Border Gold Corp: Divergence Part II

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Divergence Part II

The focus of financial markets has certainly stuck with the fallout in the price of crude oil, and rightly so as its impacts will be far reaching from global economic growth projections to domestic monetary policy. One thing that’s seems to be lost, however, is not the over excitement of lower energy prices putting approximately $75 billion back in US consumers wallets and a similar story around the globe. Instead, what’s missing is the lack of focus going to a diminishing global growth picture out of emerging markets and a continuing weakening demand for crude oil and energy. The story with oil and lower prices warrants as much concern over weakening demand as it does over a supply glut, and the price action to end the week in all markets illustrates that.

This week for the markets was a classic risk off environment with equities and commodities ending the week lower and bonds and the US dollar moving in a positive direction. Unfortunately, as optimistic as most have been over the positive benefits of lower energy prices, the financial markets are tied too closely with the pressure of falling oil prices. Concerns particularly over the balance sheets of a number of oil producers, and in particular their debt loads, have sparked fear over the stability of the resource sector, and leave investors puzzled. In a week that already saw oil prices fall 12 per cent, at what point will this market find stability?

The other factor to key in on was a report released at the end of the week from the Paris based International Energy Agency that said demand growth for crude oil next year would be less than a million barrels a day. This is driven by weaker outlooks for countries like Russia, China, and Brazil, and the prospects of a strong dollar stunting other emerging markets. The strong dollar impact on emerging markets has the potential to be somewhat far reaching.

A number of the emerging economies of the world benefitted tremendously during the aftermath of the financial crises as the US Federal Reserve’s weak dollar policies caused exchange rate appreciation in their markets, which not only made them attractive for capital investment, but also lower their import costs. Essentially, in today’s market we are seeing the opposite. A strong dollar is increasing the burden of their US denominated foreign debts and increasing the cost of the raw materials they purchase to fuel the growth of their economy. Emerging economies do not see the same benefits of lower energy prices that those of advanced Western economies might.

Looking to next week (FOMC meeting Tuesday-Wednesday) and beyond, investors will be looking for an answer as to what impact this has on fed policy. Expectations vary from March until about September for when the Federal Reserve will begin to raise their key policy rate. If they drop the “considerable time” phrase from their statement when referring to the duration of a 0 to 25 basis point fed funds rate is something that could support a move sooner rather than later.

Last week I wrote on the topic of divergence between North America’s economies and the rest of the world, and its impact on financial markets. It’s a topic that was further explored by many economists and commentators this week. The question is whether this sharp drop in oil prices keeps the fed at bay because lower energy and producer prices keep downward pressure on inflation, and the global economy poses too much of a risk, or does it accelerate the likelihood of this divide?

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Border Gold Corp: Divergence

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With less than a month to go in 2014 investors are faced with the question, what gives? The relationship that exists between an expanding global economy and the demand for its natural resources from the emerging markets is absent. As we’ve witnessed, equity markets have snapped back since their recent correction with the broader S&P 500 back up over 14 per cent since the mid-October low. Moving in the other direction, however, commodities have fallen roughly 8 per cent and much of the leg lower exacerbated by the steep decline we’ve seen in the price of crude oil.

Longer term interest rates and those in that asset class that have been forecast to be creeping higher this year continue on their lows. The expectation was for a US 10 Year Treasury yield over 3 per cent at the beginning of the year, and it seems about as distant as the time past since the forecasts were made. Yields have tracked down around 2.25 to 2.5 per cent.

The conundrum is simple. We’ve had a six year rally in the equity markets, particularly in North America that has been accompanied by subpar growth around the level of 2 per cent. And while the financial markets have taken off from the lows of 2009, it’s the economy that’s lagging and there is a continued divergence between North America and the rest of the world.

As North America advances, economies like Japan and the countries of Europe remain stagnant. Furthermore, they create headwinds for the rest of the globe. This is especially true for a country like Canada as we are linked to and rely on a strong network for global trade. And it’s the divergence that’s taking place between the commodity and stock markets that’s illustrating this concern.

There is more to the story of the weakening commodity markets then simply a global supply glut. Demand for the world’s resources is diminishing with the prospects for global economic growth. And since in part this bear market is being driven by a weak outlook from China and other emerging economies, it raises the issue of which direction the global economy is headed, and whether this ‘America on its own’ rally is really sustainable.

The other question to ask is what’s currently driving this equity market higher. Support for stock prices is continuing off a theme of last year, and that is buy backs and dividend hikes from cash rich American corporations. Pair that with fixed-income investors looking for alternatives to a low interest rate environment, and there’s no question as to where the demand for equities is coming from, but it circles back to idea of sustainability.

The real economy is what needs to catch up with the market at this point. Investors are looking to the labour market and whether wage growth will finally expand beyond the mediocre 2 per cent level, barely keeping pace with inflation. Quite possibly, this will likely come in the new year following a period when workers traditionally see raises. If that’s the scenario, with the strength in November’s payrolls, the Fed may stand ready to begin to raise interest rates sooner than expected. But before we get too excited on what’s going on in the US, let’s think of the message of what this weak commodity price story is really telling.


Border Gold Corp: Swiss Votes… No

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Swiss Votes…No

In the wake of the Swiss referendum on whether the central bank should increase their allocation to gold, investors are tasked with the question, is the no vote yet another reason to be bearish on gold at present time. Voters clearly rejected the question of whether the Swiss National Bank (SNB) should hold at least 20 per cent of their balance sheet in physical gold, which would have lead them to the purchase of 1500 metric tons over the next five years.

Even though some gold bugs were clamoring on this vote as a reinforcement for responsible management of a country’s currency, especially in the wake of quantitative easing and rapid expansion of the monetary base in countries like the US, Japan, and potentially Europe, this vote was more about anti-EU sentiment and the euro’s influence on the Swiss Franc. In the near term, its certainly possible some noise or gyrations leads the market to react to the “No” vote and we may see prices trade lower, but it too remains consistent with a strong US dollar trend that is yet to see gold return as that safe haven asset.

Citibank’s Willem Buiter made headlines this week leading up to the vote as he strongly advocated for the “No” position. It shouldn’t really come as a surprise that like-minded academic economists believe in leaving the autonomy of central bank operations with the people who manage that institution and not subject to populist regulations. Especially because a central bank is in place to instil longer term views than perhaps myopic policy decisions witnessed in different levels of politics.

Buiter, however, did stress one key point that it’s important for even those in favour of the floor on gold reserves, and that is requiring a central bank to hold a minimum amount of gold ultimately decreases the values of those gold holdings to zero. As we know, gold standards ultimately fail. As the Citi Global Economist said, gold has been in a 6,000 year bubble, arguably making it the longest-lasting bubble in history, but that’s not really a surprise. A bubble is anything that is priced above its intrinsic value.

The intrinsic value of gold is something that economists have been trying to put a mark on for years. The typical arguments when comparing it to another financial asset are it doesn’t produce cash flow, and not providing any right to future earnings or repayment minimize any fundamental value it might have. What we do know about gold is that history has proved it to be a commodity that is tied to the global monetary system, and its limited supply and negative correlation to the world’s reserve currency make it a popular hedge when diversifying a portfolio.

Inevitably, the price of gold might be the longest bubble in human history, but if that is indeed the case, what will change that? The famous words of former US Federal Reserve Chairman, Ben Bernanke during a senate testimony were, “no one really understands gold prices.” That’s because how we value or price assets in today’s financial world doesn’t apply to gold. Gold is and always has been a hedge. Setting a predetermined or fixed allocation of a balance sheet to gold will ultimately devalue it because it takes that metal out of the market permanently, and the price adjusts. But gold’s flexibility and role in a dynamic investment environment, as we are in today has been proven over the life of its 6,000 year bubble.


5 Canadian Uranium Penny Stocks That Could Power Higher

Uranium stocks may soon be on the radar of investors again as the spot price of the underlying commodity surged to recent high US$44 a pound, up 28% from year-ago levels and about 57% since bottoming out at US$28 during the summer. The following five speculative stocks could get a big boost if money begins to go back into this sector:


Milestones Are Key to Successful Junior Resource Investing: Mark Lackey

CHF Capital Markets Executive Vice President Mark Lackey offers up his insight on the recent gold price decline, reveals some factors investors should consider before buying a junior resource stock, and mentions a small energy name he likes that’s set to begin production.


“What If It’s 1982 Again?” – Thoughts on Gold and My Recent Trip To Europe – Chris Berry

Jeremy here,

Last week I had the opportunity to travel through Germany and Switzerland with 15 public companies. The trip was hosted by The Canadian Securities Exchange and Zimtu Capital Corp. Our good friend Chris Berry was a keynote speaker and acted as an MC during the presentations and seminars.

I have linked his recap below of the trip and his EU views below.


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By Chris Berry (@cberry1)

For a PDF copy of this note, click here.

Europe has always fascinated me. A thousand years of rich history confront you regardless of the country or city you visit. Opportunities to talk to Europeans from all walks of life regarding their views on current events or the global financial markets put in a unique historical context are worth the time and effort it takes to plan a trip.

My recent trip to Frankfurt, Munich, Zürich, and Geneva was no exception. I went as a keynote speaker on the Fourth Annual Zimtu Capital Bus Tour where I spoke in each city and also served as a moderator and emcee. Accompanying Zimtu were a well-rounded stable of companies representing resources as varied as diamonds, potash, coal, and uranium. Representatives from the Canadian Securities Exchange along with several CSE-listed companies were also in attendance, and as these companies were not natural resource-focused (vertical farming, biotech, high tech), it gave this year’s tour a more diverse flavor than in years past. Everyone – from institutional and individual investors to the companies themselves – had a unique opportunity to view the small cap discovery sector in a different light.

That said, this note focuses on European investors opinions of the resource sector now that we are three years into what feels like a seemingly relentless malaise. My experience in Germany wasn’t unlike that of years past. The typical investor appears more interested in owning the physical silver or gold bullion than mining shares (although this isn’t universally the case). This is interesting, indeed, relative to the overwhelming opinion of analysts that deflation is a more likely scenario for the EU in general.

While I would argue that many individuals I know have accepted the reality of lower precious metals prices for the foreseeable future – many people I spoke with in Germany thought that gold and silver should be – and would be – trading higher soon. The rationale for this wasn’t always clear as the usual arguments about manipulation and looming hyperinflation were trotted out while deflationary trends so evident were not given much credence.

I did an interview at the Munich Precious Metals show with Miningscout which you can see here

The meetings in Switzerland were notable for their dynamism, commentary, and questions from the attendees. The discussion of the Swiss gold referendum (20% backing of the Swiss currency by physical gold) loomed large over the conferences with the audience split 50/50 on it passing. The main issue wasn’t the disbelief that the precious metals and mining company shares were falling. This appeared to be an accepted reality and the question was more of “What do we do given this new lower metals price environment?”

One exchange I had in particular stood out. While talking about gold and silver, my counterpart turned and asked:

“What if this is 1982 again?”

 The chart below explains her fears and provides context. 

After a parabolic boom in the gold price in the late 1970s, the gold price collapsed (circled in black) and remained range bound until the early 2000’s. I add this chart not to invite scrutiny from gold bugs, but to demonstrate this woman’s concerns. If we are indeed at a point in the gold cycle resembling 1982, this has profound implications for your gold and currency investments. What will you do as a gold investor if the gold price remains flat for the next 20 years?

For the record, while I think gold will tread water in the near-term, I don’t believe were in another 1982-type scenario. The global economy is much more integrated than ever before, and is drowning in debt and derivatives. I think many now view gold as its own asset class rather than its traditional role as a hedge against inflation. In this way, gold is a victim of its own success, as is silver. Days where the price of gold rises or falls $20 per ounce are looked upon as trading opportunities and the long-term rationale for owning precious metals or company shares has taken a back seat. This type of thinking is dangerous. If anything, the concern should be for higher, rather than lower gold prices based on the potential for widespread economic instability and Central Banks unable to mop up excess liquidity in the financial system fast enough to prevent inflation.

However, that’s not the casein Europe. This has everything to do with Central Banks around the world jawboning the equity markets higher with zero interest rates and QE and talking down inflationary expectations. Regular readers will know that we are at least in the disinflation and possibly in the deflation camp. While in Europe, I made this case to each audience. With a collapsing velocity of money, excess labor, capital, and dormant liquidity choking the global financial system, excess inflation (and by extension the need for the precious metals) is currently a distant reality. 

The Euro Zone is struggling to generate sufficient economic growth and is clearly fighting disinflation rather than generating inflation, China continues to moderate its growth rate, and Japan has just entered its fourth recession since 2008. Who will serve as the engine of global demand to ignite wage pressures and the inflation Central Bankers covet? How did we get to this point where Central Banks covet inflation but can’t seem to generate it 

The Japanese battle with deflation began with a stock market collapse in 1989 as a result of a real estate bubble. When banks in Japan curbed their lending, wages halted their climb and sufficient organic economic growth has never really returned. This scenario should sound familiar to everyone in the US as almost the exact same scenario has unfolded there since 2008. One must believe that Federal Reserve officials in the United States are watching the developments in Japan and the failure of their own version of QE (Abenomics) to generate growth with increasing concern.

As I said before, I don’t yet believe we’re at another “1982-style” inflection point for a number of reasons. Regardless of that, turning on the television and watching the price of gold and oil fall and assuming the entire commodity complex is suffering the same fate is a big mistake. I also made this point to my audiences.

Despite what the doom and gloom crowd would have you believe, the global economy has never been more prosperous and generally speaking living standards are still on the ascent. It’s important to remember that the global economy is, on balance, still growing. Scientists and entrepreneurs all over the world are at work in R&D labs focused on finding solutions to some of life’s most pressing issues. Finding those high growth opportunities is exactly what small cap disruptive discovery investing is about and my travels in Asia and Europe have reinforced this view.

I’ll be speaking about these themes at Mines & Money in London Dec 1 – 4. Please reach out if you’ll be there.  

The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act).  In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT.  Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements.  Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially.  In addition we may review investments that are not registered in the U.SWe cannot attest to nor certify the correctness of any information in this note. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational bulletin.

The information in this note is provided solely for users’ general knowledge and is provided “as is”. We at the Disruptive Discoveries Journal make no warranties, expressed or implied, and disclaim and negate all other warranties, including without limitation, implied warranties or conditions of merchantability, fitness for a particular purpose or non-infringement of intellectual property or other violation of rights. Further, we do not warrant or make any representations concerning the use, validity, accuracy, completeness, likely results or reliability of any claims, statements or information in this note or otherwise relating to such materials or on any websites linked to this note. I own no shares in any company mentioned in this note.  

The content in this note is not intended to be a comprehensive review of all matters and developments, and we assume no responsibility as to its completeness or accuracy. Furthermore, the information in no way should be construed or interpreted as – or as part of – an offering or solicitation of securities. No securities commission or other regulatory authority has in any way passed upon this information and no representation or warranty is made by us to that effect. For a more detailed disclaimer, please see the disclaimer on our website

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Border Gold Corp: Geopolitics Plays Interference

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Geopolitics Plays Interference

It seems that once again the direction or trend playing out in the markets has been interrupted by geopolitical tensions heating up between Russia, Ukraine, and the Western powers. Precious metals finished the week on higher footing, with gold initially touching below 1,150 USD this past Friday morning, but going on to finish the day approximately 40 dollars higher just shy of 1,190 USD. The predicament for those who have been anticipating a bottom in the precious metals is determining whether or not this is simply just noise that will once again wash through and see the trend of a stronger greenback and weaker precious metal prices continue.

If weeks prior can provide any indication for what Russia-Ukraine tensions mean, it’s that they have led to unsustainable rallies in the metals market. The escalation of sanctions and threat of increased violence simply subside with time, and metals prices tracked lower accordingly. Thus, a suitable question becomes why does the market again react to similar events we have witness play out before if inevitably, time will pass and they will soon be forgotten?

For certain the liquidity of the gold and precious metal markets is one factor for the surge in prices as the relatively smaller market becomes a very quick and instantaneous hedge for the US dollars and risk assets. Short term investors or traders are less concerned about the price level of gold, but instead will go long gold as it  exhibits its safe haven characteristics during these time periods.

Perhaps another reason though is the ongoing uncertainty surrounding the Russian economy. And although what we are currently witnessing with Russia is simply antagonizing tactics with Ukraine, the likelihood of escalation of sustained violence (or war) becomes more and more likely as their economy worsens. The Russian Ruble has depreciated 23 per cent against the US dollar over the past three months. Inflation becomes a huge issue for the Russian consumer with prices up nearly 8 per cent over the last year, and it is a trend that is likely to continue as the economy is extremely dependent of imports of food and agriculture as they are unable to substitute for what is inadequate domestic production.

As the Russian economy gets choked off from the rest of the world, and it’s the citizens that feel the brunt of the pain and suffering as their lifestyles adjust to a weaker economy that makes the majority of them worse off, options become limited. The uncertainty, which is very much priced into the market for Russian Rubles, and attracting a safe haven bid in precious metals, is how far into a corner is Putin backing himself, and what will be the repercussions of his actions.

And one potential repercussion becomes, as the media has been questioning, the likelihood of another cold war. Ongoing and increased sanctions with Russia are slowly cutting the economic ties to the west. It’s not without coincidence that the largest buyers of physical gold in the last quarter were Russia, Kazakhstan, and Azerbaijan. But all central banks in aggregate have bought gold now for 15 consecutive quarters. These are the long terms investors, and as one UBS analyst put it, in this kind of environment, “diversification would be deemed a logical outcome.”


“Don’t Panic!” AlphaNorth’s Steven Palmer Tells Small Cap Investors

Small cap fund manager Steven Palmer of AlphaNorth Asset Management spoke with Gravitas Financial’s Vikas Ranjan recently about October’s stock market sell off and why he believes the broader trend will continue. As well, he explains why he doesn’t have any sector biases and hints that he’s adding some resource names to his portfolio. He also mentions one Venture exchange listed stock that he bought recently that has soared more than three-fold during the past month.


Border Gold Corp: Game Changer

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Game Changer

Friday was the best single day for gold in 14 months. This is as the markets seem to be playing a risk-on, risk-off tug of war with the US dollar. Despite the strong dollar trade dominating as we witnessed through the beginning of the week, it corresponded to the weakness in gold. The pullback we witnessed in the dollar into the close Friday stems from concerns over what may be the repercussions of a strong dollar for the US economy. Without doubt though, the trend is and has been for lower gold prices. A key day for the gold market was when we swiftly broke the 1181 USD support level, which the market had tested on three prior occasions beginning in June of 2013. As this was the first time the market has been sub-1180 since mid-2010, the physical markets were and are awash with new buyers.

As we learned over the last few weeks, despite the US Federal Reserve calling an end to their current round of experimental monetary stimulus, the game still lives on outside of North America. Although it certainly seems plausible that quantitative easing from the US Fed could make a return should the US economy warrant it, focus is what central banks are doing outside North America, particularly both the ECB and the Bank of Japan (BoJ).

The Bank of Japan shocked the markets into the end of last week as their governor, Haruhiko Kuroda, announced it will increase its purchase of government bonds from 50 trillion yen a year to 80 trillion. This was announced in tandem with the Government Investment Pension Fund announcing they’ll double their allocation to domestic stocks. The BoJ in essence is crowding savers out of an already conservative investment environment that is Japan. And although the BoJ and GPIF are putting through initiatives that will perhaps help Prime Minister Abe generate that desired 2 per cent level of inflation, uncertainty remains whether it can be successful.

The lingering question is what will be the impact on Japanese savers who do not see the same availability of government debt to purchase and hold. Will they seek out riskier assets, like equities, as was witnessed in the US through QE? Or, is this another factor supporting a strong dollar trade that sees the Yen sold for the alternative of being positioned in US assets, and the benefit of the deepest most liquid capital and treasury markets in the world?

At a conference this week hosted by the Bank of France, former PIMCO CEO Mohammed El-Erian made some very revealing comments. He said, “this is a world which places too much of a burden on central banks. This is a journey, not a destination. If the journey lasts too long, central banks go from being part of the solution to perhaps being part of the problem.” For the moment, only time will tell how this all plays out.

However, if El-Erian’s assertions prove to be correct, than those buying gold at these levels may be one step ahead of the pack if in fact Central Banks continue on their current path. And at this point there is absolutely no reason to think that they won’t.


Border Gold Corp.: There Will Be Haircuts

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There Will Be Haircuts

It’s puzzling why Europe is more an issue now than it was a few months ago. It seems the market has finally come to grips with the fact that their economy is stagnating, and hopes for growth are diminishing. Disinflation remains a central issue to their economic union. Youth unemployment levels remain disturbingly elevated. And the structural reform and fiscal discipline that many had been looking to member governments to implement and abide by are still yet to be seen.

Even more alarming is that Europe’s second and third largest economies, Italy and France, are disregarding the fiscal agreements made with member countries to rein in their debt levels. The required ratio is to move debt to GDP back towards 60 per cent. France’s debt to GDP ratio is estimated to be near 96 per cent by yearend, and Italy is faring worse at 135 per cent and continuing to grow.

As troubling as the increasing debt levels seen in Europe have become, it’s the latest commentary on the region that represents a fifth of the world’s output that stems concern. The norm seems to suggest with certainty a likely scenario would be a stagnating Japan style economy for the years to come. Some mainstream media has gone even further to suggest something as drastic as a significant debt restructuring. But these really should not strike as anything new, as the ongoing problems have been evident all along. The fact of the matter is with Europe nothing has changed since 2008, and debt restructuring or defaults and the threat of deflation are just becoming that much more of a reality.

Deflation is the central fear in Europe as it could be the contributing factor to their third recession in six years. Some are quick to cite a similar Japan style situation where their economy moved past a deflation episode in the 1990’s, but the dynamics of the two economies are much different. Where with Japan, as the Economist notes, it was a “homogenous society” that was somewhat isolated from the rest of the world, whereas Europe is much more linked to the global economy through emerging markets, and thus contagion once again rears its ugly head.

The greatest fear though is whether their economies will attract new investment going forward. It seems inevitable that growth levels will have trouble measuring up against the debt overhang of the majority of their economies. Thus, the resulting question is how much of that debt could ultimately be subject to restructuring or haircuts. Already in mortgage markets in countries like Ireland, lenders are offering non-recourse loans that prevent lenders from pursuing the borrowers personally. Reckless lending practices are already coming back into place, where mismanagement of debt was the problem in the first place.

With a lack of coordination between fiscal and monetary policy, the negative outlook for Europe continues to weigh on financial markets. If the ECB were to embark on a QE style stimulus where they were to purchase sovereign debt, the question becomes whether that would make a difference and actually address some of the structural problems in their economy. As former Fed Chair Ben Bernanke remarked regarding his own experimental monetary policy, they would have to weigh the “benefits, costs and risks.”


“Run! Don’t Walk, When a Junior Resource CEO Says This”: Thom Calandra

Newsletter writer Thom Calandra attempts to explain the recent sell off in gold and why he believes hyperinflation isn’t required to move the price higher.

He also outlines some of the warnings signs investors should be wary of before putting money into any of these names and mentions some of the stocks he likes at this time.

Watch the Interview HERE >>

Border Gold Corp.: Fed Free

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Fed Free

It’s a challenge to put a finger on what was the most significant event that took place in financial markets this past week. It might have been the price of crude oil further deteriorating to touch below 80 dollars a barrel for a brief instance on Wednesday, or the volatility index, the VIX coming within a hair of a 30 print. For certain, the most revealing of all markets was for US Treasury bonds as investors in a herd fashion reached for the safe haven and saw yields dip below the 2 handle and touch a low of 1.85 per cent. It is uncertainty that continues to be the theme that casts a shadow over economic growth prospects, but as commentators noted this week, investor complacency amongst the masses leading to excessive risk taking is what is fundamentally shifting these markets.

This correction we are witnessing in the equity markets almost seemed long overdue, and the supply glut in the global oil market was perhaps the catalyst that acted to push these markets over the edge. The S&P500 moving over 1000 trading sessions without seeing that down move of 10 per cent or greater has left behind a number of investors waiting to participate in the rebound of US equity markets, and as the buying that took place on Thursday and Friday of this week, and the speedy rebound (for the time being) highlighted how welcomed this correction was.

But perhaps there was another factor contributing to the turnaround we saw towards the end of the week, and it was inspired by comments from St. Louis Fed President James Bullard. Bullard made the point that the FOMC should remain adaptive to when they choose to end their bond purchase program, and even hinted that an end to Quantitative Easing, expected to be announced at the end of this month, could only be temporary as they stand ready to support financial markets and continue to artificially boost asset prices. Bring on the speculation for QE4.

Former PIMCO CEO, Mohammed El-Erian comments that investors should be careful what they wish for. One of Ben Bernanke’s famous quotes when justifying the Fed’s accommodative policy was that the benefits were always outweighing the costs and risks.  If the Fed was to embark on QE4, it would become incrementally harder for their policy committee to justify whether the benefits would outweigh the increasing costs and risks.

The US economy continues to experience record low interest rates. Falling oil prices will ultimately create yet another significant boost to an economy that is 70 per cent consumer driven and now sees gasoline prices 25 percent off their summer highs. And employment as a whole continues to see strong and stable growth above 220 thousand new positions a month. The takeaway though is not what’s driving the US economy via Fed policy. It’s how Fed policy is impacting financial markets, and that’s the reason for concern.

As has always been, the single biggest risk of the Fed’s accommodative policy is how investors have become dependent on their asset purchases in order to see risk assets trade higher. Thursday and Friday are further evidence of this. A sobering reminder comes with this, which is how overcrowded consensus trades have become, and really a question about how deep the liquidity or support in these markets really is when the majority of investors with the same mentality are all selling.


John Kaiser says: “This will be THE buying opportunity for the mining industry”

Newsletter writer John Kaiser, of, describes why he thinks the gold price has been selling off recently and why it could be stuck in a trading range for several years. He also weighs in on the underperformance of small cap stocks and reveals which type of junior miners he likes currently.


The Silver Summit, With David Morgan



Cambridge House: You were one of the originators of the Silver Summit. Tell us a bit about why the event began. Did it fill a need for the industry?

David Morgan: At the time there was no silver focused event anywhere in the world.  With silver near the five dollar per ounce level and knowing silver had the potential to increase ten fold we wanted to get the message out not only to silverbugs, but the investing community at large.

CH: What can experienced mineral investors expect to discover at Silver Summit?

DM: New companies, new ideas, networking, which means the more experienced resource investors will improve their circle of influence because the caliber and content of this particular event is unique in the resource sector.

CH: Would novice investors find value at Silver Summit?

DM: Silver is undervalued at the present time and anyone with an open mind to examine the facts with critical thinking stands to gain when reflected upon.

CH: We’ve heard from many experts lately that now is a great time to buy silver, especially considering recent geopolitical events. Do you see conflicts in Russia, Iraq, Syria and elsewhere impacting mineral investment?

DM: Yes, which means the physical purchase is more important than ever! Since silver is essential in so many applications it is considered a strategic asset in some countries, therefore mining shares must be selected carefully.

CH: What other crucial intelligence will investors find at Silver Summit?

DM: Every time something unexpected takes place at the Silver Summit which means this year will be no different.  Because this summit is so unique and underappreciated gaining that crucial factor could pay off in a big way going forward.

CH: What else would you tell the “uninitiated” to convince them of the value of this conference?

 DM: Any time you can buy a commodity under the price of production (silver in this case) and wait you will make a profit. The shares offer this opportunity to a far greater extent.

CH: What will you specifically be discussing at your keynote address?

DM: Silver Solutions, how silver solves so many problems in industry, when silver is a solution to portfolio diversification. Ebola and Silver, more to be determined.

CH: Ebola and Silver, oh my! Can you give us a teaser of what you and your colleagues are thinking regarding the implications of a global outbreak?

Check out:

CH: Events influencing silver are changing at a breakneck pace. Should an investor look to forge relationships that will be valuable in staying up-to-date on important issues?

 DM: This is key in my view and building relationships will certainly help investors to make informed decisions.

CH: For investors unfamiliar with purchasing physical silver in an uncertain time, how will Silver Summit prepare them to make smart choices?

 DM: This will be stressed by a number of the speakers at the conference and silver will be available for purchase at the event.

CH: What is the significance of holding the Silver Summit in Spokane, WA? It’s clearly a superb location for networking with mining companies.

 DM: The initial idea sprang from this area which is very close to the “Silver Valley” in Wallace Idaho so it started here as a natural occurrence of those that founded the Silver Summit.

Register Now!