The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which comes with counterparty risk. This conclusion is apparent from the fact that the futures prices for gold and silver have moved into “backwardation.”
…
Read more: Investors to Silver: "Let's Get Physical" http://dailyreckoning.com/investors-to-silver-lets-get-physical/#ixzz17euFwtZJ
If you’re interested in making money in energy commodities over the coming decade, I have two important numbers for you…
The first is the price of natural gas in the US – which is less than $4.50 per million British thermal units (mBtu). The second is the price of natural gas in Asia, where people will pay $10 per mBtu for natural gas they import from overseas.
Read more: America's Next Great Commodity Boom http://dailyreckoning.com/americas-next-great-commodity-boom/#ixzz17es28100
The nearby chart tells the tale. Commodities, as an asset class, have become quasi-currencies.
“Reports Barron’s: ‘This year, for the first time ever, China has been investing more overseas in assets like iron, oil and copper than it puts into US government bonds.
Natural resources should still be a good sandbox to play in to make a lot of money and protect your wealth against inflation.”
Read more: Why Commodities are Rallying as Currencies Decline http://dailyreckoning.com/why-commodities-are-rallying-as-currencies-decline/#ixzz15wqUfeIS
Interesting reports about volatility and seasonality
While short-term factors like the U.S. dollar’s volatility and the Federal Reserve’s QE2 program seem to grab the most attention, I believe the doubling of the world’s population, massive infrastructure expansion like China’s subways and the “free market policies” being embraced by the government leaders in the emerging world are much more significant
Read more: Anticipating Volatility and the Rise of Emerging Markets http://dailyreckoning.com/anticipating-volatility-and-the-rise-of-emerging-markets/#ixzz15uUjWASE
Investments in China and Brazil are a bit overdone at the moment. Where can an international investor seek higher rates of return? Try the Chilean peso.
1. Chile’s economy is absolutely booming. It is expected to grow by 5.1% this year and rise to 6.1% next year (extensive copper export)
2. Accelerations by a healthy employment rate
3. The phenomenal increases in employment are helping increase the country’s corporate investment and spending. But more importantly, the gains in the labor force are helping to support income growth and personal spending. Chilean domestic consumption skyrocketed in the first three months of the year — vaulting higher by over 11%.
As the Chilean economy expands, higher consumer prices are inevitable — but so are higher central bank rates
Read more: Three Reasons to Consider the Chilean Peso http://dailyreckoning.com/three-reasons-to-consider-the-chilean-peso/#ixzz15uMDv1i3
Read more: Three Reasons to Consider the Chilean Peso http://dailyreckoning.com/three-reasons-to-consider-the-chilean-peso/#ixzz15uHpuK9x
The dollar may fall below 75 yen next year as it becomes the world’s “weakest currency” due to the Federal Reserve’s monetary-easing program, according to JPMorgan & Chase Co.
With monetary easing in the U.S., Japan and Europe likely to bolster the global recovery and increase demand for yield, the yen is poised to weaken against other currencies beside the dollar to levels last seen in early 2007
Royal Dutch Shell said that by 2012 it expects more than half of its output will be natural gas - not oil. That is as if Starbucks said it expects to sell more tea than coffee. Yet this prediction is not unusual for Big Oil these days. In fact, most of the big boys are making big bets on natural gas. One of my favorite plays in the natural gas sector remains Contango Oil & Gas (AMEX:MCF). This is because it is a low-cost producer with no debt, so it can still create shareholder value in a low-price environment. Contango's all-in costs are under $2 for nat gas.
http://dailyreckoning.com/big-oil-bets-on-natural-gas/
The long and short of it is that the world is going to move toward nuclear power. That's why I have recommended investments in long-term uranium players like Cameco (CCJ: NYSE), and Denison Mines (DNN: AMEX), as well as direct investments in uranium via Uranium Participation Corp. (U: TSX).
Solar and wind have a place in many niche energy applications, but not for meeting the looming energy demands of billions of people. For the next 30 or 40 years, the alternative energy methods will move toward the 5–7% range of overall world energy supply. But for the “big power,” you need to keep focused on nuclear energy.
http://dailyreckoning.com/more-nukes/
The best and easiest way to cash in on Brazil's housing boom (other than to buy a property directly) is to buy Gafisa, which trades on the NYSE under the ticker GFA. It is the only Brazilian real estate company trading on the NYSE.
http://www.dailyreckoning.com.au/brazilian-real-estate-is-a-buy/2010/10/22/
There is lots of ugly economic news out there, but one key bright spot is world trade. In the US, one particular industry will enjoy windfall profits from exports this year. That industry is agriculture.
As a long-term investment, Lindsay (NYSE:LNN) should benefit as farmers spend some of that money on irrigation equipment
In Canada, Viterra (TSX:VT) is a good long-term holding. It should rebound after excessive rains in Western Canada hurt grain production. In China, Migao (TSX:MGO), makes fertilizers for high-end crops such as fruits, vegetables and tobacco. It’s growing capacity, and as the financials reflect the additions, it should report good earnings.
Read more: The Best Way to Bet on America http://dailyreckoning.com/the-best-way-to-bet-on-america/#ixzz0ybEl811h
Many of the most compelling investment ideas featured investments in oil, emerging markets, agriculture and water.
Gulfport Energy (NASDAQ:GPOR) – An oil and gas company based in Louisiana
Loews Corp. (NYSE:L) – A conglomerate with interests in three publicly traded companies: Diamond Offshore, Boardwalk Pipeline and CNA Financial
FEMSA (NYSE:FMX) – A Mexican blue chip with interests in two publicly traded companies: Coca-Cola FEMSA and Heineken
Foster Wheeler (NASDAQ:FWLT) – A large engineering and construction firm
See: Stock Picks From the Vancouver Conference
Longer term, there will be pressure to produce more food. In turn, farmers will seek to boost crop yields. Fertilizers are one way to get there. There is plenty of room for growth here, as application rates remain well below recommended rates.
Of all the nutrients, potash has the greatest potential for growth. (...) Either way, both of these stocks are potential monsters. Potash and Mosaic could double their output by 2015 and 2020, respectively. About 75% of new supply coming online till 2020 is from these two titans. This provides a powerful way to increase earnings even if potash prices go nowhere. If prices do climb, then earnings will jump sharply.
(http://dailyreckoning.com/potashcorp-nysepot-and-mosaic-nysemos-investing-in-the-fertilizer-crisis/)
As far as I know, China will still need coal. China consumed 47% of the world’s coal last year. The growth of that demand has been mind-boggling – so much so it is hard to wrap one’s mind around it. In 2000, China consumed as much coal as the US. Today, it consumes three times as much as the US. China’s leading coal stocks are all down 25% or more of late. This includes China Shenhua Energy, China’s largest coal producer, and China Coal Energy. It might be a good time to fade the Aussies and go long the Mongolians.
http://dailyreckoning.com/buy-what-china-needs-coal/
Central banks are blowing another asset bubble. Both the technology and real estate bubbles were spawned by cheap credit.
Put simply, when you factor future earnings growth and an expansion in valuations, the developing markets are prime candidates for the next asset bubble.
In our opinion, the next bear-market will only occur when the Federal Reserve is done raising its benchmark rate for this cycle. So, in the next bear-market, instead of financial institutions going bust, entire nations are likely to default. 
If our assessment is correct, towards the end of this bull-market, we are likely to see the following red flags:
However, this bull-market should continue for the next 2-3 years and as long as the primary trend is up, we will remain fully invested in our preferred growth-producing assets. (http://dailyreckoning.com/blowing-bubbles-2/)
Among the others comments this is important to remember: “China won’t revalue the yuan at this time because as the dollar is rising, so, too, is the yuan. This hurts Chinese exports to Europe – its largest market. Ergo, there is no way China would allow further strengthening of the yuan to the euro by strengthening the yuan relative to the dollar!!! (If you don’t understand this one, please re-read until you do. It is the single most important dynamic right now in the global recovery besides the euro collapse itself.)” (http://www.peternavarro.com/dailyblog.html, Saturday, May 15, 2010)
MGI says the Indian economy is expected to be five times greater by 2030, with urban centers being the key driver of this growth. It projects India’s labor force to increase by 270 million—70 percent of that coming from urban jobs. This mass of people will likely demand better housing, better roads, better goods— in all, a higher quality of life than what’s been available to them in the past. The resulting pressure this could have on commodity demand is the X-factor that we believe makes this cycle different than anything we’ve experienced in the past. You can download the full report at McKinsey’s Web site.
(http://dailyreckoning.com/india%e2%80%99s-urban-future/)
I don’t think I’d want to be involved in the frothy property market of the big cities. I wouldn’t want to invest in its opaque and undercapitalized banks. On the other hand, I would invest in ideas that link to the agricultural scene. There is clear demand and growth and constraints – in water and arable land – that one can deal with in only so many ways. I would invest in uranium, which ties back, in part, to China’s aggressive nuclear build-out. Robeco is forecasting a second-half rebound. JPMorgan Chase expects Chinese stocks to rally more than 40% this year.
(http://dailyreckoning.com/china-boom-or-bust-does-it-even-matter/)
Two fund recommendations to take advantage of the world’s most-hated asset class.
First is the iShares MSCI Japan Index Fund (NYSE:EWJ). It mirrors the performance of the MSCI Japan Index, a very broad swath of Japan’s largest companies. And it gives you a good shot at outperforming the benchmark Nikkei 225 Index. On both a one-year and a five-year basis, EWJ has beaten the Nikkei.
But don’t limit yourself to the blue chips. In almost every market turnaround, small-cap companies lead the way. So pick up the Fidelity Japan Smaller Companies Fund (FJSCX) as a supplement. This fund outperformed the MSCI Japan Index during the post-rebound in 2009. And it might do so again when Japan really starts to rebuild. Plus, you’ll gain exposure to many companies in this fund that you won’t find in EWJ.
Remember, this is the Trade of the Decade. Not the Trade of the Week (http://dailyreckoning.com/buy-japan/)
Sell Japanese government bonds. Japanese bonds are probably even more over-valued than US bonds. And with the Japanese borrowing more than ever...while the Japanese savings rate declines...it seems a fair bet that Japanese government debt will go down at least as much as US debt. Maybe more… (http://dailyreckoning.com/an-even-better-trade-of-the-decade/)
Oil has been a far more consistent performer in the energy sector than natural gas. While crude oil has more than doubled off its post-credit- crisis lows, natural gas prices remain depressed. Despite their recovery off ultra-low levels last summer, natural gas prices are still more than 70% below their record highs. The company I'm talking about is Canada's EnCana Corporation (NYSE:ECA). Another bullish indicator is Exxon-Mobil's (NYSE:XOM) recent takeover of natural gas producer, XTO Energy (NYSE:XTO) for $41 billion dollars (http://dailyreckoning.com/the-best-natural-gas-stock/)
Conveniently, Wall Street has made fear a tradable commodity. One way to play it is through the iPath S&P 500 VIX Short-Term Futures fund (NYSE:VXX). Though a mouthful, it simply aims to mimic the VIX. It started trading only this year. It’s done horribly, as you would expect given the fall in the VIX.
“Stock markets usually react negative to rate increase news because it means less corporate profits, because cost of borrowing will higher. Also keep in mind even though this principle is the same at the beginning of a rate hike cycle (like now) stocks may take it much harder than at the end of a rate hike cycle when it is over a period of time priced in and expected. Later on the dynamic change a bit and stocks might actually go up on rate hike news because business is good.” (DrFX Daily Briefing April 29)
“You must build the following into your relational analysis. There are core drivers that cause natural directional moves over time but more prevalent is the very short term naked speculation that feed on and leverage the core drivers and this cause the type of gyrations we see inside our grids.
The other thing that naturally may cause it is the economic growth differential and potential for the Fed to begin earlier than the ECB to normalize rates, and thus rate differential expectations. Since these expectations build in a multi month, even multi year increase in rates that may be quite dominant in determining the directional drift (down)… In the euro's favor, which will limited such a "drift" down, over time is the ECB inflation fighting mandate which makes it easier for them to hike rates on any sight of inflation or at least talk dirty about hiking rates”.
Senecso (http://finance.yahoo.com/q?s=SNT) is a highly speculative -- and I emphasize the word highly -- biotech stock, I am building a position in Senesco (SNT). It's a development stage company that has applications for both humans and agriculture. Last week was a good week as it jumped from $.40 to $.60.
From Peter Navarro 14/03/2010 newsletter:
”I have a relatively large position in CYB (http://finance.yahoo.com/q?s=CYB), which is a bet that the Chinese yuan will appreciate over the next 12 to 24 months. The beauty of this trade is that there is virtually no downside risk because there is no imaginable scenario in which the yuan would actually depreciate. “
The best way to own water rights is to own PICO Holdings (NASDAQ:PICO). It owns water rights mostly in Nevada and Arizona 
One way to participate in a long-term rise in the uranium price would be to take a position in the Market Vectors Nuclear Energy ETF (NYSE:NLR). Most of the holdings of NLR are on foreign exchanges. So it’s a great way to play nuclear energy on the New York Stock Exchange, yet obtain exposure to the international nuclear market without the hassle of foreign trading.
(http://dailyreckoning.com/trade-of-the-decade-sell-everything-part-ii/)
Our play here is Titanium Metals (NYSE:TIE), the second-largest producer of titanium in the world.. The company only recently signed a new agreement with Boeing that will keep it as a key supplier through 2015
http://dailyreckoning.com/titanium-metals-nysetie-investing-in-aviation-growth/
http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=TIE
AMEX:BTIM, OTCBB:ISCO
http://dailyreckoning.com/the-second-huge-stem-cell-breakthrough-in-a-week/
Worth have a look
Shorting the long bond is eventually going to be one of the great trades of this decade. TBT (http://seekingalpha.com/symbol/tbt) is the instrument
The water utilities look interesting again: SJW Corp, Aqua America. The other stocks in this space are the many industrials that make the pipes, pumps, valves and other goods that support water
UBS says:
“We revise our year-end 2010 forecasts to EURUSD 1.30 and leave our USDJPY forecast at 95.0. Many of these same factors-especially growth differentials and the diminished status of the euro owing to sovereign uncertainty-are likely to remain intact into 2011. Accordingly, we forecast EURUSD at 1.25 by the end of 2011. We retain the view that the yen will remain more stable, with a year-end 2011 forecast of USDJPY 90.0.”
That is:
Short EURUSD as 2010 long term trade
Long USDJPY as 2010 long term trade
Speaking of South Africa, RBC Capital released a report yesterday which predicted the rand will rally 10 percent in the next three months. The report credits improving economic growth and the upcoming Fifa World Cup tournament with pushing the South African rand higher. The report predicts the rand will reach a high of 6.75 per dollar by the time the World Cup ends on July 11th. "Investors are going to push the rand stronger as we approach the world cup, which will attract quite a lot of money into the country". We have seen a pattern of major events pushing the host country's currency higher, as the Olympic host country typically gets a boost in the months prior to the event
http://www.dailypfennig.com/currentIssue.aspx?date=3/12/2010
http://dailyreckoning.com/titanium-metals-nysetie-investing-in-aviation-growth/
According to informed guesses, the Middle East will buy 1,400-1,700 planes over the next twenty years, at a cost of $240-300 billion. These planes will support passenger growth of nearly 5% annually over that timeframe. Many other developing nations around the globe are also becoming active buyers of passenger jets. Airbus just signed a $1.8 billion deal with Vietnam Airlines for four A380 super-jumbos and two A350s. Ethiopian Airlines recently put in an order for 12 A350s, at a cost of $3 billion.
Favorites are the titanium producers. Titanium is a lightweight metal. In fact, it has the highest strength-to-weight ratio of any metal, making it ideal for aircraft. The newer planes are titanium intensive, more so than in the past.
Titanium Metals (NYSE:TIE), the second-largest producer of titanium in the world.
Low inflation (1% y/y) would suggest that ECB rate hike are not expected and the widening interest differential will impact negatively on EURUSD long term (3-6 month)
