Tag: chinese

A Self-Employed Carpenter’s Thoughts on the Future

The world is changing. Currently, as a nation, we have a large and well-trained section of our work force dedicated to residential construction. Unemployment within the construction industry now exceeds 20%. That number takes into account only workers getting unemployment compensation. There are also many self-employed individuals, ineligible for unemployment compensation, who have simply run out of customers and work. That is the bad news. Now the worse news: Not only are those jobs not coming back, but the construction industry will continue to diminish for the foreseeable future. The real estate glut is not on hold; it is over. Waiting for its return is similar to waiting for next the big surge in typewriters, 35mm cameras, and home phones. Why are the construction jobs not coming back? There are three main reasons, the first of which is inflation. Decades of credit expansion and the recent printing of money (quantitative easing) have increased the overall volume of our fiat currency: dollars. Therefore, the value of each dollar unit has been reduced, causing prices to rise. This results in increased costs in construction of new homes. Higher new construction costs make staying in and repairing older structures, or renting, more attractive. The second reason is fuel costs. Living rurally and working in urban areas is becoming very expensive. Reasons one and two will keep an increasing number of younger workers and couples living and renting closer to work. Why take the financial and mobility risks associated with homeownership? The third reason is we are broke. Who are “we”? Western civilization, comprised mainly of the U.S. and Europe. Consider this…there are gold and silver coins and bullion: actual wealth storage vehicles. There are paper dollars: temporary wealth storage vehicles. And there are also trillions of “dollars” represented as pixels on screens in accounting software programs. When I say that we are broke it is because I don’t believe those pixel dollars represent anything. All of the wealth supposedly held in those pixels does not exist. It is a classic Ponzi scheme. If you go today and convert your pixels to actual dollars, everything is just fine. But if 10% of us go today and try to convert our pixels into dollars, the banks will shut down…Why? Because the money doesn’t exist. There is no actual wealth stored in any of those pixels. Spain and Portugal may require financial bailouts in 2011. Part of the fallout from the Greek financial crisis last year was the creation of a eurozone bailout fund of $1.01 trillion. That fund could be used to assist Spain and Portugal if necessary. Where did that $1.01 trillion come from? Was it removed from another sector of Europe’s economy? Supplied in gold bullion to EU headquarters in The Hague? Removed from the savings accounts of earnest Europeans? No, none of those could supply …

Continue Reading »

The WSJ’s Most Controversial Article… Ever

Filed in BP, CBS, democrats, economy, euro, Gold, GOld juniors, Gold Market, o, Warren Buffett, yuan by on February 2, 2011 0 Comments
The WSJ’s Most Controversial Article… Ever

On January 9th, The Wall Street Journal ran an article that would become the most viewed, commented-on editorial in the publication’s history. The article was so controversial that the author — a Yale Law School professor — received several death threats. Thousands of enraged American readers went so far as to accuse her of advocating physical and emotional violence against children… Meet Amy Chua: a petite, 48-year-old Chinese American and the author of the WSJ firestorm piece, “Why Chinese Mothers are Superior”. Obviously, the headline caught my attention. My wife is Chinese and we have three children. But what really surprised me was the viciousness of the comments from readers. But as I perused through the comments of anger, hate, and even threats to Chua, I realized I as was actually reading comments of insecurity, fear, and envy. Think about it… Had this article been written by anybody other than a Chinese professor, it would’ve gone largely unnoticed. Bottom line: Americans fear the Chinese juggernaut. Here are just a few headlines from the past year that have caused panic among Americans and the West: Pentagon Surprised, Concerned as China Debuts High-Tech Weapons — Politics Daily Chinese ‘Carrier-Killer’ Missile Could Reshape Sea Combat — Fox News Chinese ‘carrier-killer’ missile raises concerns of Pacific power shift — Associated Press China Stealth Fighter? Photos Released Online Raise Speculations — Huffington Post China’s First Stealth Fighter Test Successful — CBS News China backs Spain to emerge from crisis: Beijing — Sydney Morning Herald Move Over Europe, China Is Pushing to Bailout the Greek Economy — Washington Post Wow: China to Bail Out Europe? — Daily Mail UK China’s Pres. Hu calls dollar’s preeminence ‘thing of the past’ — Wall Street Journal President Hu provoking the US by suggesting yuan replace dollar as reserve currency — AsiaNews.it And now Americans are fearful of the Chinese mother, as reported by Time Magazine: “Tiger Mom: Amy Chua Parenting Memoir Raises American Fears.” I hear it every day… “China is going to overtake the U.S. economy… We need to catch up before they flood our markets with electric cars, wind turbines, and …

Continue Reading »

How Not to Stop a Terrorist

Filed in AMAG, BP, deflation, euro, lead, Lear, New Gold, o, silver, target by on January 26, 2011 0 Comments

As Glenn Greenwald predicted, terrorists have attacked the next most logical target. A suicide bomber has caused the death of nearly three dozen people in Moscow’s Domodedovo Airport by attacking a crowded area not subject to rigorous security measures. Mr. Greenwald expected the next terrorist bombing to take place in the crowded lines just before the security checkpoint. Instead, they went for a soft target just outside of the hard target, but it wasn’t quite the soft target Mr. Greenwald expected… The suicide bomber went to the back door instead of the front. The other unguarded end of the airport was attacked: the part just beyond the security line where passengers crowd together to pick up their bags and find ground transportation or meet relatives and friends. “Medvedev Orders Bomb Probe, Threatens Sackings,” reads an Associated Press headline this morning. The article continues… “Medvedev lashed out at law enforcement and airport authorities over the attack at Domodedovo, an international hub and major gateway to Russia, which killed at least eight foreigners… “‘It is clear that there is a systemic failure to provide security for people’ at Domodedovo, said Medvedev. “He ordered the Interior Ministry to recommend transport security officials for dismissal and said authorities found culpable would be held responsible, suggesting they could face prosecution.” Exactly what were security officials supposed to do?: “Domodedovo Airport said it was not responsible for the blast. ‘We fully met all the requirements in the sphere of air transport security for which we are responsible,’ spokeswoman Yelena Galanova said in televised comments.” Domodedovo Airport is like just about every other airport in the world. That is to say, there is no protocol to stop random people from wandering into the baggage claim area. Now I suppose there may be. But I’m not sure it will help. You can “harden” one target all you want; there will still be an unprotect zone just beyond your securest point. Medvedev doesn’t want to accept that… “He urged officials to develop a system that would provide for ‘total checks’ on people and bags at airports.” I’m not sure what this is supposed to mean. Wherever these “total checks” start, there will be people congregating somewhere prior to being totally checked. These people will…

Continue Reading »

Clean Power Concepts’ (CPOW.OB) “December to Remember”

Filed in BP, Gold Investing, Gold Prices, o, shares by on December 29, 2010 0 Comments

Clean Power Concepts (CPOW.OB) Shares Continue Rise on Chinese Market Agreement For shareholders of Saskatchewan-based Clean Power Concepts, Inc.,

Continue Reading »

China Gold Demand Soars

China Gold Demand Soars

The Chinese saw the writing on the wall over a decade ago. They realized the ultimate fate of the U.S. dollar and the fiat currency system. So in 2003, the government of China began an aggressive campaign to secure resources of gold. They began by increasing the country’s gold reserves. Since that time, the People’s Bank of China has added 21.2 million ounces to the country’s gold holdings. China now has the fifth largest national gold reserve, with over 1,054 tonnes in reserves. While boosting reserves, the Chinese government also began to deregulate the gold mining industry and invite foreign investment for the development of domestic resources. The measures were a runaway success; China is now the world’s largest gold producer with output increasing 70% in the past decade. Chinese government even began encouraging its 1.3 billion citizens to own gold. And today, the country has become the second-largest consumer of gold in the world. The government’s efforts to stimulate and expand the domestic gold market has been highly successful. Chinese citizens have embraced gold as true wealth in all economic seasons. And now new concerns over the future of the U.S. dollar and domestic inflation has prompted the Chinese to recently begin acquiring gold on a epic scale. China’s gold imports to jump 457% this year The Shanghai Gold Exchange recently revealed China’s gold imports jumped almost fivefold in the first 10 months of this year. And even though China is the world’s #1 producer, the country is expected to import 9.2 million ounces of gold this year as inflation concerns lifts investment demand. Consumer prices in China rose 4.4% in October— the fastest pace in two years — and above the government’s full-year target of 3.0%. The People’s Bank…

Continue Reading »

China Scrambles to Secure Molybdenum Resources

China Scrambles to Secure Molybdenum Resources

The race is on… World leaders are scrambling to gain control of global molybdenum assets on speculation that China will cut exports. China is the world’s largest producer of molybdenum, supplying over a third of global supplies. But growing domestic demand may prompt the Chinese government to restrict exports… This may cause the price of molybdenum to rise significantly in 2011, and lift share prices of primary producers. China moves to secure molybdenum resources China has been a net buyer of molybdenum for the year, importing over 5.5 million pounds of the strategic metal used to harden steel. China produced about 160 million pounds of molybdenum in 2009. This year, analysts expect Chinese molybdenum to increase nearly 20% to 190 million pounds. Despite being the world’s largest supplier, China may be forced to continue importing molybdenum in 2011. The country’s recent economic stimulus package— which focuses on infrastructure — will continue to require a large supply of molybdenum for high-strength steel to be used in bridges, power plants, and pipelines. This will continue to have a significant impact on global molybdenum supplies. And China has already recognized the importance of securing molybdenum resources… Last month, the Chinese Ministry of Land and Resources reported it was planning to set up strategic reserves for 10 metals — including molybdenum and rare earth metals. The Chinese government recently showed its commitment to helping the domestic market secure molybdenum supplies. Just a few months ago, the gov’t accelerated a financing approval for Hanlong Investments, a privately-owned Chinese company, to fund the development of General Moly’s (AMEX: GMO ) Mt. Hope project. General Moly (AMEX: GMO) Hanlong Investments will purchase 25% of General Moly for $80 million and procure a $665 million loan from a Chinese bank. The total funding from the Hanlong transaction is anticipated to fund all remaining capital requirements for Mt. Hope, currently the largest and highest-grade primary molybdenum project in development. Primary producers like General Moly and Thompson Creek Metals (TSX: TCM ) will receive a premium because molybdenum is usually a

Continue Reading »

The Sierra Club’s Worst Nightmare

Filed in BP, ceo, Debt, earnings, Gold, Gold Market, o, shares, ubs by on November 22, 2010 0 Comments
The Sierra Club’s Worst Nightmare

The greatest investor of the past forty years recently bought the remaining 77.4% of Burlington Northern Santa Fe (BNSF) for $44 billion in cash, stock and debt. Warren Buffett likes to say this is a bet on the United States because “railroad operators cannot do well unless American businesses were producing goods and customers were buying them.” What he isn’t telling you is that it’s also a bet on China importing coal. Burn, baby, burn The United States now ships coal to China all the way from West Virginia using BNSF — one of only four transcontinental railroads left in North America. And it’s not just the high-end coal— or coke for making steel; the U.S. companies are shipping regular thermal coal halfway around the world. In the past, coal was burned where you found it. It was used for heat and electricity. But due to tougher environmental regulations in places like the United States, Canada, and Australia — coupled with an insatiable desire for electricity in China — it now makes fiscal sense to ship it. So, not only is the coal burned, leaving a dark and sooty carbon footprint; but it’s also being shipped around the globe — burning even more fuel along the way. China currently burns half of the six billion tons of coal used every year on earth. And the price has doubled over the past five years. It’s up 43 percent since 2008. Boom time! David Graham-Caso, spokesman for the Sierra Club, says, “This is a worst-case scenario. We don’t want this coal burned here, but we don’t want it burned at all. This is undermining everything we’ve accomplished.” Choke on this Our own mining expert and founder of Underground Profits Luke Burgess says, “There is an insatiable demand for energy in China. Seventy percent of its electricity is supplied by coal-fired power plants. There’s a coal bubble forming. You should own some.” A few months ago, Australian mining multi-millionaire Clive Palmer struck a $60 billion deal to sell coal to Chinese power stations for the next 20 years. This is the largest Australian contract ever. And though environmentalists are up in arms over the deal, mining creates jobs and exports pay the bills. The fastest growing energy source It is little wonder that new mining projects are popping up all over. Peabody Energy (BTU), for example, is expanding to meet the new demand. The company sited China’s new $30 billion investment to continue expansion of its power grid. CEO Gregory Boyce explained, “Coal is the fastest-growing fuel in the world and will continue to be largely driven by the enormous appetite for energy in Asia.” According to The BBC, China is building two new power plants a week. The New York Times says U.S. coal exports are off the hook: Last year, the United States exported only 2,714 tons of coal to China, according to the United States Energy Information Administration. Yet that figure soared to 2.9 million tons in the first six months of this year alone — huge growth, though still a minuscule fraction of China’s coal imports. There is so much growth that companies like Arch Coal (NYSE: ACI) have tripled in the last two years: Arch has a trailing P/E of 43 and a forward one of 11! Year-over-year earnings growth is up 85.3%. This is a coal company we are …

Continue Reading »

Video–Marc Faber on Bloomberg

Filed in BP, economy, Gold Investing, Gold Prices, inflation, o by on November 19, 2010 0 Comments

Marc Faber was on Bloomberg today to discuss his outlook for the Chinese economy. Faber thinks that real inflation in China is much higher than what is reported by the authorities. Furthermore, he notes that China and the US areon a collusion cou…

Continue Reading »

The 2011 Supply Crunch is Coming

Filed in BP, Gold, GOld juniors, Gold Market, o by on November 17, 2010 0 Comments
The 2011 Supply Crunch is Coming

Just when nave investors thought rare earth was down for the count, there’s word that global demand is likely to outstrip supply by next year, as China cuts exports. “Under normal conditions the global demand exceeds supply in about 2011,” Professor Brent McInnes from Curtin University in Western Australia said. “In 2016, it’s quite evident that the Chinese demand itself will exceed the global supply of rare earth elements.” China can give Hillary Clinton all the assurances it wants to, but we all know what’s going to happen down the road. They’ll eventually get to a point where they’ll need all the elements they produce. Take a look at this chart from Business Insider, for example, and tell me, “why is China actively looking to acquire additional REE resources around the world?” Because they feel like it? No.. Because even they realize demand will outstrip supply. Even Japan knows this, frantically searching for supply. “There is a whole range of economies out there… that are building high-tech industries that are dependent at the moment on a very narrow source,” said John Cole, director of the Australian Centre for Sustainable Business and Development. Even the auto industry sees rare earth supply problems, according to this report . They’re problem could be bigger than any one expects, given hybrid sales expectations. We need a new source, outside of China, immediately… We

Continue Reading »

U.S. Credit Downgraded

I don’t see why this is even news. It’s painfully obvious that the American dollar is going to be worth nothing in a few years. And downgrades like this one could easily become commonplace, as long as the US allows the Federal Reserve to fund the debt with more debt. As The Wall Street Journal reports: Chinese Credit Rater Downgrades U.S. Dagong Global Credit Rating Co., the Chinese rating company that was recently rejected in its bid to be an officially recognized bond rater in the U.S., just downgraded the entire U.S. The always objective Xinhua has the “scoop.” The United States has lost its double-A credit rating with Dagong Global Credit Rating Co., Ltd., the first domestic rating agency in China, due to its new round of quantitative easing policy. Dagong Global on Tuesday downgraded the local and foreign currency long-term sovereign credit rating of the U.S. by one level to A+ from previous AA with “negative” outlook. The Chinese rating agency said the downgrade reflected the U.S.’s deteriorating debt repayment capability and drastic decline of the U.S. government’s intention of debt repayment. “The serious defects in the U.S. economy will lead to long-term recession and fundamentally lower the national solvency,” Dagong said in a report. The Chinese rating agency said the Federal Reserve’s new round of quantitative easing would further depreciate the U.S. dollar and was entirely counter to the interest of the creditors. The Federal Reserve last week decided to buy 600 billion U.S. dollars of U.S. Treasury securities and other assets held by banks in a bid to inject fresh funds into the economy and bring down long-term interest rates. “The credit crisis is far from over in the United States and the U.S. economy will be in a long-term recession,” Dagong Global warned in the report, adding a weakening greenback will cripple U.S. capability to attract dollar capital reflow. Needless to say, the markets don’t find this credible. Bond yields haven’t done anything. As the Journal’s Joy Shaw reported , Dagong was little-known before it surprised the credit-rating world in July by publishing sovereign ratings for China that were higher than those for the U.S., the U.K., Japan and other major economies. The results differed from those issued by major credit-rating firms. While we feel justified in giving Dagong’s neutrality the stink eye on this one, it’s not like Western credit ratings agencies have really distinguished themselves in recent years by slapping their good housekeeping AAA seal on some of the most toxic bond sludge Wall Street could concoct. But as long as we’re looking to Communist state media for market update, we might as well point out one of our favorite pastimes here at MarketBeat, perusing the online pages of the Pyongyang Times. Here’s an insightful read on American culture published back in April. (Sadly, no link is available as the whole internet spirit doesn’t seem to have caught on so well in North Korea.): The US is a society that is based on extreme individualism and governed by the …

Continue Reading »

Profit from Currency Wars

Profit from Currency Wars

Right now, the world is going through a massive economic re-balancing. The old idea that China will sell us stuff— while lending us the money to buy it — is unwinding. In fact Ben Bernanke has declared a currency war on China’s undervalued RMB. Good ol’ Ben says we can make the dollar cheaper than the Chinese yuan, and he aims to prove it. The Fed recently proclaimed its desire to create and buy $600 billion in U.S. Bonds. “The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August,” said Bernanke. Ben is taking this approach because it works right up until it doesn’t. It worked after the past five bubbles popped, and it looks to be working this time. When Ben floated the idea of a $600 billion cash infusion, stock prices rose and long-term interest rates fell in anticipation. I know some of you will point out that the RMB is pegged to the dollar, and therefore the dollar can’t fall… But it does cause an inflation problem in China, which is a de facto re-balance. According to Bloomberg , “Over the past five years the real-estate prices have tripled. And as property makes up a third of living costs on average, this alone means the real yuan value has doubled.” Chinese Commerce Minister Chen Deming said as much in an interview on October 26th: “Uncontrolled” issuance of dollars is “bringing China the shock of imported inflation.” Chinese poor There are some downsides to printing more dollars. For example, easy money just creates the next bubble, and currency destruction doesn’t create wealth. China has been holding down its currency for years. It now has the world’s second largest economy; but in terms of per capita income, it ranks at 102 — right behind Turkmenistan, Algeria, and El Salvador. Clearly, an artificially low currency isn’t a path to prosperity… But it does lead to a boom in all asset classes. There used to be an inverse ratio of commodities to equities. When one went up, the other went down. In the 1970s, when gold was flying, stocks were dead in the water. In the 1980s, the reverse occurred. In the mid-2000s, when Federal interest rates fell, stocks went up, gold went up, housing went up, oil, uranium, copper— everything went up… This was a direct result of easy money. Now, due to 0.25% Fed interest rates and $600 billion in QEII, almost every asset will continue to go up — with the exception of your salary and your returns on your bank account. And to top it off, the U.S. isn’t alone. The rest of the world from Europe to Brazil is increasing the global money supply. The question isn’t whether low quality growth can work, because it does. Easy money and debt have funded the past twenty-five years of U.S. growth. The question is, How do you keep up with it? The tunnel of doom When I was a kid riding in…

Continue Reading »

The Truth About Rare Earth Supply and Demand

Filed in Gold Market by on November 5, 2010 0 Comments

Mention rare earths these days, and you might be met with a confused expression by those frothing over how “the bubble” popped on short-lived Chinese quotas, and the bearish headline assaults that are more fiction than fact… The idea that supply outstrips demand is ridiculous, at best. China wants to build 330GW worth of wind generators. They’d need 59,000 tons of neodymium for a project of that scale. That’s more than the country’s entire annual output. Essentially, they’d be cleaning out supply, leaving nothing for the rest of the world. Without neodymium, the production of a whole host of technology — including medical devices like magnetic resonance imaging (MRI) machines — would be kaput for everybody else. ~~SIGNUP_WD~~ How can a fake bubble pop? How are we to believe a rare earth bubble exists? Wake up. What we have here is not a rare earth bubble. What we have here is a rare earth supply problem. One that cannot satisfy the demand of China, let alone the rest of the world… There are reports of China’s plans to set up a strategic reserve of 10 rare metals to stabilize supply and keep prices afloat, alluding to the Middle Kingdom’s growing supply concern. And they’re looking to eventually outlaw all rare earth exports in the next 10 years, according to the Ministry of Commerce. Plus, Chinese demand is on pace to consume some 60% of the world’s total rare earth supply, leaving 40% of the world’s rare earths to be shared by everyone else. Truth is, China is still showing a reluctance to export even a fraction of what the world really needs. So while they will still export the materials, industries will be faced with a bottleneck in supply. China has already shown her hand. And the rest of the world needs to divest itself of Chinese supply dependence— not because China is running out; but because the Chinese have a monopoly and have demonstrated they’ll…

Continue Reading »