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Featured Video
Could Gold Hit $6000?
We all expect that gold will climb higher, but how much should it really be worth today?
Watch the video to see Hinde Capital's Ben Davies talk about the price of gold and why he thinks it could hit $6000 an ounce.
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| Dear Readers,
Things are beginning to change. Banking systems are about to unravel. Soon the world will be a much different place, starting with Europe.
Last week I said the ECB would cut rates on the 5th; they did just that. I expected more stimulus from Europe; the Bank of England did just that, raising their QE by another £50 Billion. Then China surprised everyone with yet another benchmark interest rate cut.
But was it really a surprise to those who have been following the underlying tones of the world economy?
For the last few years I have pounded on the notion that the world will continue to stave off its financial collapse by printing more money and do whatever it can to hold off outright disaster.
The people on Wall Street, Bay Street, and Howe Street all walk around talking about how bad the economy is, yet believe that things will be okay because policy makers will do whatever they can to prevent the inevitable from happening. So far the policy makers have done just that. But how much more can they do?
The policy makers are trying to prevent the further destruction of wealth. Yet in order to do that they have print more money. Printing money destroys wealth through debasement. Either way, wealth is destroyed. At some point the things they have put in place to avoid disaster will blow up.
Europe's banking system will need to be saved. As I mentioned last week, it all starts with federalizing Europe's banking system through a European-wide banking supervisor. After the recent rate cut, this will need to be done quickly. Europe Blacklisted
JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. and BlackRock Inc. (BLK) have just closed European money market funds to new investments after the ECB lowered deposit rates to zero:
From Bloomberg:
"JPMorgan, the world's biggest provider of money-market funds, won't accept new cash in five euro-denominated money- market and liquidity funds because the rate cut may result in losses for investors, the company said in a notice to shareholders. Goldman Sachs won't accept new money in its GS Euro Government Liquid Reserves Fund, and BlackRock, the world's largest asset manager, is restricting deposits in two European funds.
"The European market environment is in unchartered territory with such historically low -- or even negative -- yields for high-quality issuance," Goldman Sachs (GS) said in a memo to fund shareholders, citing the ECB's rate cut. "It is not currently feasible for our portfolio managers to deploy capital without substantially diluting the yield for the existing base of shareholders."
The ECB yesterday reduced its benchmark rate to a record low of 0.75 percent and took its deposit rate to zero. Money funds have been struggling to invest client assets at a profit as interest rates globally are near record lows and Europe's sovereign debt crisis has reduced the supply of available debt. Managers have been forced to cut fees to keep customer returns above zero, and some have abandoned the business.
All three firms said the restrictions are temporary and they will monitor market conditions. Investor redemptions from the funds are not being limited."
That means money will be coming out of European money markets...but won't be coming back in. This is yet another blow to the ailing countries in the eurozone already suffering from fundraising difficulties (see It's Time to Get Stinky). It also means euro central banks will have no other option but to step in as lenders or face financial collapse of their banking system.
As I mentioned in past letters, when money can't be made in other markets, they will begin to flow into the one market with value: gold.
The governments of the world will continue to print more money because it has no other choice. As a result we will see volatility in all currencies and inflation will eventually rise. I stress that we remain in a natural state of deflation for now (see It's Time to Get Stinky) which only encourages policy makers to step up the printing press.
"By his own words, Bernanke has already told us they will do more: "If we are not seeing sustained improvement in the labor market that would require additional action. We still do have considerable scope to do more and we are prepared to do more."
Stocks are once again falling following the U.S. government's report that only 80,000 jobs were created in June, the third straight month of weak hiring. The unemployment rate remained at 8.2%. Will Ben take action soon?
I don't think he has a choice.
Gold is as Good as Cash...Again
The new Basel III Accord is set to take effect early next year. BASEL III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010-11.
In the new Accord gold will be promoted to tier 1 status and carry a zero risk weighting; gold currently carries a risk weighting of 50%.
In response to the new Basel III Accord, a
letter was issued by the federal bank regulatory agencies with new rules proposed that would revise the measurement of risk-weighted assets by implementing changes made by the Basel Committee on Banking Supervision (BCBS) to international regulatory capital standards and by implementing aspects of the Dodd-Frank Act.
Under the new proposed rules issued by the federal bank regulatory agencies, gold bullion will also carry a zero risk weighting as it has been proposed in Basel III.
In short, that means banks will be allowed to carry gold and consider them tier 1 assets, right alongside cash. Basel III also states that banks must increase their tier 1 holdings from 4% to 6%%. That means banks will have to "cash up."
How will the banks increase their tier 1 holdings as currency continues to lose purchasing power?
Last year I mentioned that Switzerland's central bank returned to a profit in the first nine months of 2011 because their gold holdings helped counter losses on their currency reserves.
If you were a bank and had to increase your tier 1 holdings, would you buy gold or currency?Central Banks around the world have already been hoarding gold. But they've only just begun...
No Guts, No Glory
Consider that hundreds of billions of dollars may soon be available as a result of investors exiting the European money markets. Also consider that global banking institutions have been losing billions of dollars in riskier investments and are under serious pressure to keep a tighter ship.
Where will these institutions invest their money when their traditional investments are providing negative returns? The only safe asset I know that has continued its climb over the last decade is gold.
Institutional investors here at home are packing their bags for their two-month summer vacation. This will leave countless deals unattended and buy side liquidity dry. That means there could be further bargains on the gold and silver stocks you have been so patiently watching.
That also means the big sellers have left the market. As a result, little volume on the buyside could push many of these juniors higher.
The smart guys are seeing buying opportunities in a sector that is clearly undervalued while retail investors remain scared. For the last year and a half gold stocks have trended down right alongside the TSX Venture.
But that's the nature of the business. No guts, no glory.
Until next week,
Ivan Lo Equedia Weekly 
Questions?
Call Us Toll Free: 1-888-EQUEDIA (378-3342)
Disclosure: I am long gold and silver through ETF's and bullion, as well as long both major and junior gold and silver companies - which means I am biased towards the sector. It's your money to invest and we don't share in your profits or your losses, so please take responsibility for doing your own due diligence. Remember, past performance is not indicative of future performance. Just because many of the companies in our previous Equedia Reports have done well, doesn't mean they all will. |
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Featured Letter, Read This One Again!:
An Absolute Monster - Click to Read
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How Is Dr. Copper Feeling?
By Louis James and Andrey Dashkov, Casey Research
Copper is sometimes referred to as "Dr. Copper," because the metal is used in so many industrial applications and is essential for many different sectors of the economy, from infrastructure to housing to consumer electronics. That usually makes its price action a good indicator of the state of the global economy.
The chart below illustrates the degree to which copper follows economic health - as opposed to gold, which is a traditionally a contra-cyclical commodity. Have a look.
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This illustration paints a convincing picture: over the past five years, copper (and the economy) stagnated, while gold was on a steady uptrend. No surprises here: gold has always been a reliable hedge against economic and financial turmoil.
In 2012, copper demand started out quite strong. The International Copper Study Group (ICSG) published Q112 numbers that showed a healthy uptrend in demand: year-on-year, apparent usage grew by 9%, while refined production increased by 4%. (This is defined by ICSG as refined production + refined imports - refined exports + refined beginning stocks - ending stocks.)
China, responsible for about 40% of global copper demand, almost doubled its net imports, with a 99% annual growth rate in Q112. This does not mean, however, that the metal was used right away by industry: ICSG indicates that high import levels were accompanied by growing inventories in bonded warehouses.
This will lower demand in the near term. And it's not just China: other major sources of demand were largely stagnant in the first quarter, with the US growing by only 1%, European demand decreasing by 9%, and Japanese down by 6%.
Some analysts expect the European market to be "dead" for the rest of this year, due to the lack of trading volumes. Chinese demand is projected to soften, and its output of copper products is estimated to grow by 10-15% year-on-year. That may seem robust, but it was 18% last year, according to...
More Casey Research Articles
> Which Course Will North American Natural Gas Producers Choose?
> Why Are We Certain that Gold Producers Will Soar?
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Upload Your Own Videos - Embed Videos
Is there a video on Youtube or another website that you want to post without uploading it through our technology?
With our new Embed feature enabled, you can now upload and embed any object or video into your blog post. Many of our users are already embedding videos from Fox, Youtube, and CNBC and sharing them with our users.
Embedding is simple. Just copy and paste the embed codes from another website ino the main blog section of your post (not the exceprt).
Where do you find these embed codes?
Embed codes for videos are usually right beside a video.
Here is an example of where the code is on Youtube, highlighted in yellow:
So share what you find with everyone! To learn more, feel free to email or call us at 1-888-EQUEDIA
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Equedia Tips - The Markets Tab
Using the search function at the top right corner of the website, search for any company. Let's use Research in Motion as an example. Once you reach their profile page, click on the MARKETS TAB. You should now see 12 seperate tabs underneath their logo. Try clicking on them and you will find in-depth information such as:
Detailed Quotes - Depth/Level II - Options - Java Charts - News - Profile - Financials - Insiders trades - Filings - Analyst Consensus - Earnings - Historical Data (Highs/Lows, Volumes, Closing/Opening Prices)
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Additional Features (you may not know)
Equedia has many features (you may have overlooked) that will help you manage your investment life and ensure a more enjoyable and useful experience.
Here are just a few of them:
Calendar subscriptions: Keep track of your business events, subscribe to other events, and have access to your online calendar from anywhere in the world. In the near future, we will be working with public companies to add their events to the calendar so that shareholders will never miss an important event again. So call your companies and get them to participate!
Tagging companies to videos and images: Did you know that all of your videos and images can be tagged to public companies? Do you have a video about Google? How about a blog with an image? How about just a blog? Tag it to Google in your blog post, so that anyone searching for Google's quotes and finances can find your coverage!
Buy, Sell, and Hold Ratings: Once you log in, you can submit your buy, sell and hold ratings on the ratings tab so that other shareholders can see what YOU think. You may also access your associates' ratings and see what they think of the shares you hold.
Blog feed subscriptions: Once you add someone as an associate, you will have access to all of their blog posts through your blog feeds. Simply go to your "blog feeds" tab once you log in!
Search function: By far one of the most overlooked but important functions on Equedia. Using the top right hand corner search function, you can find and add any corporations, media users, or investors to your network.
Markets Tab: Under any corporate profile, you will find this tab. Under this tab, you can find the company's news, level 2 depth (delayed), options, charts, profile, financials, insider trades, filings, analyst overviews, earnings, and historical data (these may not be available for all companies)
There are many more useful features on Equedia.com but we think its better if you experience them for yourself. The more associates you have, the more useful Equedia will become for you. So use the new "invite my contacts" function and get started!
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Forward-Looking Statements
Except for the statements of historical fact, the information contained herein is of a forward-looking nature. Such forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the Company to be materially different from any future results, performance or achievements expressed or implied by statements containing forward-looking information.
Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that statements containing forward looking information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on statements containing forward looking information. Readers should review the risk factors set out in the Company's prospectus and the documents incorporated by reference.
Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources
This presentation uses the term "Inferred Resources". U.S. investors are advised that while this term is recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize it. "Inferred Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of "Inferred Resources" may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an "Inferred Mineral Resource" exists, or is economically or legally mineable.
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This Week's Most Wanted
The Stock Market's Most Interesting Videos That You Should Watch
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Disclaimer and Disclosure
Equedia.com & Equedia Network Corporation bears no liability for losses and/or damages arising from the use of this newsletter or any third party content provided herein. Equedia.com is an online financial newsletter owned by Equedia Network Corporation. We are focused on researching small-cap and large-cap public companies. Our past performance does not guarantee future results. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. This material is not an offer to sell or a solicitation of an offer to buy any securities or commodities.
Furthermore, to keep our reports and newsletters FREE, from time to time we may publish paid advertisements from third parties and sponsored companies. We are also compensated to perform research on specific companies and often act as consultants to many of the companies mentioned in this letter and on our website at equedia.com. We also make direct investments into many of these companies and own shares and/or options in them. Companies do pay us to advertise on our website and we often distribute our reports on featured companies. While we are never paid to write a rosy and positive report on any company, we do market our reports using the advertising fees paid for by our featured companies.
This process allows us to continue publishing high-quality investment ideas at no cost to you whatsoever. Our revenue is generated by sponsor companies and we grow our readership by using the advertising fees we charge to distribute our reports. This helps both Equedia and our client companies gain exposure and allows us to provide you with our research at no cost.
Therefore, information should not be construed as unbiased. Each contract varies in duration, services performed and compensation received.
If you ever have any questions or concerns about our business or publications, we encourage you to contact us at the email or phone number below.
Equedia.com is not responsible for any claims made by any of the mentioned companies or third party content providers. You should independently investigate and fully understand all risks before investing. We are not a registered broker-dealer or financial advisor. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report OR ON Equedia.com will be the full responsibility of the person authorizing such transaction.
Please view our privacy policy and disclaimer to view our full disclosure at http://equedia.com/cms.php/terms. Our views and opinions regarding the companies within Equedia.com are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. Equedia.com is paid editorial fees for its writing and the dissemination of material and the companies featured do not have to meet any specific financial criteria. The companies represented by Equedia.com are typically development-stage companies that pose a much higher risk to investors. When investing in speculative stocks of this nature, it is possible to lose your entire investment over time. Statements included in this newsletter may contain forward looking statements, including the Company's intentions, forecasts, plans or other matters that haven't yet occurred. Such statements involve a number of risks and uncertainties. Further information on potential factors that may affect, delay or prevent such forward looking statements from coming to fruition can be found in their specific Financial reports. Equedia Network Corporation., owner of Equedia.com has been paid $5833.33 plus HST per month for 6 months which totals $35,000 plus hst of media coverage on MAG Silver Corp. plus any additional expenses we may incur as a result of additional distribution. MAG Silver Corp. has paid for this service. Equedia.com may purchase shares of MAG Silver without notice and intend to sell every share we purchase for our own profit. We may sell shares in MAG Silver Corp without notice to our subscribers. Equedia Network Corporation., owner of Equedia.com has been paid $6666 per month for 6 months which totals $40,000 plus hst of media coverage on Abzu Gold Ltd. plus any additional expenses we may incur as a result of additional distribution. We have also been granted 150,000 options at $0.20 vesting over a one year period. Abzu Gold Ltd. has paid for this service. Equedia.com currently owns shares of Abzu Gold Ltd. and we may purchase more shares without notice. We intend to sell every share we own for our own profit. We may sell shares in Abzu Gold Ltd. without notice to our subscribers. Equedia Network Corporation has been paid $7143 plus HST per month for 7 months which totals $50,000 plus hst of media coverage on Balmoral Resources Ltd. plus any additional expenses we may incur as a result of additional distribution. Balmoral Resources Ltd. has paid for this service in one lump sum. Equedia.com may purchase shares of Balmoral Resources Ltd. without notice and intend to sell every share we purchase for our own profit. We may sell shares in Balmoral Resources Ltd. without notice to our subscribers. We currently own shares of Balmoral Resources Ltd.
Equedia Network Corporation is also a distributor (and not a publisher) of content supplied by third parties and Subscribers. Accordingly, Equedia Network Corporation has no more editorial control over such content than does a public library, bookstore, or newsstand. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by third parties, including information providers, Subscribers or any other user of the Equedia Network Corporation Network of Sites, are those of the respective author(s) or distributor(s) and not of Equedia Network Corporation. Neither Equedia Network Corporation nor any third-party provider of information guarantees the accuracy, completeness, or usefulness of any content, nor its merchantability or fitness for any particular purpose.
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