Miners Must Control Costs to Improve Share Prices: Byron King

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The Gold Report: Byron, gold is above $1,300/ounce ($1,300/oz)although not by much and silver topped $20/oz. What was holding their prices down, and what are the fundamentals that will move the prices going forward?

Byron King: The short answer is that, for all its faults, the dollar has strengthened, which holds down gold and silver prices. The longer answer is that gold and silver are manipulated metals. That is, the world's central banks have an aversion to things they can't control, and one of the things that they can't control is elemental metals like gold and silver.

Let's ask why the dollar has strengthened. The U.S. is probably in its weakest geopolitical situation in decades. The Wall Street Journal on July 17 had a front-page story about the confluence of crises across the world Ukraine, Middle East, Southeast Asiaall of which are profound challenges to American power militarily, diplomatically and economically. But the dollar is still holding up. Why?

I believe the dramatic recent increase in U.S. energy production is what's behind the stronger dollar. With more oil and natural gas from fracking, the U.S. is the world's largest energy producer. In addition, we're importing far less oil and exporting a lot more refined product. It helps the dollar.

Still, when I look at the big picture for gold, I see a resource whose production is challenged on the best of days. Output is declining in the major traditional sources: South Africa is in decline; Australia is challenged; some of the big plays in Nevada are getting long in the tooth. Continue reading "Miners Must Control Costs to Improve Share Prices: Byron King" →

5 Minimal Peter Cundill-Like Moves For Your Portfolio

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By: Tim Melvin

Have you read the book There's Always Something to Do by Christopher Russo-Gill?

If not, it should move right to the top of your summer reading list. It is the accumulated reflections of Peter Cundill. A Canadian value investor, Cundill used the Graham Deep Value Approach to return a little more than 15 percent, on average annually, to investors for almost 30 years.

Cundill once described his approach as looking to buy dollars for $0.40, and he focused almost entirely on the balance sheet. He once commented that he did liquidation analysis and liquidation analysis only. He wanted to buy stocks in companies that traded below where he estimated they could be profitably liquidated.

1. Things To Do

Cundill looked all over the world for ideas, and felt that most of the time he could find enough bargain issues to get his funds invested in such bargain issues and provide above average returns. However, he was not afraid to hoard cash when he could not find enough true bargains to get fully invested.

Value investors today, however, find themselves facing a situation where it is very difficult to get fully invested, because of a lack of opportunities in the aftermath of a five-year rally in global equities. There are a few things to do, however, even in an overheated market.

The most obvious opportunity for those who favor a deep-value approach is the U.S. community banks. Many of these smaller banks face challenges that will push them toward the inevitable conclusion: they need to sell to a larger institution rather than go it alone. The avalanche of regulations is pressuring the bottom line as compliance costs spiral out of control and make it difficult to earn sufficient profits to justify independence.

2. A 'Perfect Storm' For Regional Banks

Continue reading "5 Minimal Peter Cundill-Like Moves For Your Portfolio" →

The Greatest Risk To Investors Today

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By: Jody Chudley of Investing Answers

We've seen this set-up before...

All through 2006 and 2007, I heard some of the smartest minds in the investment game warning about the massive housing bubble that was about to pop. For a long time, these smart folks looked wrong, as housing prices kept going up and up.

Then things changed in a hurry, and we suffered through the worst credit crisis in our country's history and a housing bubble collapse. Anyone that didn't heed the warnings got crushed.

I see the same thing happening today. There have been warnings that we could be in for severe inflation ever since the Federal Reserve rolled out the printing presses back in 2008 with its "quantitative easing" program.

So far, not much has happened. However, similar to the housing bubble, that "nothing" could turn into something very quickly.

After years of easy money policy by countries around the globe, the inflation pump could be primed. Continue reading "The Greatest Risk To Investors Today" →

INO Sponsors 5 Nepalese Students - INO Cares

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Traders,

I wanted to share an incredible story with you in the spirit of our INO Cares campaign. It is amazing how one person can make such a tremendous impact and how a chance encounter can turn into something so wonderful!

INO Cares - Nepal SchoolAfter graduating from college in January of 2005, Maryland resident, Mikey Church, decided to take a bicycle ride with his friends from Amsterdam to Cairo and then from India to China. They day they entered Nepal, the King dissolved the government and declared martial law. This caused Maoist Rebels to declare a strike across the country resulting in a halt in travel and commerce. Mikey and his friends happen to cross paths with local village residents and brothers, Ujjwal and Bol Bhat.

Ujjwal encouraged Mikey and his friends to stay with his family until political tensions eased. During this stay, the American boys spoke often with Ujjwal about the poor access to education in Nepal, especially for girls and the desperately poor, and also about Ujjwal’s dream to open a school. Mikey safely returned home, but did not forget the conversations he had with the Nepalese brothers.

Mikey and Ujjwal kept in touch for a few years. When Mikey married his wife in 2008, he asked his guests to make donations in lieu of wedding gifts. Mikey was able to send this money to Ujjwal to open the doors of the Mikey Medium English School, a three room school house in Bauniyan, Kailali to 40 students, 20 of which were girls.

In a letter sent to family and friends, Mikey said, "I am a firm believer in the parable, 'Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.' The benefits of basic education need not be reiterated here. They are plentiful and convincing. Never the less, here is a refresher. Girls who are educated are better able to protect themselves against HIV/AIDS, marry later in life, have healthier children and have work opportunities beyond the home. Boys who are educated may be able to break a family cycle of hard labor and typically earn more than their non-educated counterparts."

Read the full story about Mikey's journey and the Mikey Medium English School.

Today, the Mikey Medium English School enrolls 100 students and employs 5 teachers. Fifty percent of the students are females and fifty percent are desperately poor. Class size does not exceed 20 students. For only $200, Grassroots Education Nepal provides a student at the Mikey Medium English School year-round education, textbooks and supplies, two student uniforms (including socks and shoes), a backpack and sweater.

For our June INO Cares campaign, we are proud to offer scholarships to 5 students so they can attend the Mikey Medium English School for 1 year!

This is such a wonderful story and we could not be more honored to give the gift of education to a handful of Nepalese youth, as well as continue the dream of an American kid and a pair of Nepalese brothers!

To contribute to Grassroots Education Nepal or sponsor a student of your own, please visit Mikey Medium English School’s page.

I hope you enjoyed this story. If you have any ideas for a future INO Cares campaign, please send them our way!

Best,

The INO Cares Team

Currencies, Gold And The Big Picture

Posted on by The INO.com Team

Here are the monthly views of the basket cases we call major currencies.

Uncle Buck and his reserve status were leveraged to the hilt by "The Hero" and now his successor is trying to gently talk the Fed out of its policy stance over time.  In other words, tightening is going to come one way or another and Janet Yellen is trying to go the orderly route.  When this process becomes disorderly, the USD is likely to benefit from the liquidations elsewhere in the asset world.

Technically, USD is in a long basing pattern.  There are those who think it is basing before a renewed decline, reading a Symmetrical Triangle (continuation) pattern into poor old Unc.  I think the odds are it is bottoming over the post-2008 years when inflation – try as they might to have promoted it – simply has not taken root.  Leaning bullish, watch support and resistance.

usd

 

Long ago we projected a rally in Uncle Buck’s chief competitor, the Euro.  This was due to a bottoming pattern (formed on shorter term charts) and unsustainable negative hype about the Euro crisis.  The target was around 140 +/-, which is the top of the post-2008 downtrend channel.  Euro remains in a big picture downtrend and if global asset markets start to come unwound in the coming months, it is not Euros people are going to run to, I can tell you that.  Bearish below the upper trend line. Continue reading "Currencies, Gold And The Big Picture" →