. Smith and Haywood’s staff geologists narrow their sights on small companies cheaply exploring for beaten-up commodities. In this interview with The Gold Report, Smith reveals some fresh names, as well as perennial favorites on Haywood’s quarterly round-up.

The Gold Report: Kerry, Haywood Securities recently published its Q3/13 Junior Exploration Report, which tells prospective investors about 17 exploration companies across a range of mine commodities. There were 20 companies covered in the Q2/13 report. Six of those have since been removed, while three new companies were added. Why does the report have such a short-term investment horizon?

Kerry Smith: Our focus is to identify companies that will have meaningful news in the next three months that could impact the share price. We’re looking for companies with projects that we like from an exploration perspective and we have a Ph.D. geologist who is charged with making sure the names in the report offer geologic potential.

TGR: Investors typically take a longer-term view of mining equities, but do you believe you can make money with a short-term horizon?

KS: If a company has meaningful catalysts coming in the next three months, money can be made by investing in it. I would agree that, ultimately, the way investors make real money in the space is by investing in an exploration play that makes a discovery and staying invested until it has been drilled off to a resource stage. Typically, investors would want to sell before the company starts talking about permitting, construction and project finance because that’s when a company goes into a huge vacuum—there is no news and the stock rolls over.

We’re trying to find companies that can deliver decent catalysts in the short term. It’s a constantly evolving list. We roll names off, and we roll names on.

TGR: There are hundreds of exploration plays. At a time when investors are eschewing risk, what do those three new companies in the report have in common?

KS: We like the projects that they are working on. There is the potential for a discovery or they already have a discovery with the potential to grow. The corollary is that the valuations are relatively modest.

Our primary criterion is the potential to deliver an economic discovery with compelling margin potential and high project returns. A company like NovaCopper Inc. (NCQ:TSX.V; NCQ:NYSE.MKT) controls a world-class, volcanogenic massive sulfide, base metals belt in Alaska. It will continue to deliver meaningful news. CEO Rick Van Nieuwenhuyse is an exploration geologist. He’s very good at dealing with First Nations issues and exploring for and finding deposits. This is an exploration story, and that’s what he is good at.

NovaCopper could stay on our list for some time because it’s in an established district with established discoveries. That is the kind of deposit that can make it in this market.

TGR: Did any new investment themes come to light while assembling the report?

KS: The market is looking for projects with high grades, low political risk and lower capital expenses (capex). It’s impossible to finance a 1 billion ton ore deposit with $2–4 billion ($2–4B) in capex. The market is looking for bite-size projects, like a heap-leach project with a $100 million ($100M) capex.

Investors are also interested in open-pit milling operations where the mill is a straightforward, cyanide-leach circuit. It’s not complicated metallurgy and companies can get good recoveries.

It all comes down to margin. You can have a good-grade, open-pit deposit, but if the strip ratio is 20:1, it’s not going to be very interesting economically.

In my opinion no junior company should be focused on a project that delivers less than a 30% return after tax at a gold price of about $1,200/ounce ($1,200/oz). A project that needs $1,300/oz gold to get a 15% or 20% return is destined to fail in the near term.

There are way too many projects that are being pursued and promoted that aren’t high-return projects.

TGR: The commodity price charts in your report look fairly stable, perhaps with the exception of uranium. Which commodities are you most bullish on?

KS: We are the most bullish on the commodities that are most out of favor: zinc, uranium, iron ore and gold. The longer these metals stay out of favor and the less new supply comes into the market, the better the fundamentals will be going forward.

TGR: Most of the companies in the report are working on projects in North America, which is a safe jurisdiction. What are some of those companies?

KS: One of our themes is to pick stable jurisdictions. That tends to be the U.S., Canada, Mexico, Australia and Chile, to a certain extent. Some examples of companies are Balmoral Resources Ltd. (BAR:TSX.V; BAMLF:OTCQX), Probe Mines Limited (PRB:TSX.V), Newstrike Capital Inc. (NES:TSX.V), Cayden Resources Inc. (CYD:TSX.V; CDKNF:NASDAQ), Carlisle Goldfields Ltd. (CGJ:TSX; CGJCF:OTCQX) andEagle Hill Exploration Corp. (EAG:TSX.V).

TGR: Balmoral should be putting out a resource estimate on its Martiniere project and the Bug Lake Trend this quarter. What’s the early line on this?

KS: At this stage, with the limited drilling it has done, Balmoral won’t get more than 1–1.5 million ounces (1–1.5 Moz) at Bug Lake. That structure is pretty complicated. It will take a lot of drilling to figure out those structures and chase these high-grade zones. But it has high grade and the potential to grow over time.

TGR: The company talked about its relationship with GTA Resources and Mining Inc. (GTA:TSX.V) in a press release. What do you know about that?

KS: Balmoral joint-ventured its Northshore project with GTA. Darin Wagner, who runs Balmoral, is a good geologist. In the current market, he probably had more projects than he could raise money to drill on. Northshore was lower priority. GTA is running the program now.

TGR: Balmoral raised $6M in a flow-through financing recently. It has about $15M now.

KS: Its 2014 burn rate is going to be in the $6–8M range. The way a flow-through works is that the company has to spend it in the next taxable year. The amount of money raised is roughly tied to planned spending next year.

TGR: What are your thoughts on the Martiniere project?

KS: Martiniere is looking OK. It’s complicated geologically, though it has a number of discoveries there. It doesn’t have great infrastructure either, so it’s a somewhat expensive area to work in.

In those kinds of situations, I like management teams that have a good track record, know what they’re doing and know how to run these programs efficiently. Darin qualifies in that regard.

It’s tricky in this market because exploration companies are constantly raising money. If a company is going to keep coming back to the market, it needs to show that it is spending those funds wisely. Darin is pretty good at that.

TGR: Probe Mines has said that it is going to put out a resource update on its Borden gold project this quarter. It’s at about 4.3 Moz now. Is that going to grow?

KS: Probe’s focus is on expanding the high-grade core of that deposit, which it is drilling now. The preliminary economic assessment (PEA) probably won’t be available until H1/14. It’s going to be a PEA on an underground operation, not an open pit.

The original plan was to develop a large, low-grade, open-pit milling deposit in Ontario. Those kinds of projects were of interest to the market two years ago when gold was pushing up to $1,923/oz. In this market, those projects have no investor appeal at all because people recognize that the grade is low and the capex and operating costs are going to be very high.

The advantage that CEO David Palmer has with the Borden project is its high-grade core, which is pretty continuous and well defined. It’s going to be an underground operation, which would be significantly smaller than an open pit, so the capex will be lower. The grade Probe is targeting will be in the 5–6 grams per tonne (5–6 g/t) range. If it can come up to 1.5–2 Moz, 5–6 g/t material that it can mine underground, it would be a lot more interesting.

That’s part of the reason that Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) has come into the story. Agnico is now a strategic shareholder of this company. Agnico’s primary interest is in the belt because this is a new discovery in a part of Ontario that historically hadn’t been well explored for gold. Agnico knows how to mine 5–6 g/t gold deposits in Ontario underground because it has mined them for the last 40 years. If Probe can’t develop a large, open-pit milling operation at 1–1.25 g/t, there is an opportunity here for Agnico. There’s optionality that it could also mine a higher-grade underground deposit. That kind of expertise is pretty well established within Agnico-Eagle.

TGR: Probe is conducting an 80,000 meter drill program as we speak, which is probably about two-thirds completed. What is it hoping to achieve?

KS: It’s trying to better define a high-grade core and convert Inferred to Measured and Indicated. The high-grade core starts at a couple of hundred meters below surface in the guts of it, so it would be more amenable to underground. That’s one reason why Probe is looking at this option.

TGR: What sort of cash does Probe have?

KS: It has about $36M today, so it is well funded. Its 12-month budget for 2014 is in the range of $12–15M. It still has at least two years of cash. There are not too many junior companies that can say that.

TGR: Are there some other companies that you want to talk about in North America?

KS: There are some other stories elsewhere, like Reservoir Minerals Inc. (RMC:TSX.V) in Serbia. It is a 25% partner with Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE) on a copper discovery that is extremely high grade. We’re primarily interested in margin, and that generally comes from better grades.

TGR: I don’t think any list would be complete without some companies working in Mexico. Do you want to head there?

KS: Cayden Resources has done pretty well in this market. It is drilling its El Barqueño project with excellent trench results. Everybody is waiting for the drill results from its 25-hole program. I’m hoping that we’ll see continuity to depth from those structures that it was able to trench on surface. We should get assays in the next month or so.

TGR: Are you familiar with the Guerrero Gold Belt and the geological prospectivity there?

KS: We are. We have three Ph.D. geologists on staff. Torex Gold Resources Inc. (TXG:TSX) came out with a resource on a project on the belt. It wasn’t even its main project and it was around 5 Moz. That’s not very far from where one of Cayden’s other projects is.

The Guerrero Gold Belt is pretty exciting. Goldcorp Inc. (G:TSX; GG:NYSE) is there. Newstrike Capital is there. Osisko Mining Corp. (OSK:TSX) staked hundreds of thousands of hectares there.

TGR: Do you expect a lot of significant news from mining companies in Q4/13?

KS: There are about 3,000 exploration companies. Probably three-quarters aren’t spending any money at all. There are companies that have some money, but they’re doing nothing. In some cases, it’s actually the right strategy because the risk an explorer runs in a market like this is that it depletes its treasury and the news it gets has no meaningful impact on valuation. If that’s the case, a company is better off just sitting on the project.

Probably 85% of those 3,000 companies don’t have projects that make much sense in this market, either because the grade is a bit skinny or the capex is so prohibitively large that even if they did manage to drill it off and get a feasibility done, they’d have no way to finance it. And those projects aren’t the kind the majors want to buy.

The gold is not going bad in the ground. Just sit on the project. Wait until the market is more receptive and live to fight another day.

TGR: The report notes that financings dropped to less than 600 year-to-date versus more than 1,275 financings during the same period of 2012. The total cash raise dropped to about $2.25B in 2013 from $8.83B in 2012. Is that trend showing any sign of a slowdown or reversal?

KS: It’s not getting any better. The only money out there for a junior exploration company is flow-through, which means it has to be in Canada.

There’s also hope for companies like Roxgold Inc. (ROG:TSX.V) in Burkina Faso, which is drilling on a project, has a resource and is working toward developing its project. But the average grade of the deposit is high at about 15 g/t and it would be underground. Those kinds of projects can finance themselves.

The other thing in this market that has changed is mergers and acquisitions (M&A). There has been selective M&A in this market, but it tends to be situations like Alamos Gold Inc. (AGI:TSX) buying Esperanza Resources Corp. or Orsa Ventures Corp. Alamos paid $4M for Orsa Ventures, and it picked up a 3 Moz deposit in Oregon. Companies can pick up resources cheaply. They can inventory them into their pipeline.

In the case of Esperanza in Mexico, it’s a development-stage project that needs permits. The project gives Alamos the opportunity to push ahead on the permitting side while it is continuing to generate cash from its existing base of operations. Those are the kinds of projects that could get acquired, but the majors generally are not buying anything. Their shareholders have been pretty clear that they don’t want anything like what IAMGOLD Corp. (IMG:TSX; IAG:NYSE) did, paying $600M for Trelawney Mining and Exploration Inc. That project is not economic at these gold prices, for sure.

If larger companies can deliver growing, free cash flow and can raise their dividends, share prices will move up. Eventually, the valuations on the majors will reach a level where they would be prepared to buy something.

Companies just have to hunker down and conserve their cash as best they can. It’s not an easy market.

TGR: Thanks for your insights.

Kerry Smith, research analyst at Haywood Securities, has been a mining analyst since 1992. He was a mining engineer with 10 years of mine experience and holds a Master of Business Administration degree.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as a contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Balmoral Resources Ltd., Probe Mines Limited, Cayden Resources Inc. and Roxgold Inc. Goldcorp Inc. is not affiliated with The Gold Report. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Kerry Smith: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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By OilPrice.com

Though Norway in June overtook Russia in total exports of natural gas to Europe, the balance of Russian gas to Europe comes through Ukraine, which itself is dependent upon Russia for 60% of its current gas consumption.

While Ukraine controls the transit of 90% of its gas to Europe, Russia is consistently trying to use its gas exports to Ukraine to gain greater control of the Ukraine transit system, which itself deems a strategic asset. The struggle for control of export to Europe and Ukraine’s own struggle to increase domestic production and move closer to Europe, with an European Association Agreement set to be signed in November this year, has put extreme stress not only on the energy independence of Ukraine but of Europe as a whole.

From an energy geostrategic standpoint, Europe needs Ukraine to move closer to Europe, “but for all its planning, Europe also knows retribution, in the shape of an energy squeeze, is likely from Russia.

Moscow, which has a long-standing disagreement with Ukraine over gas, has said it will raise Ukraine’s gas prices and officials do not rule out it doing the same for the EU, which gets nearly 40% of its gas from Russia. “The EU should not look at Ukraine as a business opportunity alone, particularly in light of currently lagging gas demand, but should examine the long-term future of European energy security and the key role Ukraine will continue to play in it. Partnership with the EU is not a silver bullet for the troubled Ukrainian energy sector, but it is certain to reduce the volatility of future pricing disputes and is perhaps the only solution that does not leave Ukraine’s fate entirely in Russian hands,” according to an article by Richard B Andres and Michael Kofman.

Ukraine has also done much in the past 18 months to increase its energy independence. Recent shale tenders with Shell and Chevron and with Exxon for the development of the Ukrainian Black Sea have the potential to greatly reduce the dependence Ukraine has on Russian exports and potentially for Europe as well. “While the full picture of unconventional gas is expected to be assessed in the coming years, the key to success, as is the case of Ukraine, is infrastructure. If the future of shale gas exploration is to be bright, a new infrastructure will have to be built to link the sources of unconventional gas with the grid to allow for the commercialization of the gas.

“To ensure that the Energy Community brings results, once operationalized the shale gas opportunity should be extended to the Eastern Neighborhood. It would allow the Eastern Neighborhood, in particular Ukraine, to create stronger bonds between the EU and the region and, as a result, galvanize stronger energy interdependence between the EU and Russia by stabilizing Ukraine’s internal energy supply,” according to a policy paper from the Black Sea Trust for Regional Cooperation (BST).

Coup in the Making?

In the past five years, there has been significant growth in Europe’s LNG import capacity; however, high LNG prices driven by Japanese demand, and the higher oil-linked price that LNG receives in Asia has diverted much of this supply from the European market.

An agreement between Ukraine and turkey for the transit of LNG through the Bosporus, as the gateway to the Black Sea, would be a major coup for European energy security. It would put downward pressure on current LNG prices due to the high demand and premium paid in Asia and would eventually provide Europe with cheap shale gas through a viable alternative marketplace.

It’s an idea developed by Robert Bensh , energy advisor to Ukrainian Vice Prime Minister Yuriy Boyko, managing director of Pelicourt Limited and senior advisor for Cub Energy Inc., which operates in both Ukraine and Turkey.

The potential for LNG exports to Europe without a deal between Turkey and Ukraine for liquefied natural gas (LNG) through the Bosporus will fall flat, and Russia will continue to provide at least 30% of Europe’s natural gas through 2023.

“The European Union can and should play a more active role in shaping the Black Sea security environment. As a full regional player, it should promote cooperation on an equal footing, and refrain from acting as a sponsor as it does, for instance, in the Mediterranean. As a privileged partner of all countries of the region, the EU should use its bilateral relations with each of them, including Russia and Turkey, to contribute towards the emergence of a cooperative security environment in the Black Sea region,” according to a European Parliament briefing .

A CRS Report for US Congress agrees, stating: “Development of more liquefied natural gas (LNG) transport and reception facilities from distant suppliers, such as Nigeria, into Europe could be another course of action. Coupled with the development of new oil and gas pipelines could be an offer from NATO (and/or EU) members to provide security for energy infrastructure in periods of unrest or conflict in supplier and transit countries.

For both Ukraine and Turkey, such a deal would also be a political and economic coup of vast proportions, Bensh says.

For Ukraine, LNG is the key to energy independence. For Turkey, LNG is the key to becoming one of the most important energy hubs between the Middle East and Europe. In combination with the Trans-Anatolian Pipeline (TANAP), which will bring Azerbaijani gas from Shah Deniz through Turkey on to European markets, controlling the LNG segment through the Black Sea would give Turkey broader leverage than any other player in Europe. For both Ukraine and Turkey, it would mean greater access to the economic benefits of the European Union, control over Europe’s LNG market and a level of political leverage over the continent that would render both world-class strategic players.

The benefits to Ukraine and Turkey are significant:

Benefits to Ukraine

• Independence from Russia
• Greater access to the European Union, with Kiev able to be assertive on the terms
• Political leverage in Washington, which is keen to see a Turkey-Ukraine LNG deal put through, especially one focused in part on Qatari gas as opposed to Iranian gas
• Control of the European market for LNG
• Economic prosperity by giving an edge to heavy gas-reliant industries
• Strategic positioning and leverage that goes beyond Europe and into the Middle East/Gulf and especially between competitors Qatar and Iran

Benefits for Turkey

• Control of the European LNG market
• Rise as an energy hub between the Middle East and Europe, not just an energy transit country
• Political leverage over Europe and access to the EU on Ankara’s terms
• Political leverage with Washington
• Strategic positioning as an energy hub that renders Turkey the decision-maker from Europe to the Middle East/Gulf
• Diversification of supplies, with less reliance on Russian and Iranian deliveries, including from emerging African powerhouses such as Angola and Ghana

Timing is important, and the window of opportunity should be taken advantage of before new pipelines come online and while two of the world’s biggest gas players—Qatar and Iran—are in a desperate race to grab the European market. If an LNG agreement is solidified within this timeframe, it will dictate rather than serve as an afterthought to Europe’s gas future.

In this respect, Ukraine and Turkey together already have a certain amount of leverage at the negotiating table, particularly with respect to Qatari supplies, which are very eager to get to the wider European market. Timing is critical as Iran, suffering under economic sanctions that has caused widespread unemployment and a recession (the under 35 age group is thought to have unemployment of over 40%; a sobering thought in a period of Arab Springs) is attempting to have access to markets from which it currently is cut off from; and there is no better indication of this than the British government’s current reconsideration of the embargo on BP’s joint venture with the Iranian National Gas Company in the Rhum field. One additional factor in the conflict in Syria was, Qatari-versus-Iranian plans to run a pipeline through the country to Turkey, eyeing the European market.

In terms of critical timing, Ukraine and Turkey would be better positioned strategically were they to strike an LNG deal before the beginning of Phase Two production at Azerbaijan’s Shah Deniz field, and before TANAP begins operations. The price of LNG is more volatile due to the Asian market, and it would be more beneficial for LNG to secure this market, while natural gas futures for Shah Deniz supplies, which have already been contracted out for 25 years to nine European companies.

Another Black Sea LNG project—the Azerbaijan-Georgia-Romania Interconnector (AGRI) project—is also being delayed due to the perception that European demand is not ready for this project. This is a false perception that is driven by the Asian-driven LNG price spikes and the diversion of cargoes away from the European market. AGRI at present is languishing as it waits for the market to develop. This is an opportunity for a Ukraine-Turkey LNG agreement. The first to develop will control the market.

The AGRI project is hoping to transport natural gas from the Caspian region (primarily Turkmenistan) to Europe designed as a part of the Southern Corridor and as the shortest direct route for Caspian gas to European markets. If realized, AGRI would transport Azerbaijani LNG from Georgia, across the Black Sea, to an LNG terminal planned for construction on the Romanian Black Sea coast, then piped through to Hungary through the interconnector with Romania and then further into Europe.

Azerbaijan, Romania and Georgia signed the Memorandum of Understanding for this project in April 2010, but not much has happened since then. The project requires the construction not only of a regasification terminal in Romania, but also a liquefaction plant in Georgia.

Competition for this strategic positioning will come from the development of Mediterranean LNG projects, which could also be a game-changer for Europe. Potential projects here (Cyprus and Israel, first and foremost) remain uncertain, but if realized they would offer gas to high-demand Southeastern European markets with attractive pricing. In the absence of an LNG agreement between Ukraine and Turkey, Cyprus and Israel have the potential to capture the European market from the Mediterranean side. Timing is critical and the advantage will go to the players who recognize the opportunity to fill the long-term LNG supply gap that has been created by the diversion of cargo to Asia. Ukraine, has the potential to fill this gap and control the market.

LNG’S Role in European Energy Security

The European Market for LNG at a Glance:

• Relative to 2011, LNG deliveries to the EU fell 31% in 2012, with imports from Qatar down 35%, Nigeria 31% and Algeria 18%, while imports to Asia have grown by up to 70%
• So far for 2013, LNG deliveries are in line with this downward trend
• For the first quarter of 2013, gas flowing out of LNG terminals into pipelines (LNG send-out to grids) in the UK, Netherlands and Belgium was down by 60% over the same period in 2012, and down 40% in France and 30% in Spain, Italy and Portugal
• The average price of spot pipeline gas in Europe is around $10 per MMBtu, while the average spot LNG price is $11.40/MMBtu (there is a wide range of LNG pricing across Europe)
• In Japan, LNG prices are about 40% higher (as of Q1 2013) than spot prices in the UK, for example

LNG in Europe, Present and Future

At the close of 2012, LNG accounted for 19% of Europe’s gas supply, while 81% was natural gas transported via pipeline.

The Fukushima disaster in Japan forced European countries to reconsider their nuclear policies, and this has forced a stronger focus on coal, natural gas and LNG. Before Fukushima, LNG was favored over natural gas because supplies were greater at that time and prices were cheaper than piped-in gas. As a result of the Fukushima disaster and Japan’s resultant eschewing of nuclear power reliance, is a run on LNG by Japan and other Asian nations who are willing to pay higher prices. This has driven LNG prices up and diverted supplies to the Asian market. In addition, it has caused fewer LNG development projects to be pursued in Europe. This translates into future gas shortages when LNG supplies can no longer meet growing Asian demand and when there is a lack of long-term LNG commitment in Europe. This is the critical window of opportunity in the market for Ukraine and Turkey. (There is a certain counter-intuitive momentum to be grasped here.)

Because Asia signs on to long-term LNG agreements with high, oil-linked prices, there are predictions that Europe will find itself with extremely restricted access to LNG in the near- to medium-term future, with a recovery in demand and a growing reluctance to rely on dirty coal for power generation.

This past decade has seen global LNG supplies double and regasification and shipping capacity triple. The exception is Europe, where Ukraine and Turkey are singularly positioned to take advantage of this LNG gap before demand picks up and the opportunity for strategic positioning is weakened.

The LNG market is set to expand globally over the next decade, and demand for LNG in Europe is most likely set to rise even without affecting natural gas supplies. Thus, TANAP and a Ukrainian-Turkish LNG agreement would work in tandem, not in competition, to control an even greater market share.

If Russia ends up building natural gas storage facilities in Turkey—an idea for which Gazprom expressed interest earlier this year—Turkey will lose its chance for maximum political leverage. This past winter, Gazprom redirected natural gas from its storage facilities in Europe after a spike in demand in Turkey. This prompted a Russian justification for potentially building storage facilities in Turkey ostensibly to come to the rescue when supplies are insufficient. In theory, though, this would represent an increased Russian energy footprint in Turkey that would negatively impact Turkey’s energy hub ambitions and would only help to solidify its dependence on Russian supplies, which amount to about 58% of Turkey’s total supplies. An LNG deal with Ukraine would give Turkey greater access to additional alternative supplies, and this, combined with an anticipated increase in Azerbaijani supplies from Shah Deniz will allow Turkey to become a true, diversified energy hub.

Qatar is heavily courting both Ukraine and Turkey for LNG through the Bosporus. From Qatar’s perspective, if Qatari LNG is allowed to pass through the Turkish-controlled Bosporus, this will deal a heavy blow to Iran. As such, Qatar recognizes Turkey’s role here as a key geopolitical power broker on the energy scene. Along this same line of thought, Qatar’s perception is that Russia is not capable at this time of preventing a Turkey-Ukraine energy deal focused on Qatari gas.

For Turkey, though, such a deal would allow it to further diversify its supplies, reducing reliance on both Russian and Iran—the latter which has been unreliable in terms of supplies over recent years.

Such a deal also further underlines the extent of political leverage Ukraine and Turkey would enjoy well beyond Europe, and into the Middle East.

Geopolitically, if Ukraine and Turkey were to bring Qatari gas through the Bosporus and on to European markets, this would help balance the power of a Russian-Iranian axis. It would reshape geopolitical dynamics, with Turkey the driving force through its strategic position as a Middle East-Europe energy hub.

Turkish and Ukrainian interest can either merge, or diverge to be counter-productive both to their gas supply needs and to European energy security. The perceptions of competition between Ukraine and Turkey are there, however, it is only through the combined, complementary force of the two that we will see a new energy powerhouse emerge.

LNG is the future, and globally we are looking at a major upswing in demand, including for Europe in the medium-to-long term.

As becomes clearer every year, pipeline gas delivery is hindered severely by economics and geopolitics. It limits room for consumer maneuvering, especially for those who are reliant on few, or single, sources. LNG can avoid much of these same hurdles, despite the investment cost associated with LNG facilities. There is a great deal of market flexibility to be found in LNG due to the absence of piping contracts.

LNG will become the key fuel of the future, and the forces that grasp the Black Sea market for LNG first will be among the most influential players on the global energy market. There is also the Black Sea marine industry to consider here, and the future is likely to see this converted to LNG—with new and converted transport vehicles and vessels running on LNG.

Source: http://oilprice.com/Geopolitics/Europe/Ukraine-Turkey-The-European-Energy-Coup.html

By. Oil & Energy Insider Analysts

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By clmforex.com

The moving average has been a staple of the Forex trader’s arsenal since it was first described in statistics textbooks in the early twentieth century. The visual representation of several averaged price points, the moving average provides a smooth line that makes it easy to see at a glance whether the price is trending upwards or downwards. So critical is the moving average to Forex trading that its calculation is at the heart of several indicators, including the Bollinger Bands and the MACD.

Moving averages are useful because they lag the price. That is, a moving average will always appear either above or below it. If it is above the price, this indicates that the price has been falling. If it is below, it has been rising.

Forex traders use the moving average in many ways, the most basic of which is a simple trading system. When the price moves upward through the moving average, they buy, and when the price moves downward through it, they sell. This system has drawbacks, however, in that the price will often move through the moving average only to immediately reverse. This false signal is known as a “whipsaw.” To get around this problem, Forex traders devised another use for the moving average: the filter.

To create a filter, they apply a second moving average to the chart of a much higher periodicity. For instance, if the moving average that the trader is using as a signal is 14 periods, they might apply a second moving average of 100 periods. This second indicator lags the price much more than the first, and it gives the trader an instant insight into whether or not the price is in an uptrend, downtrend, or range. If the price is in an uptrend, then, the trader will not accept any sell signals from the 14 period moving average.

Forex traders can create a more complex moving average system with a built-in filter by applying three moving averages with periods such as 14, 28 and 56, where each proceeding instance of the indicator is twice as much as the last. In this way, the price can fall through or rise above the first, then the second and finally the third moving average. At that point, the trader can be fairly confident that a change in trend is occurring and can trade in the new direction.

Another way that traders use the moving average is to plot two of them, one slower than the other. For instance, one may be set to 12 periods while the other is set to 26. The result is that a signal is generated when the slower moving average falls through the longer. This is the basis of the MACD, or Moving Average Convergence Divergence indicator, which chart technicians use to determine trend strength, momentum and direction.

The moving average, humble as it is, is often the first learned but is generally quickly discarded when when more complex indicators are encountered. This tendency may be to the trader’s detriment as many more complex indicators are simply using moving averages in their calculations and displaying the results in various ways. These more complex data presentations, while potentially useful, can also make it more difficult to analyze the market efficiently.

To learn more please visit www.clmforex.com

Disclaimer: Trading of foreign exchange contracts, contracts for difference, derivatives and other investment products which are leveraged, can carry a high level of risk. These products may not be suitable for all investors. It is possible to lose more than your initial investment. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. A Product Disclosure Statement (PDS) is available from the company website www.clmforex.com. Please read and consider the PDS before making any decision to trade Core Liquidity Markets’ products. The risks must be understood prior to trading. Core Liquidity Markets refers to Core Liquidity Markets Pty Ltd. Core Liquidity Markets is an Australian company which is registered with ASIC, ACN 164 994 049. Core Liquidity Markets is an authorized representative of Direct FX Trading Pty Ltd (AFSL) Number 305539, which is the authorizing Licensee and Principal.

By George Leong, B.Comm.

With the upcoming release of new video consoles from Sony Corporation (NYSE/SNE) and Microsoft Corporation (NASDAQ/MSFT), the video game sector appears to be set to experience a revival, as my stock analysis indicates.

According to NPG Group, the U.S. sales of video game-related hardware, software, and accessories surged by 27% year-over-year to $1.08 billion in September. (Source: The NPD Group, Inc. web site, last accessed October 22, 2013.) The sale of software, specifically, surged 52% to $754 million, accounting for 70% of total sales. Yet with the debut of two new consoles in November (Sony’s “PlayStation4” and Microsoft’s “Xbox One”), my stock analysis indicates that sales in the hardware sector will pick up, giving a boost to the share prices of Microsoft and Sony.

In the hardware area, Microsoft has done well with its Xbox console in spite of its lag in sales compared to Sony’s PlayStation console, based on my stock analysis. Yet the move by Microsoft into the gaming and entertainment console market is a big selling point for the company, as my stock analysis points out. (Read “Why Microsoft May Finally Be Set to Turn Its Fortune Around.”)

I know my son is anxiously anticipating the release of the PS4 and, in particular, the “NBA Live 14” game that is made by one of the top games developers Electronic Arts Inc. (NASDAQ/EA). Electronic Arts (EA) develops games for the Xbox, PlayStation, and ”Nintendo Wii” consoles. The company also develops games for mobile phones and tablets.

EA games are broad in scope and include action, military, sports, racing, simulation, strategy, family, kids, music, and puzzle-based games. Popular titles include “The Sims,” “Madden NFL,” “NBA,” “NHL,” “FIFA Soccer,” and numerous other lines.

The company has beat quarterly earnings-per-share (EPS) estimates in three of the past four quarters.

On the chart of EA below, note the upward price channel and the recent bullish golden cross, as indicated by the shaded oval. A surge could see the stock jump above $30.00, based on my stock analysis.

Chart courtesy of www.StockCharts.com

A second software games developer I like is Activision Blizzard, Inc. (NASDAQ/ATVI), based on my stock analysis. The company is best known for its hugely successful “Call of Duty” series.

According to Thomson Financial, Activision Blizzard is estimated to make $0.89 per diluted share in 2013, and $1.28 per diluted share in 2013; revenues are projected to fall 13.9% this year, rallying 8.5% to $4.66 billion in 2014.

On a quarterly basis, Activision Blizzard has beaten EPS estimates in each of its last four quarters.

As my stock analysis notes, the chart of Activision Blizzard below shows current hesitation following the stock’s recent run-up, due to the most recent release of its “Call of Duty” game. A golden cross remains in play, and the stock could break higher, based on my technical analysis.

Chart courtesy of www.StockCharts.com

Overall, my stock analysis indicates that the launch of the new consoles next month will surely help the video game sector and software games makers; investors would be wise to keep this sector on their radar.

This article Why the Gaming Sector Should Be on Your Radar is originally posted at Profitconfidential

By www.CentralBankNews.info     Canada’s central bank held its policy rate steady, as expected, but dropped its slight tightening bias due to lower-than-expected economic activity from weaker global growth and said the “substantial monetary policy stimulus currently in place remains appropriate.”
    The Bank of Canada (BOC), which has maintained its target for the overnight rate at 1.0 percent since September 2010, said “uncertain global and domestic economic conditions are delaying the pick-up in exports and business investment,” and cut its growth forecasts.
    Third quarter annual growth in Canada’s Gross Domestic Product is forecast at 1.7 percent, down from a previous forecast of 2.1 percent, while fourth quarter growth is forecast at 2.0 percent, down from 2.4 percent.
    On average, growth this year is forecast at 1.6 percent, down from a previous forecast of 1.8 percent, 2.3 percent in 2014, down from 2.7 percent, and 2.6 percent in 2015, down from 2.7 percent, when the economy is expected to reach full capacity.
    In the second quarter, Canada’s GDP rose by 0.4 percent from the first for annual growth of 1.4 percent, largely steady from 1.36 percent in the first.
    The BOC, which has often expressed concern over high household debt, said slower growth of household credit and higher mortgage rates point to a gradual unwinding of household imbalances and it expects a better balance between domestic and foreign demand over time and that growth will become more self-sustaining.
    But the dynamic of the global economy has changed, with the composition of growth slightly less favourable for Canada, the bank said.
   “The U.S. economy is softer than expected but as fiscal headwinds dissipate and household delivering ends, growth should accelerate through 2014 and 2015,” the BOC said in its monetary policy report, adding that Europe’s recovery has surprised on the upside while China’s economy was showing renewed momentum, and growth in a number of emerging countries had slowed.
    Canada’s inflation rate remains subdued, the BOC said, adding that core and headline inflation are expected to return slowly to 2 percent around the end of 2015.
    However, the BOC added that the fact that inflation has been persistently below target meant that downside risks assume increasing importance. Canada’s inflation rate was steady at 1.1 percent in September and August.

    www.CentralBankNews.info

By Mitchell Clark, B.Comm.

All kinds of companies are listing on the stock market and one of the hottest sectors remains three-dimensional (3D) printing. This is an investment theme with real staying power and a sector that every risk-capital investor should be scrutinizing at this time.

One of the stock market’s hottest initial public offerings (IPOs) this year is voxeljet AG (VJET), which is a German manufacturer of industrial 3D-printing systems. This small but growing micro-cap recently sold 6.5 million American depositary shares (ADS) for $13.00 each, raising $64.5 million after fees. The rest of the proceeds went to selling shareholders.

On its first day of trading last week, the position opened at approximately $24.50 and is now near $39.00. This incredibly strong action reveals just how attractive 3D printing is becoming to the eyes of institutional investors. It’s definitely a bright spot for stock market traders. A whole new industry is being formed right now.

Voxeljet is the latest IPO related to 3D printing, following The ExOne Company (XONE). We looked at ExOne recently after the position pulled back on the stock market. The company’s shares experienced a strong reversal at the beginning of October and are now settling around the $50.00 mark. (See “Wall Street Lowered Expectations for This Stock, But It Got NASA’s Attention.”)

Wall Street expects ExOne’s sales to grow an average consensus of approximately 68% to $48.0 million this year. Sales are expected to grow another 50% in 2014, as the company turns profitable.

There are still only a handful of 3D-printing companies that trade on the stock market. There is 3D Systems Corporation (DDD), out of Rock Hill, South Carolina. And then there’s also Stratasys Ltd. (SSYS), out of Eden Prairie, Minnesota, whose 3D-printing machines are used to create prototype parts, mostly serving the manufacturing sectors, including automotive, aerospace, computer, and defense customers.

In terms of stock market performance, 3D Systems has outperformed the group. The stock is very pricey, but it illustrates the desire that investors have to bid up this developing industry.

In the company’s second quarter of 2013, total revenues grew 45% to $120.8 million. Earnings grew to $9.3 million from $8.3 million, but earnings per share declined a penny.

The company has lots of cash in the bank and describes demand for its 3D-printing machines and related supplies as “heavy.” The company’s third-quarter results are due next week, and the Street expects the company’s numbers to grow at about the same pace as the second quarter.

For the most part, 3D printing is being used in industrial applications, but the transition to the retail market is highly likely. There’s plenty of time before 3D printers seemingly will become commoditized; therefore, there should be some good stock market returns to be had.

There is a fair amount of new IPO activity currently. With the stock market at an all-time record high, it is a good time for companies to be selling shares.

A number of IPOs recently hit the stock market and were bid well above their offering prices. There is an appetite in this market for new stories; 3D printing is one of them, and it’s a growth industry that investors may want to consider, as it should continue to produce excellent returns.

This article This New Trend in Printing a Boon for Tech Investors? is originally posted at Profitconfidential

By www.CentralBankNews.info     Namibia’s central bank held its repo rate steady at 5.50 percent to “support the domestic economy and mitigate the impact of suppressed prices for key Namibian exports.”
    The Bank of Namibia, which has held rates steady this year, said it expects the country’s economy to slow this year compared with 2012 in line with global growth.
    Last year Namibia’s Gross Domestic Product expanded by 5.0 percent and the International Monetary Fund has projected 4.4 percent growth for Namibia this year. The central bank has also forecast growth of 4.4 percent.
    The bank said indicators suggest that mining output is rising while the agricultural sector “remains embattled with the current drought.” Construction remains fairly strong, manufacturing is mixed while wholesale and retail trade is positive but tourism and transport has slowed down.
    Namibia’s Gross Domestic Product rose by an annual 2.3 percent in the second quarter, up from 1.9 percent in the first quarter.

    The country’s inflation rate eased to 5.54 percent in September, down from 6.03 percent, and the central bank said it expects inflation to remain stable, around current levels for the rest of the year.
    Namibia’s foreign reserves fell to N$14.3 billion at the end of September, down from July’s 18.1 billion, but the bank said this remains adequate to maintain the fixed currency arrangement and meet international obligations.
    “Nevertheless, the situation will receive continuous oversight going forward,” the bank said. The Namibian dollar is pegged to South Africa’s rand.

    www.CentralBankNews.inf