Gold Bugs Beware

24-Aug-2011 | Reggie | Commodities Currency USA

 

Just because something goes up, doesn’t mean it has to go down, but in the case of Gold bullion which has risen nearly 25% in value over the past weeks, you start to wonder if the dramatic price increase is reasonable and sustainable. The price of gold started the month of July just under $1500 an oz. Fast forward to August 22nd and we’re looking at $1900 an oz. That type of dramatic increase raises some eyebrows when the main value is to be a store of value.

 

That kind of rapid ascent is usually reserved for more speculative holdings that are subject to huge shifts in supply and demand. The majority of the world’s gold supply is held by governments and central around the world Up until 1971 currencies were linked to the price of gold. A reserve form of currency is something you wouldn’t really expect to increase by 25% in value over a few weeks or nearly double over the past year unless something really awfully terrible was happening in the economy.

 

While some might argue that’s exactly what is going on right now, I believe the facts hang on the other side. TheUnited Statesdropping from AAA credit rating to AA+ according to 1 debt rating agency has been attributed to much of the rapid ascent in the price of gold. While this is not a good thing, it has little to no impact on how theUnited Stateswill continue to operate their country and pay their debtors. The debt issues ofGreecehave also been attributed for much of the rise in Gold. However,Greeceis one of the smallest countries in the European Union and of very little consequence to overall EU productivity. While unfortunate, these types of issues aren’t anything new. Countries are like businesses. They go through ups and downs. First world countries like theUSare not going to disappear and devolve into panic and pandemonium.

 

As always, noted investor and market commentator Dennis Gartman made some very impactful statements regarding the whole gold issue.

“To bring fact to this story, as of last Friday, the SPDR

Gold Trust’s market capitalization rose to $76.7 billion as

gold moved to and through topped $1,880/ounce. The

SPY’s “capitalization” was that day $74.4 billion. It is

senseless that the SPY has a lesser capitalization than

the gold ETF and it will not much longer, either because

stocks rise or gold falls or both; but as Herb Stein said,

that which cannot continue won’t. This won’t.”

As of writing this, the price of Gold is already down over $120 from its peak of $1900/oz and further decline is expected. Some are calling it investors cashing in gains, and others are calling it the end of the bubble.

 

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Pretium Resources – The next Silver Standard?

18-May-2011 | Reggie | Canadian Investing Commodities

With gold prices hovering close to $1500 per ounce, there have been quite a few new businesses looking to cash in on the hot commodity price.  In this scenario its hard to know which deserves to be the recipient of your savings especially when many of these mines have the same boasts about a very high grade and plentiful resource base.  One great way to distinguish the best possible investments is by looking at who is in charge.

If a company has the best proven and probably resource, with the highest grade ore, in a great location close to all infrastructure, but weak management it probably wont do that well.  If the business misses targets or runs up costs too high, investors will sell the stock to oblivion.  A great management team can make all the difference in the world by taking many variables out of the equation to give a stock the best possible chance of success.

Pretium Resources is in the process of getting a mine up and running in northwest British Columbia.  The project is being led by a guy named Robert Quartermain who happened to be the president of Silver Standard for 25 years.  During his time as president, Silver Standard went from being worth $0.70/share to $45/share and has become one of the largest silver mining companies in the world with a huge number of projects in the works.  Since beginning his careeer at Teck Resources back in the 80’s Quartermain has proven himself to be remarkably adept and running projects in a very efficient and productive fashion.

Quartermain’s track record combined with the excellent initial feasibility study, is reason enough for many investors to give Pretium a shot.  Since going public only a few months ago at $6, Pretium is sitting pretty comfortably just over $9 today.

 

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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TSX just can’t get a Grip

13-May-2011 | Reggie | Canadian Investing Commodities

For the third week in a row the TSX is again lower than it was before.  Most of the losses have been led by the energy sector which comprises over 1/3 of the index.  Since hitting an interim high at the end of April, crude oil is down $14, which in turn has driven down the price of a lot of stocks.  Contributing to the pain, the news has been full of headlines regarding a bailout for Greece, China raising their bank reserve rates, and general inflation concerns that include fears of high gasoline prices slowing down economic growth.  To sum things up there hasn’t been a lot to give investors much hope for the near term.

 

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Fewer Canadian Commodities Sent to China

10-May-2011 | Reggie | Asia Commodities

Compared to a year ago there was less Copper, Iron ore, Aluminum, and Soy Beans exported to China.  One of the only commodities we went more of was Crude oil, but only by a small margin.

This could potentially serve as quite a wake up call for investors in commodity stocks out there.  Until now many have been assuming that Chinese demand is basically insatiable.  With a limit being found prices for commodities will have to be rethought along with new project and expansion plans.

Rebuilding Japanese cities devastated by the tsunami will help balance out some of this drop in demand, but a decline in commodity prices still seems likely.

 

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Natural gas for Buses and Trucks!

15-Apr-2011 | Reggie | Green Investing Market Strategies Oil & Gas

Encana Corp is one of the biggest explorers and producers of natural gas out there.  Last year Encana spun off their oil production into another company, Cenovus making Encana basically a pure gas play.  As a result their fate has been tied very closely to the price of natural gas something that has been evident thanks to ECA’s stock price recently.  Rather than sit around with their wells shut in waiting for prices to rebound before turning the taps back on, Encana is taking action to change their destiny.

One way that Encana can improve their sales is by increasing demand.  Yes, its that easy.  Encana has been a big proponent of coverting vehicles to natural gas and putting the infrastructure in place to make that possible.  With gasoline prices back up over a $1.00 a liter and over $4.00 a gallon in the United States Encana’s plan is getting a very warm reception.  There is currently a huge abundance in natural gas making this a very logical step forward for the industry.  Environmentalists should be happy as well thanks to natural gas being a relatively clean burning fuel.

 

So far commercial trucks and buses are the main target for the conversion and have to potential to increase the demand for natural gas by a substantial amount.  I absolutely love how Encana is putting their future in their own hands and not relying on the whims of the market.  If this catches on, which there isn’t really any reason it shouldn’t, it will change the market for natural gas and gasoline forever.

 

For more information check out the Globe and Mail’s article here

 

 

 

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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