World Of Wallstreet

Pretty Useful Charts: Indian Price Of Gold [Gold Price In Rupees]

The price of gold in Rupees is pretty important because Indian buying represents support for the price of gold. The really useful thing to know is the separation between the Indian price of gold vs Indian legal import price of gold. The only source I've found for this is the very valuable Midas column at, LeMetropoleCafe, the subscription website.

Googling around I found this web site (http://www.goldprice.org) with Rupee graphs.

Here's a couple of useful ones from that site:

1 Year - As of 5/30/2009, gold is trading at the top of a range in rupees. Indian's like to buy when the price seems low, so we can't expect much support from Indian buying right now.

www.kitco.com provides a 24 Hour gold Rupee gold chart. As you can see, its pretty small. I've been watching, up until recently, the standard USD gold chart (provided further below) and have found that when the price of gold starts consistently rising overnight (while Indian trading dominates) that Indian buying has kicked in and the price of gold has found support. This Indian trading period seems to start around the Hong-Kong open and ends when gold opens in London. This also seems to be a tradeable pattern. I expect I'll be paying more attention to the Indian 24-hour gold chart now that I've found it. 

The graphs in this page are linked to the automatically updating originals. Revisiting this page (and possibly doing a page reload) should give you up to date prices.

Hope you find this useful. I'll be adding this page to my browser's "favorites" aka bookmark lists.

Leave me a comment if you have something useful to add.

MontyHigh, www.worldofwallstreet.us

Scarenario: Stealing From Retirement Accounts Early Warning, "Global regulators should force banks to hold assets such as government bonds"

Here's the article (click here) that makes me want to pull my money out of my IRA and 401K retirement accounts. I will be watching this closely. Here's the money quotes:

"'Global regulators should force banks to hold assets such as government bonds as a buffer after the financial crisis exposed a “shocking” lack of liquidity at some U.K. lenders', Bank of England official Paul Tucker said.

'Regulators should define the ‘liquidity buffer’ to comprise high quality securities that can reliably be traded or exchanged in liquid markets, including in stressed circumstances,' Tucker, the bank’s deputy governor for financial stability, said today in Tokyo. 'In practice, that would mean focusing on government bonds in many economies.'"

Now, this is not some academic or po-dunk legislator with a "good idea". This is the Bank Of England talking. Whatever they say happens in the UK as far as banking is concerned. They are joined at the hip with the Federal Reserve, US Treasury and associated Powers-That-Be that forced through the TARP plan even though voter phone calls and emails were against it 100 to 1. This is not a fantasy.

As you probably know, the way the Argentine government stripped the middle class of their savings in the 2001 currency / financial crisis was to force a huge fraction of all savings into government bonds and then to devalue the currency / value of those bonds. It took a very short time (handful of weeks) from when the money was forcibly transferred until the value of those government bonds were cut by something like 80%. 

Now we have the head of the Bank Of England saying that all banks should be put in that position. As with the Argentina situation, the reason given for buying government bonds was because they are the only things that were safe enough.

The same justification will be used, in my scarenario, on pension funds and private retirement accounts. For your own safety, your pension / retirement account will be forced to hold long-term, soon to be worth a lot less, government debt.

Of course, the downside to pulling savings from retirement accounts is the substantial tax penalty both initially on pulling it out and subsequently on any "earnings" that come from subsequent investing. This is what keeps me from pulling the money out right away.

I will be watching this closely. You should be as well if you have significant retirement account savings. When this happens, the stock market will probably tank as forced selling of retirement savings invested in stocks takes place. After that happens there may be a golden chance for some value investing, for those who are prepared. Its all going to depend on getting your retirement savings out before the noose tightens and then timing when to get back into stocks, if this scarenario plays out.

MontyHigh, www.worldofwallstreet.us

P.S., in the 30s, the government confiscated the citizen's gold. It won't be gold this time, because that isn't where the money is this time. It will be retirement accounts that get confiscated this time.

Unadjusted Year Over Year: Commerce Department New Home Sales Down 33%, Median Price Down 15%

Today we cover the Commerce Department's New Home Sales for April 2009:

• Associated Press Headline And Lead: "April new US home sales inch upward... Sales of newly built U.S. homes were flat in April, but are now 7 percent above the rock-bottom lows of January, another indication the three-year housing downturn could be ending." 
• Department Of Commerce News Release: click here.
• Key Numbers: New Houses Sold Unadjusted: 33,000, Year Ago: 49,000, Year Over Year %: -32.65. Median Price Unadjusted: $209,700, Year Ago: $246,400, Year Over Year %: -14.89.

Here's my uneducated (also not not spun by guys trying to make you a sucker) interpretation - Obviously, these numbers look terrible. No turn-around for the economy to be found in housing. Final Note: AP could only come up with a positive spin because the previous month's numbers were revised down. The "inch upward" for this month will probably disappear when this month's numbers are revised. 

MontyHigh, www.worldofwallstreet.us

Unadjusted Year Over Year: Labor Department Initial Jobless Claims Up 68%

Today we cover the Labor Department's weekly initial jobs claims report:

• Associated Press Headline And Lead: "Initial jobless claims drop unexpectedly... The tally of newly laid-off Americans requesting jobless benefits fell last week, the government said Thursday, a sign that companies are cutting fewer workers."
• Labor Department News Release: click here. 
• Key Numbers: The advance number of actual initial claims under state programs, unadjusted, totaled 536,588 in the week ending May 16. There were 319,694 initial claims in the comparable week in 2008.
• My Spreadsheet (click here)

Here's my uneducated interpretation - Initial jobless claims is a leading indicator and clearly job losses are way worse than they were a year ago. The Associated Press, as usual, puts a "positive" spin on the numbers.  

MontyHigh, www.worldofwallstreet.us

Singapore Container Traffic Down 20%

http://blog.foreignpolicy.com/posts/2009/05/07/how_google_earth_explains_the_financial_crisis

 

"The world's busiest port for container traffic, Singapore saw its year-over-year volume drop by 19.6 percent in January 2009, followed by a 19.8 percent drop in February. As of mid-March 2009, 11.3 percent of the world's shipping capacity, sat idle, a record."

 

Don't know if that's year over year, seasonally adjusted or what, but I do know its not good.

 

MontyHigh, www.worldofwallstreet.us

Unadjusted Year Over Year: Census Department Durable Goods Manufacturers New Orders Down 26.6%

Today we cover the Census Department's monthly Durable Goods orders and Shipments report:

• Associated Press Headline And Lead: "New durables orders climb 1.9 pct in April... Demand for big-ticket manufactured goods soared by the largest amount in 16 months in April, the second increase in the past three months."
• Labor Department News Release: click here. 
• Key Numbers: Census Dept Durable Goods Manufacturers New Orders Not Seasonally Adjusted: $155,054,000,000, Year Ago: $211,131,000,000, Year Over Year -26.56%. Census Dept Durable Goods Manufacturers Shipments Not Seasonally Adjusted: $213,520,000,000, Year Ago: $213,520,000,000, Year Over Year -19.74%. The advance number of actual initial claims under state programs, unadjusted, totaled 536,588 in the week ending May 16. There were 319,694 initial claims in the comparable week in 2008.
• My Spreadsheet (click here)

Here's my uneducated interpretation - A perfect example of optimistic spinning by the AP. They talk about new orders soaring while year over year they are down over 26%! New orders are a leading indicator. The bottom for the economy is not in.

MontyHigh, www.worldofwallstreet.us

Technical Analysis: Inflation Being Signaled

The commodities I follow are now over their 200 day moving averages. Copper crossed recently and crude oil crossed just today. Gold and silver have been there for a while. I'd say this signals inflation.

My definition of inflation is: an overall rise in prices [not an increase of of the money supply although the increase of the money supply is typically the cause of inflation].

The dollar and long-term treasury interest rates also have 200 day moving average crossings that are signaling inflation. They are also moving in the direction of (but have not gotten wild enough to really signal the start of) a combination currency crisis / economic collapse ala Argentina 2001.

Inflation is what I, very probably, see coming. The Argentina-style currency collapse / economic collapse I see as very possible. I'm not willing to say its probable, yet.

Are you ready?

MontyHigh, www.worldofwallstreet.us

Here's the charts:

Best Of The Web: Denninger On Government Motors

What made me go the extra step and post this was my reaction to this Yahoo finance headline: "Fate of GM lies with recalcitrant bondholders."

It really irks me that these bondholders are being demonized by the press, when most of them have got to be old-school pension fund managers. Who else would hold GM debt? They thought, that because they had senior debt, they had secure investments for the little old ladies and men depending on them.

Instead they are demonized for being greedy and destroying GM because they refuse to be robbed without a day in court. Its this kind of violation of contract law that is the best indication that the USA is becoming a banana republic. This is a clear signal of that Hugo Chavez politics have arrived in America. Sounds extreme, but I really think this is the direction. 

Of course, Denninger sees and states the implications a lot more clearly than I do. Here's the money quote (click here for the rest):

"Instead, I want to leave everyone this morning with the following thoughts to muse over, since we no longer follow the rule of law in The United States:

1. If President Obama can "ex-cathedra" change the priority of creditors in a bankruptcy action, effectively engaging in selective default of debt, why should governments and private investors - such as China and Saudi Arabia - believe we might not do the same thing after using the money we borrow from them, when we find that we cannot pay our debts, just as GM can't pay theirs?
2. If these foreign creditors come to this conclusion, what is likely to happen to bond market yields on Treasury debt?
3. What leads anyone to believe that The Government can operate with a $3.6 trillion budget and a $2 trillion annual deficit?
4. What leads anyone to believe that we can close that gap, when our government is engaged in game-playing with claimed "reductions" in the budget, claiming that fractions of a single percent of the total are "meaningful"?"

MontyHigh, www.worldofwallstreet.us

Falling Rig Counts And Natural Gas Production

This article (click here) explains pretty well why you can't look at falling rig counts and assume there's going to be a natural gas shortage. I'm not in natural gas stocks right now, but if I was I'd be looking for low-cost producers with stockholder-friendly management (not CHK).

MontyHigh

Best Of The Web: How The Politicians See Us

"Let me be very clear about this: the politicians and bureaucrats have been taught to see us and our loved ones as machines that have broken down, and they plan to do whatever they think is necessary to jump start us and rev us up."

I thought the whole article was worth reading (click here).

MontyHigh, www.worldofwallstreet.us

Best [And Worst] Of The Podcasts: Jim Puplava On Energy Investing

I thought this, specifically the energy discussion beginning around 35 minutes and 58 seconds, was the best bit of podcasting on energy investing I'd heard lately.

If you want to hear me get Mr Puplava a little hot under the collar, listen in to this beginning at 38 minutes and 47 seconds. My comment was in response to last week's podcast with Joe Dancy (click here beginning around 41 minutes at 4 seconds) in which had Mr. Puplava and Mr Dancy go on and on about how natural gas production has to plummet given the falling rig count without mentioning how much more effective newer rigs are than old rigs.

I'll stick with my point of view that the increased effectiveness of the newer drills is a huge part of the reasons why the drill count for natural gas is falling. I think that failing to discuss this increased effectiveness while emphasizing the importance of a falling rig count either means you are spinning or not very well informed. I wouldn't want to think that Mr. Puplava is uninformed when it comes to energy investing.

Much thanks to the Investor Village BRY board for getting me up to speed on this.

I don't pretend to be an energy-investing expert, but I certainly don't want to be a sucker either.

MontyHigh, www.worldofwallstreet.us

Jr Gold Producers And Near Producers

To celebrate gold's recent move, the tables I put up today have price to operating income values based on $950/oz gold (the current price). The tables are based on 2010 guidance.

Here's some recent notes on the various stocks in the table:

• Gold Resource Corp (GORO.OB) - BULLISH: recently announced a drill hole that significantly increases the size of their deposit. BEARISH: Still not in production with half their cash burned in the previous quarter. A dilutive financing is probably coming. OUTLOOK: My biggest holding by far, nothing has changed as they will print money, are safe against falling metal prices and intend to give stockholders dividends.
• Castle Gold (CSG.V) - BULLISH: recently announced a drill hole that is near the surface, 109m think, same grade as they are mining with $420 cash cost. This should lead to a significant increase in reserves and resources at the mine that is ramping up production. OUTLOOK: Extremely undervalued and moving towards increasing even further annual production.
• Rusoro Resources (RML.V) - BULLISH: recently announced a feasibility study for a major increase gold output. OUTLOOK: A pure speculation due to political risk, but more undervalued than any other mid-level gold producer I know of with excellent, high-grade rocks.
• La Mancha Resources (LMA.TO) - has had a major price move up recently.
• Oceana Gold (OGC.TO) - has had a major price move up recently.

Here's the reference Jr producers. These are all steady producers with no big risks that are well-known. As such they provide a basis for comparison to other investment opportunities.

Here's my "blue-chip" (no significant political, financial or execution risk) favorites other holdings (significant chunks of my portfolio are in each of these):

Here's my list of speculations. I have relatively smaller positions in each of these. Each is severely undervalued but has at least one major risk item (political, balance sheet, etc.):

Where else can you find stocks with price to operating cash flow ratios well under 3 (and some under 2) at current commodity prices?

MontyHigh, www.worldofwallstreet.us

Which Quadrant Do We Land In? Pretty Explanatory 3 Minute Video

Seems to have a lot of explanatory power.

http://jessescrossroadscafe.blogspot.com/2009/05/us-dollar-and-paradigm-shift-in-markets.html
blah

The most clear, interesting, insightful, important, correct thing I've seen or read in a week.

 

MontyHigh

 

Year Over Year: China Electricity Usage Continues To Fall At An Accelerating Rate

http://incakolanews.blogspot.com/2009/05/china-demand.html

Indicates that the Chinese economy is shrinking even faster than previously.

MontyHigh, http://www.worldofwallstreet.us/

Denali Guide: Timing Is Everything, But Gravity Rules

Editor's Note: World Of Wallstreet presents Denali Guide's astute view on the general market outlook. I've been learning some valuable technical analysis from him on his regular web-site, http://denaliguidesummit.blogspot.com/

Wednesday, May 20, 2009

CONCEPT #1: Main Equities[Stock] Market is in decline in spite of the tweaks and whacks laid upon it. Various indexes other than the Dow / SPX reveal that there are just too many stocks out there to stay up all by themselves.

Principle "A": Timing is everything, but gravity rules. Play as they may, the market will continue to decline into July from my current view.

Corollary "1a": Continued "Jawboning", and use of obscure, if not skewed data to be fed into marketplace, "Carpet Bombing Investors with Info" to fatigue them.

CONCEPT #2: Due to continued Liquidity fed into market or cash flow leaving market,
until the cycles for Monetary Metals run their course to the downside, they will shadow the main stock markets.

BREADTH and VOLUME

Breadth:

On the first Chart you see ROBO Market in action, driven by all the fiat money shoved into the hands of banks etc. Lots of it leaked into equities, some was injected. The Black Line is the cumulative number of issues advancing over decliners. So straight line, programmed, IMO.

Now since you can only inject any patient with so much of anything before two things happen, 1/ the injections become ineffective ; 2/ the injections cause organ failure. Note how the ORANGE LINE, which is momentum, DECLINES even in the face of HISTORIC Direct Financial Stimulation. Here is where, even MainLining this patient, injecting Financial Steriods directly into the markets biggest arteries, MOMENTUM Still shows us the injections are become ineffective.

Volume:

Clearly on the SECOND CHART, the volume bars Under the DJIA CHART show Non-Confirmation of a REAL Uptrend.

Wither goest thou from here?

My selections for longs are few. Since this top started forming, good longs have been few and far btwn. Sliding or Trailing stops, offset by a amount equal to One Standard Deviation or One Average True Range, depending on your anxiety or comfort level. The ATR is tighter, but the STAN DEV will avoid being shaken out so easily.
My current selections, I'd hold relatively fearlessly are CXZ, DEJ, BQI. Up the anxiety level one notch, are FTK, MVG, and under watch, JTX. My high anxiety but tenaciously held positions are FAZ, [ a short ETF], Short MAT [ Mattel], GPS [ GAP],
UN [ Unilever], INTC [Intel].
Now of course, if there was a position to worry my readers the most, it would be that my last selection for the simulation is SHORT the DGL, Gold ETF. That is current and will be so until I receive data to help me change my selection there.

Items I'd like to add to my portfolio at my perception of a bottom reversal in the Monetary Metals would be SVM, AGT, THM. In Canadian accounts I am long RSI/Un.to and FWR.v, and XEG.To.

I am selecting pages in "TA for Dummies" so we can refer to them as we progress.
There is an TA Group Forum I have in Investor Village your welcome to join, if you care to explore TA for yourself, "Stars Lie, Numbers Don't", is the board name, and the link is here:

http://www.investorvillage.com/groups.asp?mb=11008&pt=m&category=

I think it takes a sign up on Investor Village, which is here:

http://www.investorvillage.com/index.asp

Either way, good luck and stay vigilant,

DG

Unadjusted Year Over Year: Labor Department Initial Jobless Claims Up 64%

Today we cover the Labor Department's weekly initial jobs claims report:

• Associated Press Headline And Lead: "631K new jobless claims, total benefit rolls 6.7M... The government says the number of newly-laid off workers requesting unemployment insurance dropped last week after spiking the previous week due to auto layoffs."
• Labor Department News Release: click here. 
• Key Numbers: The advance number of actual initial claims under state programs, unadjusted, totaled 536,733 in the week ending May 16. There were 326,518 initial claims in the comparable week in 2008.
• My Spreadsheet (click here)

Here's my uneducated interpretation - Initial jobless claims is a leading indicator and clearly job losses are way worse than they were a year ago. 

MontyHigh, www.worldofwallstreet.us

Quite A Day Technically For Precious Metals

Here's some charts that seem noteworthy.

The US Dollar has broken down through key support and is targeting the low from Dec 2008. This is very bullish for precious metals.

30 Year Treasury Bonds are in a confirmed up-trend. The signal we are looking for as far as a major US currency crisis like Argentina experienced in 2001 is an major uptrend in long-term interest rates and/or and major fall in the US dollar. Both are happening, but have not reached the fevered levels needed to signal such a crisis.

Gold confirmed its earlier trend line and 50 day moving average breakout and has gotten to the 50% fibonacci. It is not yet overbought.
Silver has broken through nearby resistance and is targeting this year's high at $14.63. After that the last fibonacci to the $19.50 high from last summer is at $15.30. If it crosses that $15.30 it targets that previous $19.50 high.

The $HUI large-cap gold stock index has broken through the last resistance anywhere to be seen and is set to rise hard.

The $HUI/$Gold is in a nice up-trend and has broken out of a bearish rising wedge. It has broken through its %50 fibonacci number. Together, this means large-cap gold stocks are outperforming gold and look set to continue to outperforming gold.

The CDNX (proxy for Jr gold miners) looks overbought, but it broke through its 200 day moving average. There is no visible resistance in sight. Jr gold miners could really launch. How many indices can say that?

Overall, these charts are quite bullish for precious metals at a time of year where this is unexpected. I'm already "all in", but with almost no margin in my favorite precious metal Jr producers and near-producers.

I closed my silver short for a loss today, but my accounts closed with a new high for the year, up over 40% year-to-date.

MontyHigh, www.worldofwallstreet.us

Indian Gold Buying: Indian Real Interest Rates Are -5.5%

From an Ambrose Evans Pritchard article (click here):

"Maya Bhandari from Lombard Street Research cautioned that Delhi had let rip on spending in the build-up to the election... 'Both monetary policy and fiscal policy are grotesquely loose. Real interest rates are minus 5.5pc,' she said."

Negative interest rates like that imply significant inflation. How can a poor Indian protect herself/himself from inflation? Historically, he/she's done it by buying gold.

By the way, knowing what's going on with Indian gold buying has been just about the most important "fundamental" to watch for short-term gold trading. The only place I've found to monitor this is in Bill Murphy's daily commentary at www.lemetropolecafe.com. When they are buying in India, there is support under the price of gold. The fact that they have recently begun buying when gold is over $900 is the most bullish short-term fundamental I've seen lately. 

MontyHigh, www.worldofwallstreet.us

Year Over Year: Commerce Department Building Permits Down 50% And Housing Starts Down 54%

Today we cover the Commerce Department's New Residential Construction for April 2009:

• Associated Press Headline And Lead: "Housing construction, permits hit record lows... Housing construction plunged to a record low in April as a steep drop in apartment building offset a rebound in single-family construction." 
• Department Of Commerce News Release: click here. Un-seasonally adjusted numbers found here and here.
• Key Numbers: New Privately-Owned Housing Units Authorized in Permit-Issuing Places Not Seasonally Adjusted, April 2009=46,000, April 2008=91,500. New Privately-Owned Housing Units Started Not Seasonally Adjusted: April 2009=41,300, April 2008=89,5000.

Here's my uneducated (also not not spun by guys trying to make you a sucker) interpretation - Obviously, these numbers look terrible. No turn-around for the economy to be found in housing. 

MontyHigh, www.worldofwallstreet.us

Year Over Year: West Coast Container Traffic

I don't know if I'll follow this formally going forward, but I thought it was worth looking at. Comes from the has lots of useful, unexpected stuff www.urbansurvival.com. he data begs the question: How can the economy be "turning around" if container ship traffic is down more than 15% year over year?

"Collapse of Foreign Trade Continues

It's that time of the month when I start to look at April West Coast containership numbers and I can't help but notice that in April, the Port of Tacoma up in Washington took in 17.9% less foreign containers than landed in the same period a year ago.

 

If you want evidence of why there's no recovery, you don't have to look very far to find it.

 

Similarly, the Port of Los Angeles reports being down 15% on the loaded inbound sheet.

 

Even worse?  Over at Long Beach the year-on-year decline is 22.9%.

 

True, while the Baltic Dry Index closed over 2300 for the first time since October 10 of last year, the BDI is not a wholly accurate way to read foreign trade.  What matters is what's going on at America's West Coast Ports.  And, by the look of things now, I'd say there's not nearly as much action as usual, despite recovery happy talk."

MontyHigh, www.worldofwallstreet.us

Going To Zero: PALM after its PRE phone fails...

Well, I'm back to looking for stocks to short as I think the spring rally is just about over.

One that I'm watching closely is PALM. You may remember the PDA leader with the Palm Pilot. They've been losing money like crazy and have bet the company on a smart-phone that competes with RIM's Blackberry and Apple's iPhone on price and yet has to compete on price with Motorola and Google (the Android phone). The Motorola / Google platform is open-source which gives it clear advantage when it comes to cost. Palm's efforts look like they are pretty out-gunned to me.

I'm expecting an exhaustion top with the formal product roll out announcement and then when it consolidates or turns down I short. I may begin building up a long in one account, short in another account as a way of making sure I can short it when the time comes.

This seems like a replay of Creative (CREAT) fight against Apple's iPod (where Creative's cheaper product was creamed by Apple's panache and iTunes store) only this time Apple is the incumbent.

Here's an example (from trends.google.com) of Palm's mind share relative to Apple's:
As you can see (little blue line showing up near zero in 2009), the Palm Pre is completely unknown to the public. Palm doesn't have any genuine cost advantage. This is a platform play, where the winning platform takes all. I just don't see how they can compete with Apple, RIM and Motorola/Google/Open Source. The only thing that gives Palm a chance is Apple's exclusive deal with AT&T. Is that enough to allow them to succeed? I doubt it.

Here's the chart. It looks great, but it also looks like its had great momentum. I'll wait until the fundamentals catch and turn the chart ugly before entering.

Like I said, I'm waiting for the exhaustion top and then I go short.

I have not completed my due diligence, so let me know why I'm wrong. What defensible market niche does Palm have a shot at?

MontyHigh, www.worldofwallstreet.us

Off Topic?: Flu Pandemic Update

On May 7, I put up some scary graphs about what would happen if the flu pandemic kept growing at its current rate (click here). This post compares what actually happened compared to those projections. It then provides revised projections based on the actual records. The data comes from the World Health Organization via www.urbansurvival.com.

This graph shows that the number of cases has quadrupled since May 7, but that even so it has not kept up with the original estimates. Neither have the deaths.

The graphs below provide a revised extrapolation based on a growth rate of 16.74% per day and death rate of .85% of cases. This matches what has been seen between May 7 and today. This still show the entire population getting the flu before the end of the summer, but the number of fatalities has fallen to a little under 60 million. Still seems like a big deal that is not getting adequate coverage.


MontyHigh, www.worldofwallstreet.us

FWIW, here's the primitive spreadsheet this is based on.

Year Over Year: US Industrial Production Down 13.9%

Today we cover the Federal Reserve's US Industrial Production for April 2009:

• Associated Press Headline And Lead: "Industrial production falls by least in 6 months... The nation's industrial production fell in April by the smallest amount in six months, fresh evidence that the pace of the economy's decline is slowing." 
• Federal Reserve News Release: click here. Un-seasonally adjusted numbers found here and here.
• Key Numbers: Finding the unadjusted numbers took a little doing. The numbers are April 2009 94.8, April 2008 110 from a baseline for 2002 of 100.
• Ahead Of The Curve Chart: here.
• My Spreadsheet (click here)

Here's the "Ahead of the Curve", by Joseph Ellis, chart (without yesterday's data point):

Here's my uneducated (also not not spun by guys trying to make you a sucker) interpretation - Here's a perfect example of how the mainstream news is trying to spin you. Year over year industrial production is down almost 14%. This is the worst so far in this recession / depression. Its still trending down. Its as bad as anything in my life time. And yet... the Associated Press goes out of its way to make it sound like things are getting better. I'm not an economics expert, but I'm trying not to be a sucker either. I'm not buying it.

MontyHigh, www.worldofwallstreet.us

Year Over Year: China Electricticity Consumption For April 2009 Down 3.55%

Here we cover an indirect, but telling, measure of the Chinese economy: Electricity consumption. Obviously, the actual news release is something I can't understand being in Chinese, so I have to depend on the financial news. :

• News Story Source, Headline And Lead: "Xinhau, Data shows detours on China's road to economic recovery... With the world keeping close watch on the Chinese economy for signs of revival, the latest data are sending mixed signals and fueling concern that a recovery, if there really is one, is not on solid footing."
• Key Numbers: "But power generation fell 3.55 percent last month from a year earlier, to 274.76 billion kilowatt hours...".
• My Spreadsheet (click here)

Here's my uneducated (also not not spun by guys trying to make you a sucker) interpretation: For resource investors, this is a key stat to watch. If China's electricity consumption is not growing, why should its need for commodities grow. And, for copper in particular, if China's electricity consumption is not growing why should China use a bunch of copper to beef up its electrical network and power plants? This stat suggests that China's real use of commodities is falling, not rising at the previously usual meteoric rate.

MontyHigh, www.worldofwallstreet.us

News To Me: Insider Trading Is Legal...

for some: " insider trading is actually LEGAL within the halls of Congress - that's right, Congress and their staff is not prohibited from trading in front of legislation nor are Congressfolk and their staff required to hold their investments in blind trusts!"

Karl Denninger strikes again (click here)!

Will Americans ever wake up to the rampant corruption that controls our political system and throw these bums out? Is there any solution to the current concentration of power inside USA politics, finance and media?

MontyHigh

Year Over Year: Consumer Price Index Down .7%

Today we cover the Commerce Department's retail sales figures for March 2009:

• Associated Press Headline And Lead: "US consumer April prices flat, matches estimates... Consumer prices were unchanged in April as both food and energy costs declined to offset gains elsewhere." 
• Labor Department News Release: click here. 
• Key Numbers: This index has fallen 0.7 percent over the last 12 months, due primarily to a 25.2 percent drop in energy prices.  The year-over-year declines in March and April are the first since 1955.
• My Spreadsheet (click here)

Here's my uneducated (also not not spun by guys trying to make you a sucker) interpretation - Need more points for comparison, but clearly the deflation over the last year of all commodity prices is still affecting year over year data. The big question with inflation is: WHEN WILL IT KICK IN? Its going to be hard for inflation to tick up as long as falling energy prices drive the situation. The monthly crude oil chart below shows clearly that, year over year, falling energy prices will become less of a factor beginning around the end of this summer. Then we'll start seeing how the inflation situation really is working out.

MontyHigh, www.worldofwallstreet.us

Year Over Year: Labor Department Initial Jobless Claims Up 74%

Today we cover the Commerce Department's retail sales figures for March 2009:

• Associated Press Headline And Lead: "New jobless rise more than expected to 637K... New jobless claims rose more than expected last week due partly to an increase in layoffs by the automobile industry, while the number of people continuing to receive unemployment benefits set a record for the 15th straight week." 
• Labor Department News Release: click here. 
• Key Numbers: The advance number of actual initial claims under state programs, unadjusted, totaled 565,395 in the week ending May 9, an increase of 27,856 from the previous week. There were 325,480 initial claims in the comparable week in 2008.
• My Spreadsheet (click here)

Here's my uneducated interpretation - Unemployment is a lagging indicator, but clearly job losses are way worse than they were a year ago. 

MontyHigh, www.worldofwallstreet.us

FWIW: I'm Short Silver July Futures, Entry At $13.96

The trading system is: Waiting until the $GOLD:$SILVER ratio RSI crosses upwards over 30 (indicating no longer overbought) or until it gets darn close to 30 and turns up. Hold until that RSI touches 50.

Here's the entrance:

The back-tested results (with very little if no curve fitting) were surprisingly good. For that last 5 years, 16 of 17 trades were winners with an average winning percentage gain (without leverage) of 4.71% or, at current prices, approximately $900 per contract.

The thing I don't like about this system is the lack of stops. Some of those winning trades stretched out for more than a week with the trade going adversely at least part of the time.

MontyHigh, www.worldofwallstreet.us

Year Over Year: Producer Price Index Down 3.7%

Today we cover the Commerce Department's retail sales figures for March 2009:

• Associated Press Headline And Lead: "US wholesale prices rise 0.3 percent in April... Wholesale prices have risen more than expected in April as the biggest jump in food costs in more than a year offset a second monthly decline in the price of energy products." 
• Labor Department News Release: click here. 
• Key Numbers: Monthly Change In Finished Good From 12 Months Ago (unadj.) = -3.7%, Unadjusted Index = 169.9.
• My Spreadsheet (click here)

Here's my uneducated interpretation - Need more points for comparison, but clearly the deflation over the last year of all commodity prices is still affecting year over year data.

MontyHigh, www.worldofwallstreet.us

Best Of The Web: Jesse On Who To Blame

"Don't blame the Democrats alone for this. Instead blame a political system that is corrupted by Wall Street and lobbyist money, and a mainstream media dominated by four corporations feeding a stream of managed news and perception spin to gullible US households." [emphasis added].

Click here for the whole piece including the scary graph.

MontyHigh

Year Over Year: Retail Sales Down 10.6%

Today we cover the Commerce Department's retail sales figures for March 2009:

• Associated Press Spin: "Retail sales drop unexpectedly in April... The Commerce Department said Wednesday that retail sales fell 0.4 percent last month, much worse than the flat reading economists expected." 
• Commerce Department News Release: click here. 
• Key Numbers: Commerce Department retail And Food Services Sales Unadjusted Mar 2009: $333,990,000,000 vs Mar 2008: $373,587,000,000.
• My Spreadsheet (click here)

Here's my uneducated interpretation - Retail sales are dismal. The economy is still shrinking. This is a very important leading indicator.

Hope you find this series useful.

MontyHigh, www.worldofwallstreet.us

Message Board Confessions: Behavioral Economics Behind Technical Analysis

Here's a quote from a Stockhouse message board post that is an example of the real human psychology that is behind, and gives validity to, technical analysis:

"As it recovers to the 2.50 range I'm gonna bail, get back my cash (I hate taking a loss) and buy some silver companies that have a desire to promote." [emphasis added]

A big part of what is called "resistance" by technical analysts is really a price level where a group of investors who, at current prices are "losers", bought in. As soon as the price gets back to that point they sell so they don't have to think of themselves as "losers". So, there is built-in selling at that price and thus its hard for the price to move through that level.

MontyHigh, www.worldofwallstreet.us

Off Topic: Musing On Money And Wealth

To try to understand the relation between money and wealth let's take a look back a few centuries at European history.

The Spaniards came back from the new world with more money (gold and silver) than anyone had ever seen. Did it bring the genuine wealth? I believe what happened was the spent it all on some stupid wars (against Holland, for example) and after that were not a significant player in history and neither did they have an enviable standard ever again.

Conclusion: an abundance of money, even "real", hard gold and silver money does not produce real wealth.

The French in the 1700s invented paper money under the final monarchies, ruined their economy (apparently), had a violent revolution which continued the use of paper money into hyperinflation and yet... pretty shortly after Bonaparte came to power, there was sufficient productivity (wealth) left over to power Bonaparte's conquest of continental Europe. After Bonaparte's bust at waterloo it didn't take long for France to again become a significant power.

Conclusion: horrible monetary problems (e.g. hyperinflation) and even military defeat can cause temporary problems, but does not extinguish a nation's core wealth.

One could argue that China's emergence after 30 years of abysmal government mismanagement demonstrates temporary set backs do not permanently extinguish as nation's core wealth.

Perhaps the United States can emerge from what looks to be a period of monetary and economic chaos in a similar fashion.

MontyHigh

Best Of The Web: Bill Bonner, "Going For Broke"

Bill Bonner does what Bill Bonner does best (click here).

MontyHigh

Best Of The Web, Jesse: crisis in the US will resemble the crises in Argentina and Russia

Nice, short piece (that matches my thinking) on Jesse's Cafe Americain (click here and enjoy): "We expect this crisis in the US will resemble the crises in Argentina and Russia rather than Japan".

MontyHigh

Chart Of The Day: US Dollar Dangling By A Thread

 
One more down day and that last fibonacci is broken targeting 78. I don't see anything bullish about this chart. Here's the bearish items I see (left to right):

1. 50 day moving average breakout failure - mid-April.
2. Trend-Line breakdown - late April.
3. First fibonacci break down - late April.
4. MACD bearish cross over - late April.
5. Support just under 84 break down - early May.
6. Support around 83 break down.
7. RSI still not oversold.

Would be very bad for the dollar and good for gold if tomorrow closes with an 81 handle. So bad, that I expect a bounce and a little consolidation, but we'll see.

MontyHigh

Update: 9:13PM EDT, US dollar breaking down having an 81 handle right now at 81.93. The stock market didn't even go down today and I'm feeling as scared as I've felt since early March. We'll see what happens.

Year Over Year: National Association Of Realtors Median Home Price Down 13.8%

I'm starting a series of short posts where I intend to dig through economic data announcements and try to find the key year over year (unseasonally adjusted) economic data. I'm doing this because I think it provides the best short perspective on the economic data. I intend to include with each post:

• A link to the relevant organization's new release. 
• A link to the relevant organization's raw data (if available).
• A link to the spreadsheet I'm keeping holding all year-over-year data. 

The goal if this is to try to allow you, dear reader, and I to look at the data with less than the usual amount of spin.

Today we cover the National Association Or Realtors Median Home Price:

• News Release Quote: "The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal."
• Historical Date Link (click here) - NOTE: I don't see the $169,000 number in the spreadsheets provided.
• My Data Sheet (click here)

Here's my uneducated interpretation - The bottom is not in for the real-estate market as existing home prices continue to fall pretty hard year-over-year.

Hope you find this series useful.

MontyHigh

Best Of The Web: Who Do You Trust [Old Folks Boogie]?

William K Black, frumpy, overweight, bad-suit [but one the guys who actually fixed the S&L crisis and knows what an insolvent bank looks like] or...
the two young, enthusiastic, tall, cute, dressed-for-success interviewers?



Click here for the interview.

MontyHigh

Copper Moves Into LME Inventories (For The First Time In A Long Time)

LME copper inventories fell today for the first time in a long time:

These inventories tend to trend pretty strongly (down or flat every day for the last 30 days):
 

And copper is near a recent high ($2.25/lb):

I'm short September copper at $2.19 with a stop of a close of $2.31 or higher. I will also exit on two consecutive days of LME inventory rises. My target is $2.01. I just don't believe there's enough real demand to sustain the current price over $2.00.

MontyHigh

P.S. 5/11/2009 9:21AM, LME inventories went up over the weekend and I closed the trade and booked my profits.

Off Topic (NOT!): Evidence That You Can't Trust The Mainstream News Media

The most important news story of the week is that the head of the NY Fed (number two guy at the Federal Reserve which is the regulator responsible for the banking industry) resigns for corruption after what looks like insider trading on a scale that dwarf's Martha Stewart's (click here). This is at the hear of the banksters empire responsible for the global financial crisis and for the fraud that is destroying millions of innocent worker's pensions.

AND YET...

It doesn't appear on the front page of any of these mainstream news web sites. They are so protecting of the actual powers running this country (the banksters) that they don't even cover this. Friedman will probably be able quietly retire even though he should be locked up for the corruption he has been up to his neck in.

The more I attempt to improve my investing by understanding what's really going on, the more radicalized I become.

The mainstream media is not there to inform you about what is important. It is there to distract you from what's really going on and to deliver your eyeballs to their advertisers. Both parties, all the big media including the big left and right mainstream commentary (and big talk radio) are mostly controlled by the real powers that be and exist to distract, not inform.

That's how I see it. And my change in perspective came only in the last two years, so its not that I'm a long-time nut-job.

MontyHigh, www.worldofwallstreet.us

[Does this make you want to visit www.stopthelooting.com?]

Washington Post

CNN

Fox News
 

Off Topic? Flu Story Isn't Over (Looks Worse To Me Than Ever)

Here's the latest numbers courtesy of www.urbansurvival.com (interesting material on this site nearly every day coming out at 9AM).

The thing to look at here is the "% Case Change" which averages out to almost 46% DAILY!. Running a quick spreadsheet (using half that growth rate) we get the following two graphs. They indicate that this may be a pretty darn big story. Now, I'm not an expert and this is a darn crude model, but why doesn't the news media contact some real experts and show us a real model?

MontyHigh, www.worldofwallstreet.us

Financial News Myth Makers

 
The above picture perfectly illustrates Nassim Taleb's view on financial news. You see two headlines right next to each other giving the same reason for two exactly opposite market movements. Taleb claims, rightly, that they come up with some fairy tale to explain "randomness". They call this analysis but really its myth making: "Coming up with a plausible explanation for something that you really just don't understand". Its the same as the Ancient Greek's explanation for anything in nature they didn't understand: The gods did it.

MontyHigh, www.worldofwallstreet.us

Report: Mining Risk In Latin America

Inca Kola News provides a link (click here) to a really valuable report on mining risk in Latin America.

The report is a little hair-curling as it is provided by a company (Kroll) which "is the world's leading risk consulting company". Kroll is thus like anti-virus software providers. Every PC (when you load the free anti-virus diagnosis software) has multiple "infections" all of which are made to sound pretty scary. Kroll highlight's each country's risks in a way that certainly doesn't minimize them.

Still, getting a nice summary (with details) on what is happening in each country is pretty darn valuable. It also gives hints and tips regarding which provinces within a country are "safer" or "riskier" than others.

I'm planning on referring to this closely prior to buying any Latin America mining company.

One more thing, this report is the best reason to buy Metanor (MTO.V), which is in Quebec CA, that I've seen lately. Same thing goes for other Canadian producers, e.g. SanGold (SGR.V). I don't own either, but they are on my radar screen.

MontyHigh, www.worldofwallstreet.us

Precious Metals: What I'm Thinking And Doing Intermediate To Long Term

We are now in "sell in May and go away". My account values are close to their yearly high, but I could have done much better if I had ridden the bounce that started early March. I regret not making significant money on copper stocks as the LME inventory levels have been falling most of the time since March and I should gone with a combination rising price / falling inventory trend.

Anyway, I'm sticking with my Jr gold producers (and near producers) because:

• Gold looks like it has strong support at $880/oz as that is where Indian (and other Asian) buying kicks in.
• The fundamentals for gold continue to look great (negative real interest rates, central bank money printing, high and rising government deficits, falling mine supply, falling central bank selling and, just recently, acknowledged Chinese central bank buying). 
• Gold miner costs (fuel, labor, drilling, materials) are flat or falling.
• Great valuations at $800 and higher gold (with decent valuations substantially below $800). 
• There's no telling when the general stock markets (along with other commodity stocks) will roll-over. I think that other stocks are overbought and overvalued.

Overall, I'm more confident with what I'm holding now than anything else I know of that has significant upside. I expect roughly a double (from here) by the end of 2009 provided gold can stay above $850 and end the year above $950. I think this is reasonably likely, but the portfolio is undiversified and is all Jrs so I could face significant losses should gold turn south hard and I have to exit.

For what its worth, here's my updated table of Jr gold producers (and near producers) that I'm following closely. All values are based on 2010 forecasts with price to operating cash flow ratios are based on $800/oz gold.

First here's the reference gold miners. Their valuations have risen since last I published this table. This provides more room for the stock prices of the Jrs I actually own to rise.

Now, here's my favorites. Castle Gold Corporation (CSG.V) has made the biggest move among these stocks. With each of these favorites there is no unusually high risks and they are all very undervalued relative to the reference producers.

Now, here's the next tier of stocks that I own. They either have a more significant risk than my favorites or are not quite as undervalued. Ocean Gold Corpartion's (OCG.TO) risk has fallen significantly with another profitable quarter of meeting or exceeding guidance recently completed. I'm looking forward to LaMancha Resources (LMA.TO) earnings which come out this Friday.

Finally, here's some stocks I like, but currently do not own because of their valuation. Capital Gold Corporation deserves as a closer look as their $430 cash cost is actually a trailing cost including all operational costs. If you go with their stated "cash cost" their valuation is a lot closer to Castle Gold Corporation's.

If you are astute, you might have noticed that a couple of stocks have dropped out of the above tables. They are not mentioned because my mother used to tell me: "If you don't have anything nice to say, don't say anything". 

By the way, the only non-gold miner I hold right now is Impact Silver (IPT.TO). I bought into them because they are profitable and because I really like their stockholder-friendly, build it organically modus-operandi. This is one stock I'm holding not because of its valuation but out of pure affection.

Hope you continue to find these tables useful.

MontyHigh, www.worldofwallstreet.us

Gold: Lightening Up For A Wave Of Interventionals

What happened to Gold today? And what's coming up soon?

Here's what happened today (gold must not be permitted to question the B.S. coming out of the head of the fed):

Here's what's coming Thursday (gold must not be permitted question the health of the big banks):
TAKE-A-LOOK- US to unveil bank stress tests on May 7

Here's what's coming on Friday (gold must not look like a safe haven when folks are afraid): ‘Great Recession’ Will Redefine Full Employment as Jobs Vanish ... The government may report May 8 that the jobless rate jumped to 8.9 percent in April, the highest since 1983

Learning to play the "interventionals", the times when the Gold Cartel classically "takes down" gold, I lightened up this morning on my gold stocks (about 5% of my portfolio) and expect I'll trade back in around 1:30 or  2PM on Friday after the coast is clear when gold is likely to be back in the $880s.

MontyHigh

Off Topic (Sorta, Kinda): Stop The Looting / Start Prosecuting

Stop The Looting / Start Prosecuting refers to the financial fraudsters (and their political and regulatory accomplices) who, through out and out criminal fraud, created this "global financial crisis" and are bankrupting the USA.

To try to do my little part on helping folks demand what might actually change things for the better, I spent (wasted?) a few hours and some bucks printing off the bumper sticker below. If you are interested in getting one on a donation basis (or just want to see a not so flattering photo of me), please check out www.stopthelooting.com.

MontyHigh, www.worldofwallstreet.us