TFN eNews 10/13/2009: This creates fantastic opportunities!
Published via e-mail broadcast on October 13, 2009
In today’s TFN eNews:
* This uranium miner is moving nicely
* Gold at new records
* Of addicts and breakthroughs
Dear TFN eNews reader,
Two weeks ago, I directed your attention to Canadian uranium miner Kahn Resources (TSE:KRI). This Toronto-traded company is preparing to develop uranium properties in the Dornod district of Mongolia. It now looks like things might actually start moving for this company!
Based on the spike in commodities, the stock is trading up 12% over our recorded entry price in our TFN free picks.
It’s too early to take gains on this one. For a variety of reasons…
I’m not ready to buy into propaganda of an imminent recovery of the American economy: Redistributing money extracted from the economy is a poor substitute for revenues generated by demand-based growth! Without American consumers doing what they do best — supporting global growth by consumption-driven spending — the global economy has to structurally realign. Which takes time — if it is possible at all.
But demand for commodities is rising, despite growing inventories. Most of that increase is based on speculation, not actual industrial demand. It all comes back to the dollar.
The Obama administration is counting on a low dollar to “increase exports.” That’s a perfectly good strategy. The Bush Administration and Beijing did the same thing for years: Talking a good game about wanting a strong currency while allowing the greenback/yuan to dip lower by benign neglect or outright manipulation.
That’s where the similarities end. Pro-growth economic policies in the United States made it feasible and lucrative for foreign countries to jazz up their export business. All they needed to do was extend U.S. consumers credit to buy their goods. As long as there was upside, there was no limit to credit.
But that upside has gone. The Obama Administration’s efforts to buy economic statism via “stimulus” have failed. Unemployment is at multi-decennial record levels. The budget deficit has tripled over the most spendthrift year of the previous administration. Worse, this is a mutually reinforcing spiral: High U.S. unemployment means lower tax revenues and higher government expenditures. Which means higher borrowing: After all, this government campaigned on its commitment to increase entitlements!
But higher debt and lowered prospects that that debt will retain its denominational value are causing a major global shift — away from the dollar and into “non-dollar” assets.
If Obama received the Nobel Peace Price because Europe perceived him as the “un-Bush” — commodities are now rising because they’re the “un-dollar”!
TFN’s Andrew Snyder called this phenomenon the “Commodity Carry Trade”.
*** Gold, the retail investors’ favorite “un-dollar” set a record high at $1,064 today as the dollar sank against the euro. EU economies may be in no great shape… but compared to the uncontrolled debt binge of the Unites States, they’ve started to look downright American!
Oil prices, too, approached new highs for the year. Not on industrial demand (which is now believed to have peaked in 2005!) but mainly on dollar-avoidance.
The U.S. dollar index, which measures the greenback against other major currencies, hit a 14-month low.
In the long term, it’s bad news for Americans. In the short term, the upside for stocks like Kahn Resources is enormous!
*** I’ve noticed it over the years. First, during my days presiding over an office full of young co-workers. These days, overlooking the customer service division of an in-house competitor. Seems like every time I look up from my monitor, there’s an exodus of people taking a cigarette break.
Every hour and a half, they disappear for at least twenty minutes.
I didn’t use to mind as long as the work got done. I only got miffed when the non-smoking colleagues started to feel entitled to the same break schedule.
“Smokers typically have interesting insight on their addictive, often deadly habit,” writes TFN’s Andrew Snyder today. “Ask most long-time nicotine addicts and they’ll tell you they despise their pack-a-day dependence. Yet few smokers have the willpower to take a deep breath, push the carcinogens aside and move on. That’s addiction for you.
“The world’s dependence on fossil fuels is not much different. Sure, we talk about renewable fuel sources and spend huge amounts of taxpayer money to kick-start a ‘revolution.’ But in reality, we’re just as addicted to oil as ever.
“For investors, this is good news.
“While solar, wind and geothermal are intriguing ways to power a TV set or your hot water heater, they do little to create the kind of horsepower needed to get a 737 up to cruising speed or an eighteen-wheeler into high gear.
“For that kind of power, we’ll depend on fossil fuels — or a synthetic version — for a long, long time. That’s okay, though. We have all the technology we need to ditch crude and move to cleaner, more abundant resources. Like natural gas. After all, the United States is the Saudi Arabia of gas.
“This creates fantastic opportunities. Earlier this week, Qatar Airways passengers were part of a historic flight. They traveled from London to Qatar on a plane fueled by natural gas, the same fuel source the United States currently has too much of.
“The flight used fuel created by gas-to-liquids technology developed by Royal Dutch Shell (NYSE:RDS-B) that turns natural gas into liquid kerosene, the basis of jet fuel. The flight is fantastic news for Rentech (AMEX:RTK), a company celebrating the FAA’s recent decision to allow jet fuel to contain a 50/50 blend of fossil-based fuel and synthetic gas-to-liquid fuel…”
***The 3 Best Stocks under $3 to buy Now!
We expect these new recommendations to bring in gains of perhaps 145%… 55%… 67%. Better yet, I think we can take some of those gains before Christmas. But you have to act immediately! http://www.todaysfinancialnews.com/HSC/ridic/EHSCK902.html
*** Quote of the Day:
“Politicians may not know much — or care much — about economics, but they know politics and they care a lot about keeping their jobs. So a great distracting hue and cry has gone up that all this was due to the market not being regulated enough by the government. In reality, it was precisely the government regulators who forced the banks to lower their lending standards.”
– Thomas Sowell, Creators.com
Recommended Reading:
Historic flight for crude addicts
Q4 Update: TFN Complete Guide to Stem Cell Stocks under $10
The 3 Best Stocks under $3 to Buy NOW!
Today’s Top 3 Financial News Stories:
FT.com – Gold pushes to fresh high “Gold reached $1,067.60 a troy ounce, another record, pushing past the previous peak of $1,061.20 reached last Thursday as bullion’s record-breaking run showed little sign of running out of steam.”
Bloomberg.com — Obama Dollar Retreats Most Against Commodities in Wealth Shift “As threats of a financial meltdown fade, the currency is falling victim to an unprecedented budget deficit, near-zero interest rates and slow growth. The dollar is down 10 percent against six trading partners’ legal tender in Treasury Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. This year’s drop followed its best two quarters in 16 years.”
Telegraph.co.uk — Deflation, not inflation would be the bigger threat if the Conservatives do what they say “For the the time being, runaway inflation looks rather unlikely. Indeed, the whole purpose of ‘quantitative easing’ in a world where interest rates can’t practically be cut much further is to keep money supply growth expanding at a level which prevents the inflation rate dropping significantly below target.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
P. S. *** Diversify globally: offering convenient accounts and all major currencies with EverBank’s WorldCurrency CD or money market account.
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