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REE Stocks Are Down but Not Out: Siddharth Rajeev

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The Critical Metals Report: Siddharth, despite the poor price performance of critical metals equities since the fall of 2011, most of the prices for the underlying commodities have indicated relatively stable demand. What's your view?

Siddharth Rajeev: It's tough to generalize on the mining sector because each critical element has its own supply and demand drivers. We have a positive outlook on a few elements; this is not so with others. However, it's true that commodity prices have not dropped as much as equities. If you look at industry data, you can see that mining companies are in a much better position now compared to four or five years ago. For example, the margins, return on equity and balance sheets of gold and copper producers have improved significantly over the past five years. Despite that, why is the TSX Venture, 50% of which is comprised of mining companies, down by 60%? I believe that the market is overreacting, just as it did in 2008. Therefore, we believe there is a good opportunity to buy quality assets at this time at cheap valuations. Continue reading "REE Stocks Are Down but Not Out: Siddharth Rajeev" →

Deepwater Service Stocks Are Tapping the Supercycle Sweet Spot: Elliott Gue

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The Energy Report: A lot has happened in the energy markets since your last interview. What are the most significant changes in the space?

Elliott Gue: The Gulf oil spill in May 2010 and the Fukushima event in March 2011 were the two most pivotal events of the past two years. The repercussions of the Gulf spill extended for over a year. Fukushima dramatically changed the policy toward nuclear energy in Japan and in Germany and caused a surge in global natural gas prices due to increased Japanese demand, Japan having suddenly lost about 30% of its power. Japan has since built new natural gas plants, which are the only plants that can be brought onstream very quickly to generate large amounts of power. Continue reading "Deepwater Service Stocks Are Tapping the Supercycle Sweet Spot: Elliott Gue" →

Why My Portfolio Gained 30% This Year: John Stephenson

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The Energy Report: John, In your last interview, you were pretty optimistic about much higher oil prices. What can you attribute the oil market's recent weakness to? Did everyone just get spooked?

John Stephenson: There was a rumor that the U.S. was going to release strategic petroleum reserves, which would lower prices at the pump and also lower prices in the world market. It would be a temporary fix, because the actual total volume of the reserve is only about a month's worth of U.S. consumption. Nonetheless, it would definitely lower prices. There's some waning of geopolitical risk, and some of that risk rhetoric was positive for oil prices.

The European ban on importing Iranian oil has had a pretty dramatic impact on tightening supply. It's roughly equivalent to when Libya was offline because of its revolution. That same level of production, about 1.5 million barrels (MMbbl) is off the global market now, creating a fairly tight supply picture. Then there is the Israel/Iran nuclear confrontation, which has also driven oil prices higher. Realistically, there's very strong support for oil prices in the $9095 per barrel (bbl) range because one of the big sources of demand for oil has actually turned out to be the Middle East itself, where the producers are becoming their own best customers. They're like drug dealers getting hooked on their own supply, and their consumption growth rates are double those of China. Continue reading "Why My Portfolio Gained 30% This Year: John Stephenson" →

The Case of the Missing 200 Million Barrels of Oil: Marshall Adkins

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Supply threats in the Middle East have governments around the world hoarding oil, largely in secret. But it didn't get past Raymond James Director for Energy Research Marshall Adkins, who noticed the 200 million-barrel discrepancy between what was pumped and reported global oil reserves. Where did the missing oil go, and why don't prices reflect this substantial surplus? More importantly, what happens once the reality of an oversupply sets in?—A tough six months, Adkins expects. Read on to find out where you can hide when prices plummet.

The Energy Report: You've written a provocative research report titled "Hello, We'd Like to Report a Missing 200 Million Barrels of Crude." It argues that the global oil inventory should have grown by over 200 million barrels (200 MMbbl) during the first six months of 2012. Where did this oil go? And a better question is, why hasn't this surplus shown up in pricing?

Marshall Adkins: When the U.S., the European Union and the United Nations imposed sanctions against Iran, the world responded by putting oil into storage. China rapidly began filling its strategic petroleum reserves. Saudi Arabia topped off its surface reserves. Iran put oil in the floating tankers. Continue reading "The Case of the Missing 200 Million Barrels of Oil: Marshall Adkins" →

Gold Will Break Previous High in Near Term: Brien Lundin

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The Gold Report: We just had a third round of bond buying in quantitative easing (QE). Will QE3 help the economy?

Brien Lundin: It will not help the economy, but it will help Wall Street. It will help elevate the stock market, including precious metals and resource stock prices. Although that was not the Fed's stated goal, it will be the ultimate result.

As I have written lately, we now have "QE as far as the eye can see." There is no end to it. The Federal Reserve will use QE until it works. If it does not work, the Fed will ratchet up the program and print more money until it does work.

The Fed is using the brute force of money creation to eliminate the U.S. unemployment problem, but that is not a foundation upon which a sustainable recovery can be built. At the same time that the Fed is trying to build a towering economy, it is eroding the very foundation of that economy by issuing vast pools of liquidity. Continue reading "Gold Will Break Previous High in Near Term: Brien Lundin" →