Copper

Copper:

From the crash of the 2008 autumn and to its highest in last April, copper regained 182%!

And Since the mini-crash of the markets in last May/June, it rebounded by 20%.

The offer is insufficient, BHP records Q2 2010  a fall of 5% of its production of copper over one year. And expects to see lowering its production by 5 to 10% over the next 12 months!

In the same time, the demand increases.
According to the ICSG (International Copper Group Study), the copper world demand over one year grew by 5,8% in April, whereas the offer only follows to the constant rate of 5,5%.

And China has not indexed its copper stocks, so we have to scan the volumes of copper which it imports.

In the Short Run: copper will remain strongly correlated to the equity market. And thus with the evolution of the world economic growth.

Indicators for the short run: the increase of the BDI, a decrease of LME and Shanghai stocks.

Any decrease under the 6 000 $/6 100 $ the tonne will be a good opportunity to invest in copper.

A prediction from Credit Suisse analyst Michael Shillaker, of $10,000 a tonne ($4.54/lb) in 2012.
Indeed copper has already touched close to $9,000 a tonne back in the heady days of 2008 before the bottom fell out of the market... (It suggests a big rise in mining company share prices over the next two years, Micahel is looking for around a 30% increase overall by the year end and as much as 100% or more for some stocks over the next two to three years.)

And always keep in mind that there is no doubt that when China will restart its massive copper consumption copper will be able to reach its highest. (if there is no double dip W)

Tehran stock market hits all-time high

Tehran Exchange Begins Trading Futures to Attract Investors (Bloomberg)

Website of TSE

FLOORED trailer

 

Website of the movie

A world that's more riot than profession, the trading floors of Chicago are a place where gambling your family's mortgage is all in a day's work. Floored offers a unique window to this lesser-known world of finance. These men may not have degrees, but they've got guts, and penchant for excess that solicits simultaneous feelings of revulsion and admiration. But like many aspects of our economy, technology is changing the way these traders do business, and these eccentric pit denizens aren't the type to take kindly to new tricks.

Rare earth metals war

Candium, yttrium and the lanthanides, it tell you nothing?

The emergence of a mining sector with high potential investment opportunities:

Strategic and irreplaceable.
Without rare earth metals, no hybrid cars, no iPhone, no Ipad, no LCD or Plasma screen, no solar technology, no lamps with low consumption LED. No national defense either (they are essential in the armament) and no effective oil refining.

Moreover 25% of the future new technologies will need the rare earth metals.

The rare earths are between the hands of Beijing.
China produces 95% of the world production of the highly strategic and irreplaceable rare earth metals.

 China’s Monopoly Over Rare Earth Element

China always exported its rare earth metals. But today, China wants to keep them for its technological future and thus reduces its exports.


Over the last seven years, China has reduced the amount of rare earths available for export by some 40%.

In 2007, exports were limited to 40 000 tonnes. A fall of 33%!

In 2009, 30 000 tonnes.

And the cuts should be more drastic in 2010!

In its 2009-2015 plan for the development of rare earth elements, Beijing wants to ban exports of dysprosium, terbium, thulium, lutetium and yttrium. Exports of other rare earth elements being strictly fixed to 35 000 tonnes maximum per year.

And I don't even speak about the taxes up to 25% on some rare earth metals.

In June 2010, China has new objectives:

- To close all the illegal mines and thus to remove illegal exports
- To put the extraction in hands of 3 to 5 large public companies.
- To unify the supply chain of rare earth metal.

So China will make the price and will control 100% of the market.

The rare earth metals world demand doubled over the seven last years and should still double from now to 2013.
Some even say that it could increase by 50% per year from 2010 to 2015!

--> So Rare earth production is or may soon be too low to keep up with growing demand, and rare earth metals prices may increase.

The rare earth metals are very important for the development of industries of high technologies, of defense, and all “green” technologies.
US policy makers should consider all options, including government incentives if necessary, to return US supply back to the point that it can satisfy at least US national defense requirements (Mountain Pass mines).
The United States started to redevelop its rare earth metals mine.

They have to be patient, to create, develop and put in production a mine can take 8-10 years.
But the operation will be very profitable.
It should also be noted that Canada also has large and high grade deposits under development.
 
Follow the investment opportunities in cobalt, vanadium and lithium.
Dacha Capital [TSX.V:DAC, OTCQX:DCHAF] is a relative newcomer to the rare earths sector.
Global X Lithium, an Lithium ETF.

Invest in ETF based on rare metals 
Article

EUR/USD USD/JPY GBP/USD

EUR/USD:

EURUSD has continued to push higher after confirming a Head and Shoulders bullish reversal chart formation, with prices now testing resistance at 1.3266, the 76.4% Fibonacci retracement of the 4/12-6/7 downswing as well as the upside target implied by measuring the distance between the head and neckline of the H&S formation. We can look below the bottom of a rising channel established from late June (now at 1.3128) to position for a selling opportunity.

  

 USD/JPY:  Japanese Yen Breaks 2009 High

   

Daily Bars 

  

8480 (2009 low) has been broken and focus is now on the all time low just below 80 (1995 low). Former supports, 8520 and 8560, are now resistance. A move above 8625 would begin to suggest that an important low is in place.

 

GBP/USD: Bulls Clear Key Resistance, Challenge 1.60

Strategy: flat  

GBPUSD has cleared the top of a rising channel set from the lows in May  as well as the horizontal barrier at 1.5831, with prices now stalling ahead of the psychologically significant resistance at the 1.60 figure. A push above this boundary would open the door for a challenge of 1.6377.

Source: Dailyfx

China agricultural sector

New green revolution: China is now able to produce enough food  for its 1.4 billion people

So follow the Chinese agricultural firms, there should be interesting investment opportunities...

Gold portfolio

my gold portfolio:

EUR/USD

(240 minutes bars)

The EURUSD has slightly exceeded the 38.2% retracement of the decline from 1,5144 and is now testing the March low of 1,3270. Since price has exceeded 1,3250, the previously preferred count is no longer. The alternate, in which the rally from the low is a complex double three (2 zigzags), is now preferred. The 2 zigzags would be equal at 1,3420 but we could get a top before then as RSI is overbought and divergent on multiple time frames.

US Dollar Index

Prices have taken out support at 82.11, the 76.4% Fibonacci retracement of the 4/12-6/7 upswing. Still, positive RSI divergence continues to hint that a rebound is in the works in the near term, albeit from a lower base. Continued selling is eyeing a move toward April’s swing low at 80.07.

Crude Oil

The bullstook out resistance June’s swing high ($79.38), with prices now set to challenge the upper boundary of a rising channel set from May, now at $82.21. A push above that will expose the 2010 top at $86.84.

Gold

Prices are re-testing support-turned-resistance at a rising trend line established from the low in February, with a break higher exposing the top of a falling channel established from the swing high in June (now at $1199.43). However, a Shooting Star candlestick setup hints a move lower may be in the cards from here, with initial support at the $1170.00 figure.

Source: Dailyfx.com

Coffee, what else?

The coffee price increased by 40% in just one year (reaching its highest level in 12 years), and went up by 29% in 15 days.

Arabica Coffee (KC, ICE [NYBOT]) in cents/pound

The arabica is a high quality coffee collected in Central America, East Africa and in Brazil (larger producer in the world of arabica).

The robusta is collected mainly in Asia and in Africa. The largest producer is Vietnam. This coffee is mainly used to make instant coffee.

American stocks decreased by 28% this year, whereas they reached 2,2 million bags last year.
However stocks could fall to 1,74 million bags in September and to 800 000 in March, according to experts.

The official stock of the LIFFE (robusta) passed in one year from 400 000 to 230 000 tonnes.

Why?

Because the two last harvests of arabica in Central America and Colombia (the second largest producer of arabica after Brazil) were bad, and last year the production of Brazil was damaged by excess rain. For the robusta, dryness hit Asia this year and Vietnam should produce 17,5 million tonnes this year  vs. 18 million last year.

So the supply will decrease by 6% from 128 million tonnes last year to 120,6 this year, while the demand for arabica and robusta remain constant.


To sum up:

- Insufficient Supply for a constant demand

- Level of coffee stocks to low

- Fears of “coffee shortage” on the market



-->It explain why the coffee price is going up.


Also there is many hedge funds which speculates in the coffee market. These funds shorted massively the coffee, when an important actor of the market decided to ask for the physical delivery of all the July expiring contracts. Due to the supply shortage they were forced to repurchase their short positions at a high price to respect their engagements.

In a short-term coffee will be under 150 with 50/61,8% of Fibonacci retracements, with a support at 145 and 135 if it breaks the 145.

However coffee should be bullish again soon and reach the 175.

Follow Coffee Stocks

Money supply and Inflation

Source: Wikipedia.org

M1:  The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).                  

M2:  M1 + most savings accounts, money market accounts, retail money market mutual funds,and small denomination time deposits (certificates of deposit of under $100,000). (A key economic indicator of inflation.)

M3:  M2 + all other Certificate of deposit (CDs) (large time deposits, institutional money market mutual fund balances), deposits of euro-dollars and repurchase agreements.

Source: Inflationdata.com  

Following the theory of the Austrian economists who measure the inflation by calculating the growth of what they call 'the true money supply', how many new units of money that are available for immediate use in exchange, that have been created over time.

This interpretation of inflation implies that, within a centralized banking system, inflation is always a distinct action taken by the central government or its central bank, which permits or allows an increase in the money supp, including bank credit as a contributor to inflation. 

In the US, the value of bank credit generated by private financial institutions and held within checking accounts currently rivals the value of the bills and coins "printed" by the Federal government, and has, at times, significantly exceeded the value of printed money. In addition to state-induced monetary expansion, the Austrian School also maintains that the effects of increasing the money supply are magnified by the credit expansion usually performed by private financial institutions as a result of the fractional-reserve banking system permitted in most economic and financial systems in the world.

Austrian School economists claim that the state uses inflation as one of the three means by which it can fund its activities. In other cases, the central bank may try avoid or defer the widespread bankruptcies and insolvencies which cause economic recessions or depressions by artificially trying to stimulate the economy through encouraging money supply growth and further borrowing via artificially low interest rates.

Accordingly, many Austrian School economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to money based on the gold standard. 

At the beginning of his career Alan Greenspan, former chairman of the Federal Reserve, was also a strong advocate of the Gold Standard as a protector of economic liberty:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.”

"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
Henry Ford

The devaluation of the Dollar: 

 Source: Oustanding Investment
 

This figure shows that the money supply skyrocketed while the dollar value plunged by 96% thus plummeting the purchasing power.

In 1971 you could buy a house for $50,000 then and, just on an inflation basis, it would be worth $350,000 today, and back then, you could retire on $270,000 in savings and it would be as good today as being a millionaire.

The enemy of the Fed is a dead and stagnant economy, the deflation, an economy in which nothing moves and nobody buys a thing.

Therefore the Fed secretly fights to hold it off desperately every single day, by flooding the market with cash and easy credit. Because regular cash and credit injections make everyone feel rich.

The theory goes, when you've got cash and low-priced credit, companies borrow and expand. Consumers borrow and spend. Families borrow and buy homes.

This is why, since 1950, the total amount of money in circulation has soared well over 3,000%!

Note that now we are exporting some of our inflation to China as they send us goods and buy our debt.

The Fed Chairman Ben Bernanke famously said in a speech at the National Economists Club in Washington, in November 2002:
“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology called a printing press (or, today, its electronic equivalent) that allows it to produce as many U.S. dollars as it wishes at essentially no cost... We conclude that under a paper money system, a determined government can always generate higher spending and, hence, positive inflation.”
 
In other words, if you want to juice an economy... turn on the printing presses and make it as easy as all get-out to borrow money at a low, low rate of interest.
 
And Ludwig von Mises, the famous economist said:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

The Bush administration, with full knowledge of the implications of a credit disaster, borrowed more money from 2000–2008 than every White House since the time of Washington!
 

“Economists agree this can’t go on. We can borrow and borrow, but eventually there will be a day of reckoning”

Joseph Stiglitz, former white house economist

The dollar's worth today is just pennies compared with what it bought a century ago.

In fact, its worth is just a fraction now, as we just demonstrated, the money supply had gotten so embarrassing that the Fed actually "retired" a number, "M3," which was the most broad-reaching measure of how much cash floats around in the system.