Is a debt crisis looming?
March 24, 2010
Whether you agree with MR. Reynolds or not this article should give pause for thought.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
Market Perception! Thoughts on U.S health care
March 23, 2010
I was asked early last week what was on its way, in the stock markets, if the U.S. finally dragged their respective butts into the twentieth century, and advanced a health care strategy?
My answer was effectively nothing would happen. And that by the way is what we saw today (03/22/10).
There is only one reason for this:
1.It was already in the market.
Most of the market people that have been around for any length of time already are aware that any one piece of news ,that takes any length of time to come to a conclusion, has already been dealt with by the market. It is only unanticipated surprises that move markets. There is certainly a short term hesitation (like the first hour this morning) but markets will go to where they were headed anyway.
That is not to say that there are many times when the market cannot possibly anticipate the outcome of what it knows is coming. For example, I can think of nothing more frustrating than trying to anticipate the release of most government statistics. Whether GDP or something that should be as simple as a crop report, government release can give markets fits trying to get an advantage before the report in question is actually released. We have been through one of the most volatile periods for reports in the last two years that I can remember. To say these were uncertain times would be an understatement, but the markets seem to have recovered in a steady manner despite slowly improving numbers.
In broad terms, individual reports have a minor effect but can have a major impact when taken collectively. This is arguably why sometimes bad numbers have no effect or good numbers are ignored in the context of the broader market. “If the market didn’t want to go higher it wouldn’t.” “Why didn’t the market go up on the good news?” “That should have been a disaster, why didn’t the market crash?”
These are all questions that people ask when they think they guessed right but still didn’t make any money. They get very frustrated (understandably so) when it seems not to make sense. This is not always the case, but it is usually in the market already. This weekends decision on health care is a perfect example. If you really think about it, individual stocks may be affected but why should the overall market take a hit. The reality is there are probably many opportunities to make some of the nearly trillion dollars of newly printed government money being distributed as there are ideological reasons to dislike this government initiative. So why wouldn’t the market prefer to look at the money and not the esoteric reasons for a negative reaction?
To finish,” Anything that takes a length of time to realize, and is not of a spontaneous nature, has already been dealt with by the capital marketplace.”
In my case, I learned this when it took Bush 1, literally months to finally invade Iraq!
Talk to you soon,
Ritch
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
The New Sector: Gold
March 17, 2010
I have had some problem with people saying that I am a hypocrite! They say that I am negative gold, and can’t see clearly that gold is the “only way to go”. Not true I say, “I like gold just as much as the next guy, AS LONG AS IT IS MAKING ME MONEY”
Those that have taken the time to read some of my previous articles will be very aware that my opinion of gold has been consistently bullish on a longer term basis. The ultimate arbiter of price being supply vs. demand, gold continues to have excellent fundamentals from this standpoint. Gold’s problem has been that more often than not gold is simply a proxy for the currency trade. My argument has been for some time that the short term movement is currency related while the macro or longer term pricing is predicated on good old fashioned supply/demand. Based on this and the uncertainty in the currency markets I believe that we are ready for a new leg up in the price of gold over the next number of months.
Fundamentally the price of gold is great. If you are a producer the current price not only makes you profitable it opens up a number of areas that weren’t profitable before. So what is wrong with the stocks of the producing companies? They certainly don’t seem to be reflecting the advantages that the current conditions offer. The problem seems to be that the market doesn’t want to give the” Blue Sky Premium” that should be there. If you are Apple you can trade at levels that predict great future earnings or Caterpillar that can predict huge upside based on improvement of exports. But if you are a gold stock right now you get kind of laughed at if you say your outlook is for higher prices and hence improved earnings. I can parse this, and give a whole bunch of reasons, but I don’t care to right now (see next section). All I think I know is that it has given us an opportunity to be back in the stocks in this sector. I feel it is just now getting ready to make its next leg up. I have produced charts that represent the big three in North American gold stocks over the last year, Barrick, Newmont and Goldcorp. They are all off their highs and all trading, I feel, at a discount to where they should be in light of even current gold prices.
All of these stocks are trading at levels comparable to where they were when gold was at U.S. $1000. or less. This gives me the impression that collectively they (the stocks) have predicted too much of a sell-off in the current environment. If you look at the currencies they all retraced roughly 10% against the U.S. (Euro 146+ back to less than 134 recently) and the price of gold certainly has not retraced to $1000 as of yet. I don’t believe it will. Therefore the market has predicted too much of a retracement for these stocks.
So here are the reasons that we (me) in the commodities world would look at for why gold now has a new positive outlook:
1. Currencies. The first thing to consider here is what our currency relationship will do. The Euro is currently a basket case and not the basket of currencies it was designed to be. This means that we will once again be looking for an alternate to the U.S. dollar when we are uncertain. Up to this point that alternative has been the bond market or the Euro. To a lesser degree the Aussie or Canadian dollar. If you were like the Chinese and bought zillions of dollars worth of bonds you have just scored a very nice 10% return on your low yielding bond purchases. This allows you to now re-deploy funds to other areas. If you are the Europeans the same has occurred against your own currency, except to re-deploy, you might have to guy Greek bonds that you would rather not do. If you are American or the rest of the world your bets are also limited. This means that your safer haven once again becomes at least partly gold. If you are buying Aussie or Canadian it also means that you are making a bet on gold indirectly. One way or the other an alternate to owning more Euro (or pound for that matter) based anything, has a much more appealing feel. This accounts for why gold has stayed above $1100 U.S. announce while the dollar index has rallied smartly.
As you can see from this chart the Dollar index has risen smartly and seems to be kind of rolling over from its highs. If it turns out it is not rolling over it certainly seems to be making a range for itself.
This is telling me that since there are still lots of issues with the U.S. economy, the U.S. dollar, has only still a limited amount that it can appreciate against the Euro, or for that matter gold. As we know, since gold is quoted in U.S. dollars, that means that the physical price will actually find a more positive level relative the dollar. This means a higher quoted price for gold as the U.S./EUR relationship appears to be similar but is now being reflected in the gold price as this new relationship takes hold. The problem then becomes where can you go if you don’t have the luxury of trading dollars for Euros or dollars for Yen or dollars for Swiss Francs for that matter, or even just parking Yuan in bonds, while you get your return out of the currency conversion? Well if you are Chinese that would mean gold or copper or oil or sugar or ……… what ever you can use in your factories. Hence the recent step-up in Chinese commodity investments again. If you are any one else, for example the Saudi’s with all of their petrol dollars, you will buy more gold and not as many bonds, to help spread your risk.
Check out this chart. Kinda looks like times are changing.
What this shows me is that there is a hesitation to own both of these more so the Euro because of the Greek issues.
2. Time of year. We are leaving now what is regarded as the slowest time of the year for gold sales. It is before the wedding season in Asia and after the gift giving seasons everywhere else (Christmas. Valentines Day et al) this means that the re-stocking by the jewelry trade is still coming. Consumption is therefore on the rise. This hasn’t made the impact it used to in some peoples eyes but is still very supportive to prices at different times. I suggest this year that for reasons mentioned above our friends in Asia might spend a little extra this year on gold instead of bonds for the kids. You still don’t want all your money in Rupees. The Indian sub-continent is still very strong and has an historic passion for gold ownership. This may accelerate this year due to the uncertainty in Europe.
3. The majors are still trying to increase their reserves. Anyone this year that can put ounces on the bottom line will be trying to do this. Kinross buying Underworld is a good example. This is a deposit in an area that by all public disclosure carries a great deal of risk and would be regarded as small by the standards of the mining industry. So unless Kinross thinks they know something we don’t (very possible) they have set some form of precedent for small acquisitions. This would suggest that reserves now trump perceived size. If the major gold companies are apparently scrambling to acquire more reserves, that can only be positive for the price. It also says that if the guys that make the stuff are finding supplies tight, who am I to argue. Remember these guys were all in the business, and survived, with gold under three hundred dollars an ounce. It is like asking a farmer why he is planting more corn when his bins are full. “Soon my son(he says) by fall the bins will be empty and if I don’t plant now, I can’t re-fill them for next winter.”
With the yearly decline in overall gold production it appears the senior producers are a little afraid of next winter.
4. With all of this, the simple question to ask your self is:
Would you be short gold or gold stocks in this environment?
Answer: No.
My time in the markets has always told me that if it doesn’t go down, at some point it will go higher. The reverse is also of course true. At some point everything either bottoms or it tops, I think we are at a near term bottom on gold. I could not think of a better market to be writing or owning or even selling options in. This market is right now ideally suited for options versatility. If you already hold some of these equities you should be writing calls. If you don’t, you should be buying the stocks and writing the calls. You could also be applying bull call spreads to limit your risk ,or just simply buying calls to capitalize on the perceived upside.
Yours ‘till next time;
Ritch Wigham
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (”RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
The Other Shoe Has Dropped for Potash!
March 16, 2010
Demand has finally resumed…
Take a look at this article on the Globe and Mail on Potash Corp raising its outlook…
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (”RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
What I Do….(And How I can Help You!)
March 11, 2010
It has been made clear to me, from the comments that I continue to receive from people that are not yet really familiar with what I do, that I should try and make some things “more clear” (as a friend of mine puts it).Not to go over my background again, what I try and do is direct our attentions to sectors in the market that are the most likely to out perform “next”. That may mean that focus may stay in one spot for what seems a long time or may seem very short without the proper focus.
Let me explain:
As many of you know I have spent the last several months talking about Potash. Potash is a commodity, commodities is and are what I do. It was a sector that was horribly left off of the markets positive radar and offered very productive profits for my existing clients and those who may have followed the recommendations from my report and subsequent market follow up. It is however just one sector of a much broader market place. I am still very bullish of this sector, but we need to keep other areas in mind as well.
It is now very much the time to do that.
Those who know me or have read any of the previous material that I have written for my website know that I am not a gold bug. Gold is a function of currency as a general rule and a surrogate investment when a dislike for the U.S. dollar is prevalent in the market place. It is however on the short term shaping up as the place to be again. I will write more on why this is shortly (next couple of days/week).
There is much more to come from our Potash but it is time to take some of those profits and allocate the funds to other areas.
This is what I try and do. Reasonably assess where we can look, to continue to make our profits. This will invariably be somewhere within the commodity markets, and the stocks that are related to those areas. The reason the world trades commodities is because the world needs commodities. This was lost for a number of years while technology exploded and the investments where all related to the knowledge markets. This is no longer the case. Whether it is gold or sugar or the bond markets (yes bonds are a commodity) the world has come back to realize you can enjoy your iPhone but you can’t eat it or drive it home!!
Stay tuned for the upcoming gold sector report!
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
Junior Mining Firms left out of sector rebound
March 10, 2010
With my new found bullishness for gold going forward, The premise behind this article should allow for the acquisition of comparatively “cheap” junior miners with good advanced projects!! I have a couple in mind!
Ritch Wigham
Mackie Research Capital
PH.(604)-662-1853
T.F. 866-662-1853
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.
China sinks $1-billion into venture with B.C. miner
March 10, 2010
The significant result of this investment by China is the continued demand for a product that they need!! Apparently they are concerned about maintaining their inventories beyond end use purchases.
See this article from the Globe and Mail to see what I mean.
Ritch Wigham
Mackie Research Capital
http://ritchwigham.com/
PH.(604)-662-1853
T.F. 866-662-1853
Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-RCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.
The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“RCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor RCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member CIPF.