Morgan Stanley Releases The Definitive Gold Stocks Report
Everything you always wanted to know about the future of gold stocks and much more is now answered in this 79 page monster of a report just released by Morgan Stanley, which finally joins the crowd and goes megabullish on gold stocks, by estimating that "currently c.$1500/oz of value is accounted for in reserves in the ground – so, at a $1800-1900/oz gold price, this leaves $400-500/oz for stakeholders, of which shareholders come last (after debt servicing and tax/royalties). While this is a blunt tool, we do believe it provides a good illustration how the sector has historically discounted the spot gold price, but currently does not seem to believe that the current $1800/oz gold price will hold. Thus, we believe an opportunity exists to invest in reserves in the ground rather than bullion (ETF)." So for those who do not wish to chase bullion at record prices (although with currency collapse increasingly imminent, that is probably not a lot), here is MS' conclusion: "Broadly, on stock performance we would make the case for: i) primarily, operating delivery; hence, which stocks look to offer value in their reserves through volume growth and cost reduction. ii) secondly, in the extremes of gold price movement, operating gearing can, but generally does not, supersede operating delivery; theoretically, higher operating gearing generally implies lower quality assets associated with difficult cost/volume control, hence our caution in looking at operating gearing in isolation from operating delivery and track record. iii) thirdly, valuation (but need to adjust for regional risk factors, by-product discount to rating, track-record and risk of delivery). Apparent valuation anomalies can rapidly be erased by big movements in the gold price or failure to deliver to operational expectations. Stocks screening favourably on a balanced gold price outcome (and rated OW by Morgan Stanley analysts) include ABG, ABX, BVN, PMTL. While several of the growth stocks (RRS, KGC, GG) screen less well, delivery on the operating expectations would likely be positive stock drivers." Of course, as much as we like gold and its derivatives, Morgan Stanley's outright push is nothing short of an attempt to get investors to move away from physical into a stock certificate deliverable (and hence, "confiscatable") which is ultimately in the hands of the DTC: something, which, with the world on the edge of complete insolvency, we would hardly advocate.Guest Post: Obama Jobs Plan - "Screw Future Generations"
EURUSD Opens Gap Down To 1.3598
If there is one currency which can move almost 1000 pips lower in 10 days, the EUR it is. After Chinabot gave up on supporting the broken currency, whose viability is only better to the even more doomed US Dollar, but not before an epic run to safety sends the USD into a Volkswagen-like historic short squeeze, and after Goldman openly called for QE from the ECB (and not just the EFSF monetization foreplay which now looks like it may not even pass) the currency has taken out pretty much all support levels, and at the current rate may tumble to sub 1.30 in the next 72 hours. Gold opens in less than 2 hours: the latest response to the flight from fiat should be amusing.
Jean Claude's Three Straws
It is a messy situation Trichet will be handing over to Draghi on October 31st. After the unnecessary rate hike in spring, what do you do: i) Cut rates in one of the remaining 3 meetings (see table), presenting Draghi with (almost) no room left to cut? ii) Leave rates unchanged and risk being seen as a lame duck as the Euro debt crisis escalates? iii) Agree to be removed early so Draghi can announce “his” first interest rate cut?The Two Year Anniversary Of "China's Ghost Cities" Epic Keynesian Fail
Two years ago we first covered the flip side of the Chinese real estate "boom" story by presenting the ghost city of Ordos. Today, on the two year anniversary of China's Keynesian miracle being exposed for the whole world to see, Al Jazeera goes back to Ordos to see if anything has changed. And while Paul Krugman may be shocked, shocked, that the Keynesian approach of building for the sake of building does not work not only in the US but pretty much everywhere, it will be no surprise to anyone, that as Al Jazeera concludes, "it's still pretty quiet, but here's the remarkable thing - the building has't stopped, somehow people are convinced that if you keep building, people will come. If not in a few years, then... eventually." And somehow we keep bashing the Fed as the only source of Einsteinian insanity, when it is the same cretins from the Princeton economics department in both the monetary and fiscal arena, who know one thing and one thing only - do whatever ultimately fails, just keep on doing it.More Obama Lies From Fact Checked Speech
Knowledge is your best weapon...
Dear Casey Subscriber,
If you are anything like
me, you've had your share of incredulous reactions while trying to
explain the economic reality to your friends, coworkers and relatives.
By “economic reality,” I mean things like:
- Why the U.S. government is bankrupt and Social Security and Medicare aren’t safe anymore
- Why we’ve entered the Greater Depression, and what we can expect for the near future
- Why the housing market is not going back up anytime soon
- Why owning gold and silver is a must to weather the economic storm
- Why things will get much, much worse before they get better – and why you need to protect yourself now
In my case, typical
reactions I’ve received from the “uninitiated” have ranged from polite
withdrawal from the conversation (“Geez, he’s always so negative!”) to an overt rolling of the eyes and a scathing “Here we go again!”
If you’ve absorbed any of
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It certainly is frustrating
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Now you can kill two birds with one stone: get your loved ones on your side and help prepare them.
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Please do them (and yourself) a favor
and copy & paste this link to forward to them:
www.americandebtcrisis.com
and copy & paste this link to forward to them:
www.americandebtcrisis.com
www.AmericanDebtCrisis.com |
To good investing,
Olivier Garret
CEO, Casey Research
Olivier Garret
CEO, Casey Research
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