A Christmas Message and a Christmas Thought!

A Christmas Message

We at StockResearchPortal.com wish you and your family a very Merry Christmas, and a Healthy and Prosperous New Year.  As I have said previously, through these E-mail Commentaries and our website we plan to do our very best to help you through whatever economic and financial market conditions we face together.  Our intent is to have us all come ‘out the other end’ more knowledgeable, and better off ‘from a financial point of view’.

A Christmas Thought

Each Christmas my wife and I receive many ‘Family Letters’ from friends and relatives recounting some of their ‘life experiences’ over the past 12 months.  One of those letters this year came from my brother-in-law, writing on behalf of he and my wife’s sister.  I would describe this particular brother-in-law as a smart, well-educated, well-read and deeply philosophical lawyer who is more than a little ‘left of center’ politically.  By lifestyle choice he practices law in a remote area of Canada.  I say by lifestyle choice because I believe he is well equipped intellectually and energy-wise to have been a successful ‘big city’, ‘big law firm’ lawyer had he elected to follow that course.  With some minor editing so as to not use given names, I thought his paragraph before the “Happy holidays to you all, with love and hugs” says a great deal about him, and about how he thinks from rural Canada where he is very tied into world events via the internet.  Summarized, that paragraph says:

• several years ago my staff and I agreed to a four day week.  This has been a welcome change, creating more balance between work and home;

• this year we built a second vegetable garden next to the first one, and grew a bounty of potatoes, carrots, broccoli, garlic, onions and even a few artichokes;

• this year we added solar panels, batteries and an inverter system to our house in preparation for the coming energy shortages; and,

• I am looking for a more localized sense of community.  Particularly as we watch the world’s industrial and financial system self-destruct, awash in wars of aggression and exploitation both at home and abroad.

He ended that paragraph by saying: “But I digress.  It is Christmas after all.”

Many people reading this E-mail may have lifestyles similar to my brother-in-law and his wife.  I suspect most don’t.  I am one of the ‘most don’ts’.  So two days before Christmas, going into what I think may be a tumultuous 2012 for:

• the world economy;

• country specific economies; and,

• the financial markets.

I suggest ‘most don’ts’ might conclude that my brother-in-law just may be a tad smarter than I think.

For any number of reasons that pertain to my own characteristics, ambitions, and personal need to ‘be in the center of things’, I wouldn’t trade places with my brother-in-law.  That said, I do consider him a real-life example of someone whose life choices have worked out for him – and who may in the end be proven to be right in making those choices.

Something to think about over Christmas as you reflect on your own lifestyle and your own life choices.

E-mail Commentaries Next Week!

Next week I plan to send E-mail Commentaries only if economic or financial events come to my attention that I think are particularly significant.  I currently am planning my next E-mail Commentary for Tuesday, January 3.  All best wishes for a Happy New Year.

Subscribe today for complete, unabridged commentaries along with full access to Stock Research Portal.com

Christmas Read on Gold!

This brief commentary is aimed at those who own or are contemplating owning physical gold and/or gold stocks.

I found an comparatively long article this morning that I think is worth putting under the Christmas tree on December 25, and then reading carefully on the afternoon of December 26 after one’s head is sufficiently cleared to take the time to think through and reflect on what its author says. The article is far too broad in its discussion of the physical gold price for me to summarize it here. I suggest continue reading

Commentary reading time 2 minutes. Referenced article(s) reading time 12 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

U.K Credit Rating?

On Tuesday Moody’s is reported as saying the United Kingdom’s current credit rating, which I assume is AAA since it is described as “top notch”, is threatened by:

• the current Eurozone Sovereign Debt and Banking issues; and,

• possible further ‘shocks’ to the U.K. economy that might negatively impact the U.K Government’s budget balancing efforts.

I see this as simply ‘more of the same’ by way of credit rating, and threatened credit rating, downgrades.  At the same time I consider this type of announcement a further important indicator of prospective deteriorating economic conditions in several important developed economies – which if I am right I believe inevitably will spill over into all other developed and developing countries.

On the topic of credit and company credit ratings, you may not be aware that you can access updated Fitch, Moody and S&P credit ratings by visiting the websites of each and registering without cost.  I have done that, and you might consider doing likewise.  Treat this information as a ‘Holiday Gift’ if you were unaware that information is available for the asking.  Those websites can be accessed at Fitch, Moody’s, and S&P.

For what it is worth, on a personal note I currently have more confidence in the ‘British Bulldog’ approach to things than I have in what I generally perceive as an American Centric and seemingly unrealistic approach to things by current American politicians.  That said, each week and month I am increasingly coming to think that America’s current predominant world military position may prove to be increasingly important to it, and to the developed world, in the months and years ahead. I think that is a rather sobering thought for a Thursday that is only 3 days before Christmas Day, but nonetheless something you might think about as you read and hear media reports on current world affairs and events.

For a detailed write-up on Moody’s current views on the United Kingdom’s credit rating I suggest you read ‘Moody’s says euro crisis endangers UK’s top-notch rating’.  Written by Sven Egenter and published by Reuters, the article takes about 4 minutes to read.

Subscribe today for complete, unabridged commentaries along with full access to Stock Research Portal.com

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• A New Greece?
• Bernanke – February 2, 2012 – U.S. Presidential Election!
• U.S. January Jobs Report!
• More On Greece!
• Christine Lagarde – Listen Between the Lines!

So, do you want to know what some big banks think the price of physical gold will be in 2012?  Here are three views that all were expressed in yesterday’s early hours: (1) Barclays Capital – U.S.$2,000 average, (2) Goldman Sachs – U.S.$1,810 average, and (3) UBS – U.S.$2,050 average.

As you know if you read these e-mails, I believe that any forecast of the physical gold price is a forecast on the world macro-economic and political condition at a given point in time.  Accordingly, as I reflect on the current gold price and these three 2012 price estimates – which for all intents and purposes are broadly in the same ‘ballpark’ – I have reached the following views with respect to them:

• First, generally speaking, assuming analysts get their underlying facts right and their assessments of prospective macro-economics and political matters in good balance, I think their estimates generally tend to be on the conservative side.  I think this whether they are forecasting the gold price, the silver price, or generating a ‘target price’ on a company’s shares irrespective of industry sector.  It follows that I believe that if the analysts who generated the physical gold prices for these three banks got the macro-economic and political conditions through 2012 ‘right’, then I intuitively believe their ‘real’ 2012 gold price forecasts may be lower than they really believe in their respective ‘heart of hearts’ the think the gold price will be in 2012;

• Second, if they didn’t get the macro-economic and political conditions through 2012 ‘right’, then as far as I am concerned any forecast of the 2012 physical gold price they generate either yesterday or at any other time is meaningless, and should be disregarded.  The problem is, of course, that based only on the article referenced below, there is not enough detail in my view to determine whether the Bank analysts have those things ‘right’.  The underlying macro-economic and political conditions through 2012 adopted by the analysts when determining their physical gold price forecasts that are set out in the article are for me:

• too general, and are not attributed to specific analysts or banks,

• incomplete – they include only a view or views by (I assume) the various bank analysts that 2012 will be an environment of (1) negative real interest rates, (2) continued Central Bank gold purchases, (3) a possible Eurozone breakup, (4) possible currency devaluations and risk of related ‘big inflation’ without reference to which currencies are at greatest risk (which ‘big inflation’ reference strikes me as being inconsistent with an assumption of ‘negative real interest rates’), and (5) “re-hypothecation and the serious risks that a massive period of deleveraging poses to the financial and economic system is likely to be a very important factor in 2012 which will lead to heightened volatility”;

• Third, I am particularly taken by the foregoing comment with respect to re-hypothecation and attendant related risk of financial system deleveraging.  I commented on re-hypothecation just last week – see ‘MF Global and Re-Hypothecation’ (December 12 – reading time 10 minutes).  I am increasingly thinking that re-hypothecation and what I think is the related topic of ‘derivatives’ is a potentially huge ‘overhang risk’ to the world financial markets.  To the extent I am right, and one or more of the bank analysts from the three Banks who made these gold price forecasts took that risk into account, I don’t see any way to assess how much they have impacted that risk in their gold price forecasts; and,
• Fourth, following from the foregoing, I see these three bank forecasts as little more than interesting observations.

The foregoing is an example, for what it is worth, of how I generally think through the things I read and listen to.  You may not agree with the way I look at things, but nonetheless it may give you some ‘food for thought’ with respect to your own ‘thought process’ as you do your own reading and listening.

The article yesterday that set out the three Bank forecasts referenced in this commentary is titled ‘2012 Gold price to be 28% more than current levels’.  The article was published on the CommodityOnline Blog – reading time 2 minutes.

Today’s Abridged Daily E-mail Commentary
Subscribe today for complete, unabridged commentaries along with full access to Stock Research Portal.com

U.S. Home Sales Revisions!

Revisions expected today to U.S. home sales reported over the past 10 years are anticipated to result in downward adjustments by as much as 10% – 20%.  I am not sure that any such revisions ought in theory to mean much, as prevailing house prices won’t change as a result.  Among other things, prevailing house prices by area should reflect …..

Commentary reading time 1 minute.  Referenced article(s) reading time 4 minutes.

Brinksmanship and Close to the Brink?

Bickering continued yesterday in Washington over the Senate approved short-term extension of a payroll tax cut that has been saving the average American worker $1,000 per year.  As you likely know, the U.S. Senate agreed to a short-term extension of the payroll cut this past weekend.  However, the Republican controlled Congress has rejected that agreement, demanding that President Obama order ….

Commentary reading time 2 minutes.  Referenced article(s) reading time 4 minutes.

Europe – Unprecedented Finance Risk In Early 2012?

An article Monday reports that European Central Bank President Mario Draghi then warned that Europe could face recession in early 2012 as European Governments and Banks will compete in the next few months to refinance about U.S.$500 billion in bonds coming due …..

Commentary reading time 2 minutes.  Referenced article(s) reading time 4 minutes. This Commentary includes a suggestion that you speak with your Investment Advisor(s) with respect to its subject matter.

IMF Funding Falls Short!

Yesterday the European Finance Ministers who wanted to raise 200 billion Euros (U.S.$260 billion) for the International Monetary Fund to assist with Eurozone financial issues succeeded in gaining commitments for only 75% of that amount.  The United Kingdom refused to contribute its 25 billion Euro share.  If seems to me the question that needs to be asked of U.K. Prime Minister Cameron is: …..

Commentary reading time 1 minutes.  Referenced article(s) reading time 7 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• Consequence of Iranian Oil Embargo?
• 2012 – More Difficult Than 2011?
• Iran v. United States!
• Gold Standard – Roubini – Lunatics and Hacks!
• Gold and the Eurozone?

As you may know, the Keystone XL Pipeline project is back in the news, with new pressure being put on the Obama Administration to approve what is more properly referred to as the Keystone Gulf Coast Expansion Pipeline.  This commentary briefly summarizes what are said to be the costs and benefits of completing this pipeline project.  As, I am sure you know, the majority of the oil that would be shipped through that proposed pipeline to the U.S. Gulf of Mexico refineries would be sourced from the Canadian Oil Sands.  As I understand it, the principal issues raised by the pipelines detractors (effectively the ‘cost side’) are:

• the potential of oil spills from the pipeline that could contaminate ground water in Nebraska and other areas the pipeline will pass through if built;

• Most importantly, the generation of greenhouse gases from the processes used to extract oil from the Canadian Oil Sands, as contrasted with greenhouse gases produced from processes used to extract oil from conventional oil resources.  On average, the difference in greenhouse gas generation from the Canadian Oil Sands is cited in some estimates ‘best case’ to be between 2.3X – 2.8X, and ‘worst case’ to be 3.0X – 3.7X, higher per barrel of oil produced depending on whether the Oil Sands oil is extracted by surface-mining techniques or in-situ techniques.  In-situ extraction techniques extract the oil by heating the sands ‘in place’, thereby reducing the viscosity (or more simply put ‘freeing up’ the oil trapped by the sand) so that it can be pumped out like conventional crude oil; and,

• The extraction of oil from the Oil Sands is more destructive environmentally than is conventional extraction.

As I see things, the ‘benefit side’ of the Keystone XL Pipeline equation from an American point of view is as simple as this.  In all probability, America will need conventional oil going forward that it can’t itself produce – and barring American interference, if America doesn’t want or is unable to access Canadian Oil Sands output, that output will go to China or elsewhere via physically shorter pipeline transportation systems that will take future Oil Sands production to Canada’s west coast.   That said, as a practical matter I think the U.S. eventually will have to face up to, what I see as, its prospective need for the Oil Sands production – and if it doesn’t act now, or even if it does, it will or may end up sharing that production with Asia in any event.  If I am right in this, if the Keystone XL Pipeline is not built now, it (or some alternative direct or indirect pipeline from the Oil Sands to the U.S.) almost certainly will be built at a future date – and at that time will prove to be far more difficult to approve and be more expensive than the current Keystone XL Pipeline as now proposed.

Rightly or wrongly, I see what is going on in the U.S. (and the Obama Administration) as procrastination in the face of a comparatively small minority of vocal environmentalists.  Continuous ceding by governments, whether they be Federal, State, Provincial or Municipal, to the ‘vocal minority’ typically, in my view, in the end results in unwarranted delays, inefficiencies and excessive costs.

If you are not well versed in matters pertaining to the Canadian Oil Sands, you might want to visit Wikipedia’s write-up on what is thought to be about one-third of the world’s known oil resources.  I think the Wikipedia write-up is a good primer on the Canadian Oil Sands, and one can use it as a ‘takeoff point’ for further research.

I, for one, have very little doubt that the Canadian Oil Sands will – in one way or another – play a very important part in how the world unfolds economically over the next decades.  If you invest or trade in the financial markets I believe you should make it your business to learn as much as you can about the Oil Sands.  I suggest you ask your Investment Advisor(s) to provide you with whatever written information they have at their disposal now, and on an ongoing basis, so as to keep you up to date with Oil Sands development.

For an article dealing with the Keystone XL Pipeline that includes a map and charts, see ‘Costs and benefits of the Keystone XL pipeline’ – reading time 5 minutes – published yesterday on the Econbrowser Blog.

You might also want to read ‘The GOP could accidentally delay the Keystone XL Pipeline’ – reading time 3 minutes. This article suggests that if House of Congress Republicans attempt now expedite that pipeline, that could result in the pipeline being deferred longer than it might be if they simply let the Obama Administration deal with it.  I do not have an opinion on whether or not that makes sense.

Today’s Abridged Daily E-mail Commentary
Subscribe today for complete, unabridged commentaries along with full access to Stock Research Portal.com

Ben Bernanke – Main Street American?

A December 16 article reports that U.S. Federal Reserve Chairman Ben Bernanke, now age 58, a man who I see as holding one of the most important positions in on the world macro-economic stage, refinanced his own home mortgage in September for a 30 year term in the amount of …..

Commentary reading time 3 minutes.  Referenced article(s) reading time 4 minutes.

Foreclosures – 60 Minutes – December 18!

And more on U.S. Housing – but from a different perspective.  On Sunday, December 18, CBS’s 60 Minutes carried a documentary on U.S. Housing Foreclosures.  Its emphasis was on the destruction of foreclosed houses in the Cleveland area by the municipality.  The documentary as I watched it, and listened to what was said, had a number of messages

Commentary reading time 2 minutes.  Video viewing time 14 minutes.

An American Centric Article!

Or so I think.  A recent article from Bloomberg suggests that S&P’s August, 2011 downgrade of its United States Credit Rating from AAA to AA+ was absurd in light of subsequent events, citing a number of U.S. statistics in support of this proposition.  I think the real question that the article does not answer, let alone pose, is:  What is …..

Commentary reading time 3 minutes.  Referenced article(s) reading time 3 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• And So It Goes – New Arms Race?
• Strategic Petroleum Reserves
• OPEC Stalemate
• Country Risk – A Very Big Deal!
• Oil Price Significance, Dollar v. Gold, Cash Flow v. Earnings, Poverty in America