Month: December 2011

The Narodowy Bank Polski‘s Monetary Policy Council held the benchmark 7-day interest rate unchanged at 4.50%.  The Bank said: “In the opinion of the Council, in the medium term inflation will be curbed by gradually decelerating domestic demand amidst fiscal tightening, including reduced public investment spending, and interest rate increases implemented in the first half of 2011, as well as the expected global economic slowdown. The impact of the situation in the global financial markets on zloty exchange rate continues to be an upside risk to domestic price developments.”


The Bank also kept the following interest rates unchanged: the rediscount rate at 4.75%, the Lombard rate at 6.00%, and the deposit rate at 3.00%.  The Bank last raised the interest rate by 25 basis points to 4.50% in June this year, and held the interest rate unchanged at its previous meeting.  

Poland reported annual headline inflation of 4.3% in October, up from 3.9% in September, compared to 4.3% in August, 4.1% in July, with previous readings of 4.2% in June, 5% in May, 4.5% in April, 4.3% in March, and just higher than the Bank’s official inflation target of 2.5% +/- 1%.  

The IMF recently reduced its forecast for Poland’s 2011 economic growth rate to 3.8% from 4% previously.  The Polish Zloty (PLN) has weakened by about 13% against the US dollar so far this year; the USDPLN exchange rate last traded around 3.33.

Iceland’s Sedlabanki held its seven-day collateral lending rate unchanged at 4.75%.  The Bank said: “The nominal policy rate path required to bring inflation back to target is highly uncertain. In the near term, the current level seems broadly appropriate in light of the economic outlook and potential international headwinds. Looking further ahead, however, it will be necessary to withdraw the current degree of monetary accommodation as the recovery progresses and the slack in the economy disappears. The degree to which such normalisation takes place through higher nominal rates will depend on future inflation developments.”

Iceland’s central bank increased the rate 25 basis points at its previous meeting, after increasing the lending rate by 25 basis points to 4.50% in August.  Iceland reported headline inflation of 5.3% in October, compared to 5.7% in September, 5% in July, 4.2% in June, 3.4% in May, and 2.3% in March; inflation had previously been forecast to peak just above 3.0% around the middle of this year, meanwhile the Bank’s inflation target is 2.5%.  Iceland’s currency, the krona (ISK), last traded around 119 against the US dollar.

By MoneyMorning.com.au

For years, industrial uses of silver dominated the silver market. It’s used in things like solar panels, electronics, photography and jewellery.

But now, silver is becoming an investor’s metal.

Private ownership has doubled in the last five years to 2.2 billion ounces.

Today I’ll show how this investor demand will keep pushing up the silver price.

After the big cracks started to appear in the financial system in 2007, the silver market changed.

It took silver away from industrial users. And since investors flocked into the silver market in 2005, Aussie dollar silver has quietly gained an average of 22% a year.

But there’s more in store for silver. Mints can’t keep up with demand. The Perth Mint recently emailed its clients to say: ‘Demand is currently at unprecedented levels, and we have been inundated by high levels of web and telephone traffic from clients all around the world.’

And when I chat with silver miners I keep hearing the same thing: Refiners and miners are ‘extremely keen’ to get their hands on more metal.

So what does this mean for the future price of silver?

We are rewriting the rules by turning silver into an investor’s metal. Instead of the price being a measure of its value in manufacturing, the silver price is becoming a measure of how big a mess the global financial system becomes.

Silver’s only gained 8% in Aussie dollars this year. But silver’s big years – where it’s had gains of 33%, 43% or 58% – have historically followed slow years like this one.

And the silver market is ready for a big jump. I’m convinced silver could rise from $33 to $50 an ounce next year.

Even if silver only continues to rise at its current rate of 22% a year, the price would be $203 an ounce by 2020. And that’s a very conservative forecast.

If you think that sounds outrageous, bear in mind that as of September, the silver price had increased 10-fold in only 10 years.

The case for investing in precious metals, especially silver, has never been stronger than it is today. In fact, it’s one of the top resource plays I recommend for 2012…

Dr. Alex Cowie
for Money Morning Australia

P.S. Over the last 15 months I’ve been travelling the world visiting the projects of a whole host of resource companies on my watch list. The last few weeks I’ve been busy writing up my findings. My research will be ready later today. In it, I reveal my top resource plays for 2012. So watch this space!

Related Articles

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Swiss National Bank Intervenes…

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Was This Just Another Rigged Market?

From the Archives…

How to Profit from the Inevitable Return to Sound Money
2011-12-02 – Kris Sayce

Two Reasons the Market Should Have Fallen…
2011-12-01 – Shae Smith

Ditch Your Investor Pride to Avoid an Investing Fall
2011-11-30 – Kris Sayce

How to Play a Volatile Market for Profit
2011-11-29 – Kris Sayce

No Thanks to Central Banks
2011-11-28 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

Will Silver Break Through $50 an Ounce in 2012?

By MoneyMorning.com.au

If you believe in the Armageddon scenario, where banks collapse – but they aren’t bailed out – and all faith is lost in paper money, then you’d be bonkers to hold any shares at all.

Even holding gold or silver stocks would be risky… seeing as mining companies live and die not so much by the gold price, but by the ability to raise capital to dig for gold. Gold could go to $10,000 an ounce, but if mining companies can’t raise money to dig for the stuff it will count for nothing.

Think about it, gold mining and production didn’t stop when gold fell to USD$250. That was because financing was readily available for good projects. (We’ll explain why you should buy gold stocks in a moment).

So, if you’re in the Armageddon camp, your best bet is the survivalist approach: gold, silver, tinned hotdogs, water filter, toilet paper… and a stash of weaponry for personal safety.

But what if Armageddon doesn’t arrive?

Well, the alternative is this…

The next 10 or 20 years could play out in the same way as the last 10 or 20 years. Where the population is fooled by governments and bankers into thinking wealth is achieved through credit growth…

Whereas in reality, credit growth actually creates working poverty… where individuals work harder and longer just to maintain a standard of living, let alone improve on it.

What that means for you as an investor is making sure you invest in the right assets. You may not see gold soar from $1,700 to $5,000 in the next 12 months, but as governments continue to keep the truth about money printing from the public, the smart money will know what to do…

Buy inflation-beating assets: gold, silver, a few income paying stocks, and for leverage, a few gold and silver stocks too.

Oh, and don’t forget a bit of cash. Sure, inflation may chew it up, but it’s useful and far less volatile than stocks. Your other inflation-beating assets should more than make up any losses from holding cash.

The point is, while the ultimate result may be the same – the end of paper money – the route there could take either path.

We can’t say for certain which way things will turn out. But we know the uncertainty will continue…

And uncertainty means a volatile market… just as you’ve seen for the past three years. That means more government and central bank intervention, more money-printing… and a steady increase for gold and silver.

It’s in that kind of market that gold and silver stocks should outperform the gold and silver price as investors leverage to the rising gold and silver price. (Investors will buy gold and silver stocks even if they don’t understand why the metals are going up).

But not all gold and silver stocks will succeed. The key will be them getting access to shareholder financing. As we see it, in a tight credit environment only the best and most promising projects will get the cash… those are the gold and silver stocks to invest in.

Cheers.
Kris

PS. My old pal, Diggers & Drillers editor Dr. Alex Cowie has been working on a special report and presentation. He outlines his ideas for helping investors survive and prosper over the next 10 years. It’s a report you won’t want to miss. For an insight of what to expect, keep reading and look out for the report when it hits your inbox today…

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Why the Fed’s Actions Make Perfect Sense

Too Big to Bail

Swiss National Bank Intervenes…

Bailouts Still Boosting the Market

Was This Just Another Rigged Market?

From the Archives…

How to Profit from the Inevitable Return to Sound Money
2011-12-02 – Kris Sayce

Two Reasons the Market Should Have Fallen…
2011-12-01 – Shae Smith

Ditch Your Investor Pride to Avoid an Investing Fall
2011-11-30 – Kris Sayce

How to Play a Volatile Market for Profit
2011-11-29 – Kris Sayce

No Thanks to Central Banks
2011-11-28 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

The Only Gold and Silver Stocks to Buy

By MoneyMorning.com.au

Here’s a headline you don’t read every day in the mainstream press:

“Why banking works one big confidence trick”

Today, we’ll explain how to avoid this con-trick of the banks and the best way to set your portfolio to survive the next 10-plus years using investments like gold and silver stocks. But first, back to that headline…

It’s from today’s Financial Times (FT).

Written by Zoltan Pozar, a former New York Federal Reserve Bank economist, he makes the following point:

“Banking is one large, clever, and finely tuned, confidence trick.

“On the one hand are bank notes which are ‘legal tender for all debts, public and private’, trade at par and are referred to as money. They are liabilities of the sovereign. On the other hand are demand deposits – from savings to cheque accounts – which also trade at par and thus function as money. But, unlike bank notes, they are the liabilities of banks.”

In short, banks have the power to create money from thin air. Independent of central banks. The central bank sets the limits for what the banks can do, and the banks do it.

It’s something the banks have done well (by that we mean in the same way a fraudster does something well, we’re not saying we approve of it) for years. Trouble is banks have hit the limit.

The amount of debt issued is so large it has become much harder for banks to refinance old debt while still issuing new debt to keep credit growth – and the economy – growing.

The only option left is for the central banks to increase the money supply without making it obvious what they’re doing. The European Financial Stability Fund (EFSF) is the latest effort to achieve this.

Bottom line: governments and central bankers are doing all they can to avoid shocking the market. So far they’ve done a poor job. We’ve seen more shocks in the past three years than we care to mention.

Despite that, they’ve muddled through… they’ve gotten away with it. The question is:

As an investor that should be your number one question. Because the answer you come up with will determine the shape of your investment portfolio. Here’s why and what you should do about it…

Cheers.
Kris

Related Articles

Why the Fed’s Actions Make Perfect Sense

Too Big to Bail

Swiss National Bank Intervenes…

Bailouts Still Boosting the Market

Was This Just Another Rigged Market?

From the Archives…

How to Profit from the Inevitable Return to Sound Money
2011-12-02 – Kris Sayce

Two Reasons the Market Should Have Fallen…
2011-12-01 – Shae Smith

Ditch Your Investor Pride to Avoid an Investing Fall
2011-11-30 – Kris Sayce

How to Play a Volatile Market for Profit
2011-11-29 – Kris Sayce

No Thanks to Central Banks
2011-11-28 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

How Banks Fraud the Economy

GBPUSD broke above the downward price channel on 4-hour chart, suggesting that the fall from 1.6164 had completed at 1.5423 already. Further rally to test 1.5779 key resistance would likely be seen, a break above this level could trigger another rise towards 1.6500. Support is now at 1.5561, only break below this level could indicate that lengthier sideways movement in a range between 1.5423 and 1.5779 is underway.

Daily Forex Forecast

By Paul Tracy, globaldividends.com

There simply aren’t many opportunities like this one. It’s an energy investment, but it’s a far cry from the oil “majors” like ExxonMobil (NYSE: XOM) or Chevron (NYSE: CVX).

In fact, this is one of those investments I’d guess only 1 in 20 investors know about.

Let me explain…

Most energy investments you find on the New York Stock Exchange are actually pretty complex. They are companies that own land, wells, derricks, and trucks. They have employees. They have to deal with spills, lawsuits, and cleanups. That’s a lot to handle and still pump out a profit.

Take Chevron, for example.

In a recent quarter, it generated $64 billion in revenues… but $52 billion of that went toward employee salaries, marketing campaigns, administrative overhead and other operating expenses.

And then Uncle Sam took $5.5 billion in corporate taxes.

That still left a respectable $7.7 billion in pure profit. But Chevron pumped the vast majority of that right back into the business to find and develop new sources of oil.

Chevron is a complex oil giant, but the company I’m going to tell you about is the exact opposite. It couldn’t be any simpler… or more lucrative.

This stock — SandRidge Mississippian Trust (NYSE: SDT) — simply takes in royalties and then pays them out to investors.

As a royalty trust, SDT owns a stake in dozens of wells run by its parent company, SandRidge Energy (NYSE: SD). SandRidge Energy takes care of the drilling, production, marketing, and selling of the oil and gas produced.

The royalty trust — SDT — is passive in the relationship. It doesn’t have to do a thing. In return for the initial investment when it went public, its investors get a cut of all the oil and natural gas sold from the wells between now and when the trust is scheduled to dissolve in December 2030.

To create SDT, SandRidge Energy packaged a 90% interest in 37 of its oil and natural gas wells in Oklahoma. In other words, for every $1 in oil or gas pumped by these more than three dozen wells, owners of the royalty trust are now entitled to $0.90 in royalties.

But that’s just the start…

You see, most trusts simply package up some of their reliable reserves and wells, sell them to the public as a trust, and that’s the end of the story. Those interests in the wells pay out steady dividends and not much changes.

But SDT is a different breed of trust. That’s because in addition to the 37 wells it owned at its inception, the trust also gets a bonus. Between its inception in December 2010 and December 2015, parent company SandRidge must drill an additional 123 wells, of which SDT will own a 50% stake.

In other words, over the next several years each unit of this trust will have a stake in an increasing number of wells… meaning increased royalties and distributions.

Because the trust is so new, it has only made two dividend payments so far — one of $1.07 per unit (for a longer than usual period of January through May 2011) and another for $0.82 per unit.

But the trust has outlined its projected distributions for the next four years. If you take the midpoint of those projections, it adds up to payments of $2.73… or a 10% yield at recent share prices.

But here’s the best part — the trust has significantly topped its projected distributions so far. In the recent quarter when it paid $0.82 per unit, it had targeted a distribution of just $0.66.

In other words, the trust topped its targeted distribution by 24%. That shows management is already under-promising and over-delivering. As a royalty interest holder in this trust, I like that.

That’s also why I have tabbed SandRidge Mississippian Trust as one of my Top 10 Stocks for 2012. This select group of just 10 ideas are the ones we’ve marked to outpace the broader market over the coming year.

You can learn more about what we uncovered — including some names and ticker symbols — by reading our latest research here.

All the best,

Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist — Top 10 Stocks

P.S. — Because SDT is a royalty trust, the tax implications can be complicated. You will probably want to entrust your tax filing to a competent accountant.

But don’t fret too much about Uncle Sam. Although royalty trusts like SDT can create some minor tax headaches, the trust’s 10% yield — and the potential for rising distributions in the future — should prove to be well worth the hassle in the long run.

eBay’s Next Hot Item: Incandescent Light Bulbs

by David Fessler, Investment U Senior Analyst
Wednesday, December 07, 2011

The last time I wrote about the new light bulb standards set by Congress as part of the Energy Independence and Security Act of 2007, I was accused of supporting “government meddling in our personal lives.”

I’m not in the government, and I don’t like it meddling in my life or anyone else’s. Lest you start bashing the current administration on this particular issue, note that the aforementioned legislation was passed when Bush was President.

Besides, there are plenty of other things we can deride the current Congress and Executive Branch about. But that wouldn’t leave any room for what I really want to talk about: the new bulb standards that start to take effect in just a few weeks.

The following chart from the EIA shows when the new standards take effect and the bulbs it affects.

For those of you who made last minute hoarding buys, good for you. But if you visit Home Depot, Lowe’s, or just about anywhere else these days, you’ll be hard-pressed to find incandescents.

Your choices are primarily compact fluorescents (CFLs), halogen-based incandescents, or expensive LED bulbs.

While LEDs represent the least amount of energy use, they’re currently also the most expensive. I believe they’ll eventually supplant CFLs due to the disposal issue with those types of bulbs.

Like worn out rechargeable batteries, CFLs contain hazardous chemicals (in their case, a small amount of Mercury) and must be disposed of properly. Setting up that recycling infrastructure will probably happen at the store level. But the average consumer will just throw them in the trash.

LEDs are really the future of lighting. Many Christmas lights are already LED-based, and commercial lighting is heading in that direction and will drive costs down at the retail level.

When I checked on the price for a 100-watt equivalent LED bulb the other day at Home Depot, it was around $26 bucks. That’s steep, but still represents significant savings over the lifetime of the bulb. Prices will continue to drop though, and I expect we’ll see prices in the $4 to $5 range in just a couple of years.

Like the bulbs themselves, light bulb labeling is going through a big change, too. It’s similar to what happened to the appliance industry. It had to produce an energy-use rating for each air conditioner, refrigerator and freezer sold. It became simple for energy-conscious consumers to compare different models based on energy use.

As you can see, brightness will now be expressed in lumens, not watts. That will take some getting used to. A 100-watt incandescent put out roughly 1,600 lumens, but consumed 100 watts of power in doing so.

The typical CFL 100-watt equivalent drops the power consumption down to about 23 watts. That same 1,600 lumens from an LED bulb takes only 13 watts, and lasts over 50,000 hours. The other big thing with LEDs is there’s no disposal or pollution to worry about.

The mercury contained in just one CFL bulb is enough to contaminate about 1,500 gallons of drinking water, according to Advanced Lumonics, a manufacturer of LED bulbs.

The real payoff comes from the life of the bulb and the lower power it uses. Take a look at the comparison chart below to see how LED bulbs can really make an impact. Both bulbs are assumed to operate eight hours per day for 10 years, with an electricity cost of $0.10 per kWh.

These differences will be even more dramatic as cost for LED bulbs drop even further.

Lest you think the United States is the only country instituting higher efficiency-lighting standards, think again.

China recently announced a ban on the sale and import of nearly all incandescent bulbs starting in October 2012. Other countries have also instituted higher efficiency lighting standards.

How to Play the Big Light Bulb Switchover

There’s one pure-play company that’s at the forefront of LED lighting development. Cree, Inc. (Nasdaq: CREE) is a North Carolina-based company that’s primary focus is the development and production of high-output LEDs for use in residential and commercial lighting applications.

Cree makes and sells just the LEDs, LED modules and complete bulbs. The company’s stock is trading in the $25 per share range, way off its 52-week high of $75.85 per share. Buying into Cree now isn’t much of a gamble, as the company has revenue in the $300 million a year range and trades at a reasonable P/E of 27.

Timing is everything, as the old saying goes, and over the next several years, the demand for more LED bulbs will skyrocket. That should help Cree’s bottom line, and send its shares headed north again.

Like it or not, the great light bulb transition has begun, and Cree will be right in the middle of making it happen.

Good Investing,

David Fessler

Article by Investment U

The Central Bank of Armenia held its key refinancing rate unchanged at 8.00%.  The Central Bank Board said in its release [translated]: “The Council noted that at present there is no inflationary pressures from penetrating global economy into the RA. With the expected slowdown of the world economic growth is assumed that the market prices of basic raw and food did not significantly change, which corresponds to the baseline scenario the global economy outlined in the “Programme of the monetary policy of the 4th quarter of 2011. ” At the same time, there are still uncertainties associated with debt problems in developed countries.”

Delta Air Lines (DAL) has signed a binding agreement to acquire a minority stake in Brazilian airline Gol Linhas Aereas Inteligentes (GOL). Delta will acquire $100 million in the discount airline’s preferred shares.