China’s yuan-denominated crude oil futures launched overnight in Shanghai with 62,500 contracts traded in aggregate, meaning over 62 million barrels of oil changed hands for a notional volume over $4 billion.
The obvious concern with this launch, which was regarded with cautious hesitation is the fact that China is not a free market economy and the government will actively interfere with the markets.
Nonetheless this illustrates a willingness to move away from the US system which has dominated the world. Many indicators show that as the West spent time worrying about identity issues and pronouns, spending money on dadgets the East was Nation building.
More speculation in regard to Russia stockpiling gold by the end of 2017, its total gold reserves rose to 1,828.5 tons passing China's to reach the fifth largest reserve of gold. It has been rumoured that China was looking to introduce gold backed futures to usurp US markets. China has already started trading its Petro-Yuan and it seems clear that global trade and money supply is up for some incredible shifts. Russia has been working arduously to decrease its national debt while the US has been spiralling with another $1.3 billion of spending signed off from the Trump team. Seeing the reach of China, the trade war ensuing and the relations between these countries makes the notion of an Eastern dominated market rather than Western.
A firm famous for its investment in commodities sounds the call for the metals and mining sector. Matthew Korn, an analyst with Goldman explained:
"Our coverage view on the North America metals and mining sector is Attractive, with the stocks supported by a diverse combination of good fundamentals," the analyst added. "Commodity prices are high [and] the supply side for metals and bulks looks more rational than it has been in years."
It is time to take active measures in your portfolio. It is time to take action and take some of the passive gains from major funds and explore opportunities in Canadian mining.
Caution and preparation is the message. It is one that I have been yelling. Consider becoming more defensive in your approach. Many of the massively overvalued stocks, and/or incredibly debt laden companies will have to face a tough future. More and more countries are also waking up to the anti-trust business models many companies can use in the US. Not only this, as discussed before for many companies stock buyback programs seem to be what is driving stock prices higher. Not sales or fundamental growth. It is a reflection of the company not seeing where else to put money but back into its own shares. Of course, this is a negative view. Plenty of companies buyback shares for positive reasons, as there is no other place providing the same return, not even Research and Development.
”The equity market has some way to go for the next year to two," Pinto said in an interview with Bloomberg TV. "But then, if there is a correction, it could be a deep correction. It could be between 20 and 40 percent depending on the valuations at the time. The most important thing for someone like us is just to be prepared."
The main concern is inflation with interest rate hikes expected in the next few quarters. Even if they can control inflation to some degree one can pretty much guarantee that your salary will not be inflating. Today a household of two workers makes roughly the same as one income earner in the 1950’s.
Josh Hawley, Yale law school graduate see’s what so many of us have seen for years. Alphabet, the parent company of Google is in the business of monopoly. Peter Thiel is well known for his honest approach at explaining capitalism. The goal is to create a monopoly and then not pay tax. It is a two-step process. Amazon has managed to do it and Google certainly has, as well.
“Lawyers on Hawley’s staff are still considering the evidence, and he says he’ll make a decision on whether to bring charges this summer—when his Senate campaign will be in full swing. A person familiar with the case says several other states are considering similar investigations.”
However, as in most things regarding law just because something appears to clearly be one thing, make sure those that create laws have worded those laws specifically, so people can wiggle around them. It is how a capitalist democratic country works. One does not need to spend much time looking at the mountains of evidence both regarding collusion, corruption, fraud, stock manipulation to see that that is true.
Money is coming home. Vince Madden-Scott, Manager at Wood Mackenzie a leading resource research firm commented that Canada is going to increase gold production by 80% over the next 5 years. In his comments he speaks about the opportunity in the Yukon and many of the untapped land that has no become available to prospectors. He references the surge of investment flowing into Northern BC and Yukon as a huge potential for investors. The mineral potential is extremely high in Canada and the cost of capitalizing on these minerals is relatively low, while geopolitics is stable. It highlights what I have been saying in regard to Goldstrike, Juggernaut and Goliath. The biggest obstacle is simply having people be interested in the sector. Where else can you have the chance at extraordinary gains while owning actual assets that have value, not perceived value or intellectual property but real, tangible wealth?
The numbers are up at the annual PDAC conference in Toronto and enthusiasm is high. The article discusses some of the issues surrounding mining. Part of it is simply visibility. Not enough money flowing into it. There is a desperate need for production, the demand is high. It is acknowledged that many of the major producers are doing well but junior miners and prospectors are struggling to raise capital. That is not the case for all, as I well know with some having strong enough stories to raise funds.In the link below we hear from Jason Neal, who comments that the Mergers and Acquisitions departments are looking favourable towards this sector perhaps hinting at an interesting spring and summer.
"They’re probably in a position now that if they wanted to make an acquisition they could do it and find support.”
The final thought is also an interesting one: funds have become too big. There is not enough focus on growth opportunities with etf's, and mutual funds needing to invest too much money in order to get a solid dollar return on their large funds. This sounds like a fault of the fund industry. Perhaps, we need to have people building the growth side of our industry? There will incredible opportunity in this sector for those private equity plays. Talk to your adivsor about this mining, about the opportunities and see what they can do for you. If they are handcuffed by corporate policy get an online account and take advantage of opportunities. You can buy physical gold as insurance right now and you do not need much more than 10 minutes. You should be moving out of crypto and weed stocks and focusing on where the value is. The value is in the mining sector.
Price Waterhouse Coopers annual report entitled Preparing for Growth makes the case that mining companies have been consolidating their balance sheet and riding out a tough 5 year cycle but well positioned for exceptional opportunity. Companies focused on debt reduction and smaller investment banking deals. 2017 was a solid year in all and has left this sector poised for growth.
“2017 was a stable year for mining companies and one where they were positioning themselves for growth,” says Liam Fitzgerald, national mining leader, PwC Canada. “As prices for commodities stabilized over the past year, the industry focused on getting its financial house in order – focusing on their balance sheets and debt reduction, poised for future growth.”
Former Fed Chair Alan Greenspan the man who coined the term ‘irrational exuberance’ but allowed investment banks to run rampant was vocal about the current ever increasing markets. Alan Greenspan, a firm believer in allowing markets behave as they should with little regulation and allowed a cycle of greed that made the 80’s and 90’s look like medieval times stated:
“There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” Alan Greenspan, 91
The pieces below associated talk about conditions that lead to the housing crash in the US and the devestation that caused citizens...not bankers. Greenspans comments seems clear to me, but not if you turn on the television. It sounds like the best days are ahead. The good news is that there are many great signals coming out and great places to put your money. Resource commodities and companies associated with building, infrastructure, those companies with raw materials will see a strong bump in It is no surprise that I would throw in the housing market for a third, but that was covered in another camp chatter piece. No one likes to hear about all the doom and gloom, but the markets are resilient and as mentioned there are opportunities. The other thing to remember sometimes doing nothing and sitting in a safe insurance position for the near term is wise. I do not mean cash, but actual assets: gold, and silver.
Click heBHP Billiton is a massive Australian mining firm second to Glencore and chased by Rio Tinto. It is a large global player with a global outlook and understanding. Daniel Malchuk, President to f Operations, Minerals America’s spoke at the LME Week Bloomberg Forum some months ago in London and brought up some key point about copper.
The fundamentals for copper are great and the green revolution is a great place to start with:
These are electric vehicles and renewable energy… and fortunately Copper is ideally placed to benefit from the expected upsurge in demand from both.
The rise of renewables is a positive story. Thanks to strong policy support and major technical improvements, wind and solar power generation have increased nearly 50-fold since 2000!
Solar’s share of global power generation has more than doubled in just three years – yet still accounts for a small slice of the total energy mix.
Solar requires 5kg of copper per kilowatt that is more than double other types of energy! Danial Malchuk goes on to mention that an electric car uses about 40kg of copper more than a petrol car and that 140 million electric cars are expected to be on the road by 2035. That is an incredible demand.
“Based on total refined copper output, the value of the copper market could increase by over 50 per cent by 2035 – an opportunity worth seizing!”
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