Border Gold Corp.: Fed Free

Visit Border Gold Here

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 Kaiserbottomfish.com, 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.

WATCH THE INTERVIEW HERE >> 

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: http://www.silver-investor.com/silverwater/part1.html

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!

Border Gold: Global Slump

Visit Border Gold Here

Global Slump

There have been an increasing number of factors that have begun to put pressure on global financial markets. Just over the past week the International Monetary Fund once again revised lower their outlook for growth, and cited that the global recovery was relatively uneven between different geographic regions. This triggered yet another down move in energy markets, which translates to pressure on a number of smaller commodity based economies (like Canada) and emerging market economies. As well, the Fed released minutes from their September meeting midweek and cited concerns over a stronger US dollar, which led investors to briefly question the timing of the Fed’s tightening schedule. Finally, manufacturing data out of Germany signalled the Eurozone’s perhaps only remaining beacon of light may too be headed for recession.

The aforementioned reasons could all be factors that three years ago would be used to explain higher gold prices. That they are not today gives reason to believe that there will remain attractive buying opportunities in the months to come. Ultimately investors’ appetite for precious metals is not yet there. Gold, as we have witnessed, is not performing as its typical safe haven asset for capital, and part of the reason may still be tied to a loss of confidence following a year when the asset class of precious metals were nearly decimated and gold lost close to 30 percent. In a global environment where investors where holding gold for its relative stability, this traumatizing event would inevitability lead many to seek a safe harbor elsewhere.

The forward looking question though is can gold outperform the US dollar? As the IMF outlines in their most recent report, we remain in an unbalanced global recovery. As North American economists look to whether the US and North American economies can “go at it” alone, with 60 per cent of US exports destined for Canada and Mexico, the IMF, with a more international focus, is left to ponder whether US growth is strong enough to support the rest of the world. The scenario though with the United States acting as the leader and the first to step forward from accommodative monetary policy is the reason for the US dollar strength.

As we witness outside the US, Europe is at a near standstill and recent data seems to point to being on the cusp of a German recession. Brazil, who was once the poster child of the emerging market economies (the B in BRIC) is ahead of Germany now actually in a recession. Analysts continue to call for a slowdown in China as their GDP growth retreats from once double digits to below 7.5 per cent. Passing on the debate of whether the landing will be soft or hard, their demand for the world’s resources at this point seem to be tapering off. This leads to commodities.  We remain plagued with the uncertainty of where this global supply glut can meet a slumping demand.

Gold cannot behave like a commodity forever. Unfortunately, it seems it will until investor confidence is restored in its ability to act as a relatively stable asset that’s uncorrelated with most other markets, making it that ideal hedge. And as has been most often the case with the precious metal, its shine is revealed after its bigger moves rewarding those already holding it. Right now, however, it maintains it’s near perfect negative correlation to the US dollar, and any dollar strength is inevitability bad for gold in the near term.

 

#Canvest 2014 Toronto Interview

The first inaugural Canadian Investor Conference was a great success. Over 1200 people convened over the two days to listen to the top thought leaders in finance, resource, technology and venture capital opportunities in Canada. We were happy to film 19 interviews over the two days that we can now share with you. Take time to watch a few or simply hit the “Watch later” option in youtube to save them for later.

Enjoy

Mining Stock Investing Tips: SmallCapPower.com “Asks the Analyst”

Small cap stocks can be risky but also have the potential to produce big rewards for patient, knowledgeable investors. In our latest edition of “Ask the Analyst,” Gravitas Financial analyst Stefan Muchal talks about how to invest successfully in mining stocks and points out possible warning signs every potential shareholder should be aware of before putting money into one of these names.

WATCH THE INTERVIEW >>

Tolerating Risk – A Guide for Canadian Investors

Tolerating Risk

By, Amelia Dookhee, Pycap Venture Partners

Canada has long been criticized for its minimal risk appetite when it comes to investing outside of the typical ‘blue chip’ options. But, in order for an economy to thrive, and in order for Canadians to generate wealth instead of just preserving it, we need to reconsider how we invest. An exciting tradeshow will take place in Toronto on September 25-26, 2014 called Canada’s Investment Conference, hosted by Cambridge House International. This ‘candy shop’ for savvy investors will house a plethora of many different asset classes, for the first time, all under one roof. The conference will showcase exhibitions and presentations by expert analysts and entrepreneurs from Mining, Technology, Energy, Agriculture, Real Estate and Life Sciences. Continue reading

Border Gold-Oh, Flower of Scotland

Visit Border Gold Here

Oh, Flower of Scotland

Leading up to the referendum on Scottish Independence, one trader remarked “there will be blood on the trading floor Friday” if the Scots were to vote “Yes” and chose to break the 307-year-old union with the United Kingdom. That’s because money was already flowing back into the assets classes that were negatively affected by the uncertainty surrounding Scottish Independence on the basis that a “No” vote would ensue. Evidently, exit polls were giving traders enough information to bet the outcome. The money illustrated the results in Thursday’s referendum as the pound gained approximately 2 per cent from its lows of the week before votes had even been tallied. However, what later resulted was a clear “buy the rumour, sell the news,” as the pound gave back most its gains Friday morning.

The theatrics associated with the unknown outcome definitely took a toll on markets as we head into the tail end of the third quarter. But the underlying theme or message is certainly an important one as an astonishing 45 per cent of the population voted for independence in a referendum that saw approximately 85 per cent of their population participate. The message for those invested in financial markets is that populism has the potential to trump pragmatism when it comes to governance and economics.

Any economist leading up to the vote rationally stood on the side for Scotland to remain a part of the UK. The greatest concern, and one that could only be discussed hypothetically thanks to a lack of detail from Alexander Salmond, leader of the Scottish National Party, was what currency to adopt. With over 9 per cent of Scottish GDP coming from their financial services sector, and part of the benefit being that the pound still serves an important role as an international currency, how would the banks react? Initially Scotland discussed the idea of keeping the pound, an approach known as ‘dollarization’ where the pound still serves as the nation’s currency, but monetary policy and facilities like deposit insurance are not conducted or utilized in Scottish interests. All of these measures that promote stability and longevity in a currency, and thus become a harbour for capital and commerce would be jeopardized.

Other obvious issues surrounded the idea of disruptions to business and a worsening Scottish deficit.  Estimates had it that around 60 per cent of Scottish exports are destined for the other three countries in the United Kingdom. There lacked sufficient reasons other than a phoney idea of nationalism to put up a border only to disrupt trade flow and make moving goods harder for businesses.  Oil reserves in the North Sea were perhaps the saving grace for Scots, but when transfer payments from Westminster equaled the royalties received from North Sea drilling this year, and projections for North Sea oil are vastly diminishing, financing their 7 per cent deficit looks like a challenge. This compares to EU nations, which outlined by the Maastricht treaty look to maintain a deficit-to-GDP of 3 per cent.

There is the angle that it was the Scots incentive to fear Westminster with an independence vote to benefit more from government or take back more autonomy over more local issues of their economy, and the latter outcome will likely prevail. But the takeaway for investors has got to be the potential for instability in nations were a misguided millennial-inspired movement can have such a significant impact.

 

Norrep Funds CEO Alex Sasso’s Top Stock Picks and Why He Thinks Small Caps Are “The Beautiful Asset Class”

Norrep Funds CEO Alex Sasso, in an interview with SmallCapPower, explains why he thinks small-cap stocks are “the beautiful asset class,” and describes the factors he considers before investing in a small-cap company. He also reveals his top stock picks, including one with a 31% Return on Equity.

WATCH THE INTERVIEW HERE >>

Border Gold Corp-Dominating Dollar

Visit Border Gold Here

Dominating Dollar

The resounding story for the markets these last few weeks has been the unequivocal strength of the US dollar. The dollar closed higher Friday for the ninth straight week as it continues on its best run in 17 years. This has been the move in the dollar that many investment professionals were looking for as they anticipated the US Fed to end their Quantitative Easing program and begin to raise the Federal Funds rate, but the move in the dollar really did not come to fruition until the latter half of this year. That, however, is not the only story that has been supporting the strong dollar trade as a number of both domestic and international factors are weighing in on the foreign exchange markets.

The international story is based on the action of western central banks. As the US has passed their inflection point from making policy more to less accommodative, the question through the end of the summer has been what future measures will be taken by the European Central Bank and Bank of Japan? And unfortunately for the Bank of England, despite efforts by Governor Mark Carney to talk up the pound, a referendum on Scottish Independence on the 18th of this month has substantially weakened the pound translating to a stronger greenback.

On the domestic side it’s perhaps investor’s lax expectations that shifted this market. The San Francisco Fed put out a paper this week looking at how investors and futures markets were anticipating when the Fed might begin to tighten policy and at what pace versus what members of the Federal Open Market Committee (FOMC) were actually saying in their most recent June meeting. What the San Francisco Fed found was that the market and investors are behind the curve in anticipating when the Fed will begin to raise rates. This is inherent in an expectation that the accommodative policy will be around longer than the Fed currently plans on delivering.

This all leads into what will be a very important week for the markets. The FOMC meets Tuesday and Wednesday, and following that on Thursday Scotland votes. No question, volatility which has been vacant from currency markets for so long is finding its way back. Accommodative policy from the world’s most influential central bank had dampened volatility from the FX markets. As we’ve learnt, this had an effect of suppressing and stabilizing interest rates at record low levels. But as the Fed shifts back to a less discernible role in the markets, volatility in currencies will begin to rise.

The unknown going forward is what it means for the US dollar, and commodity prices, along with equities and the outlook for earnings of US companies, with a foreign income stream. The same questions holds true for most other financial markets. A stronger dollar provides headwinds and at this stage the dollar looks like it will continue to dominate.

 

Cambridge House International: A 40 Second Insight

In January of 2014 Cambridge House launched the Cantech Investment Conference with tremendous review. In June of 2014 we launched Canadian Investor Conference Vancouver which included all industries in Canadian venture capital.

 

In two weeks we are doing it again in Toronto. The Canadian Investor Conference (Canvest) Toronto is taking place Sept. 25/26. at the Sheraton Centre Toronto. The conference features dozens of analysts, money managers, Investment bankers and ceo’s on the podium while Investment opportunities from across the country are showcased on the exhibit floor.

 

Take a look at this quick video that gives you a snapshot of what a Cambridge event is like!

 

For a full list of events click here

 

Cantech, Canvest

“The resource sector outlook continues to be positive” says Michael Giordano of Stone & Co.

Michael Giordano, Portfolio Manager and Vice President of Investments at Stone & Co., recently spoke with SmallCapPower regarding his outlook for the resource sector.

He also provided some tips as to how he would construct a resource-weighted investment portfolio, and revealed some of his top stocks to watch at this time.

Watch the interview HERE >> 

Super Mario Shows His Hand

Visit Border Gold Here

Super Mario Shows His Hand

Mario Draghi and the European Central Bank (ECB) shocked financial markets this week when they yet again revealed they were prepared to further combat a stagnating European economy. They announced they were lowering three key policy rates to their ‘lower bound’ and unveiled an unconventional QE style stimulus program to purchase non-financial private sector debt. Unfortunately, the implicit message delivered was that their policy options are becoming exhausted, and consequently further accommodative policy saw the euro fall over 2 cents on Thursday against the US dollar.

The trimming of the key policy rates is only somewhat significant as they have taken their deposit rate, the rate of interest charged to financial institutions, further into negative territory. Ideally, no financial institution is going to take a loss or pay the ECB interest to hold their cash overnight, and ultimately it’s a facility that will not be used. In theory, it’s to create the disincentive to deposit funds with the ECB, and instead incentivise them to make money available to the business sector.

The other key lending rate to focus on is the refinancing rate, which the ECB cut to 0.05 percent. This is similar to where the Federal Funds Rate in the US sits between 0 and 0.25 per cent, and at 1 per cent in Canada. And again, a marginal 10 basis point cut does not make a huge material difference to incentivize banks to now borrow more and make loans, but it almost acts as part of a last resort move for the ECB attempting to stave off a deflationary environment.

These further rate cuts seem like a last resort tool for the ECB in terms of utilizing their conventional policy tools, which clearly are not providing the incentives with the liquidity to spur economic activity in the respective economies. With powerhouses like Germany actually seeing GDP growth contract in the latest quarter, and Italy now entering a triple dip recession, this crisis still very much drags on in Europe. But the question is, as monetary policy sees a diminishing impact, can further accommodation prolong the structural reforms so desperately needed?

Mario Draghi said at his press conference that these measures will only work if they come with the structural reforms on the fiscal policy side, and that is left up to the individual European governments.  But as the ECB looks to protect its mandate of price stability in the euro, similar to that of the US Fed, policies in the last week have entered the experimental phase as they begin their targeted bond purchases.

The biggest shortfall of monetary policy in Europe was that it was not filtering through to the businesses that hire workers and advance the economy. As was seen by continuously lowering policy rates, credit has largely remained unavailable to the small and medium size enterprises. The announcement of purchasing asset backed securities is the first step in how the ECB plans to combat this.

As Draghi dictated and the market reacted, this is a policy that ultimately weakens their currency, where on Thursday the euro reacted and fell to its lowest level since July of last year. Many are drawing comparisons to this and the Fed’s Quantitative Easing, or Abenomic’s and its three arrow approach in Japan. Moreover, the ECB is really the last major central bank to join the experimental policy party, and whether they will be successful is not the question, as six years into recovery, investors have learnt the hard lessons of not betting against central banks. Instead, what is the cost of experimental policy and ongoing government malaise?

A question we are still awaiting an answer to here in North America.