Monthly Archives: August 2013

South African labor unrest spreads, gold, construction strikes loom

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“Tens of thousands of construction workers prepared to down tools next week and unions in the gold sector also signaled their intention to call a strike over wages. NUM represents about 64 percent of the roughly 140,000 miners in the South African gold industry, where major operators include AngloGold Ashanti, Gold Fields, Harmony and Sibanye Gold. Seshoka also announced that NUM’s 90,000 members in the construction industry would go on strike from Monday.  South Africa’s faltering economy is already losing an estimated $60 million a day to a strike by 30,000 workers in the car manufacturing sector that accounts for 6 percent of gross domestic product.”

http://www.reuters.com/article/2013/08/22/us-safrica-strikes-idUSBRE97L0BA20130822

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Paulson Offsets Gold Bullion ETF Sale with Gold Swaps

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“Hedge fund manager and gold bull John Paulson made headlines this week after regulatory filings revealed he cut his stake in the largest bullion-backed ETF by more than half in the second quarter. However, Paulson offset much of the sale by buying gold swaps in the over-the-counter market, the Financial Times reports, sourcing a person familiar with the matter. ‘Paulson & Co.’s decision to shift a chunk of its gold holdings out of the ETF and into the OTC market reflects the relative costs of the two,’ the FT reports. GLD charges an expense ratio of 0.40%.”

http://finance.yahoo.com/news/paulson-offsets-bullion-etf-sale-151238295.html

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Gold flows from Britain to Switzerland surge in first half

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“Britain’s gold exports to Switzerland surged in the first half of this year, Australian bank Macquarie said on Monday, suggesting bullion being sold out of exchange-traded funds may be heading for Swiss refineries before being sold on in Asia.  The UK exported 240 tonnes of gold to Switzerland in May alone, while its exports over the first half of this year totalled 797 tonnes. In contrast, Britain exported just 92 tonnes of bullion to Switzerland in the whole of last year. ‘The UK does not have gold mines, so where has it all come from? The obvious source is the gold exchange-traded funds (ETFs), most of which hold their gold holdings in London vaults, and which saw huge outflows in 1H 2013,’ Macquarie said.”

http://www.reuters.com/article/2013/08/19/gold-uk-exports-macquarie-idUSL6N0GK2M920130819

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In Bhutan, a stock trade a day keeps stress away [2009]

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“The outside world is coming to Bhutan, slowly. Television arrived here in 1999 and there are now around 10,000 Internet connections in a country of under 700,000 people. Bhutan still has no traffic lights since the first one was withdrawn after protests from residents that it was unsightly. In the stock exchange’s bare trading floor, computers sit on sparse wooden desks. There are no TVs on the walls, no shouts into telephones, no empty coffee cups or discarded paper. Peldon, dressed in traditional Bhutanese dress, typed in her one trade for the day before an 11 am deadline, when buy and sell orders are matched up by computer software that has not been updated since 1993.”

http://www.reuters.com/article/2009/12/09/us-bhutan-stockmarket-idUSTRE5B840620091209

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Ecuador: Is it nuts to invest here?

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“Since coming to power in 2007, Correa has voluntarily defaulted on the country’s debt, rewritten terms for natural resource companies and steadily pushed up taxes for imported goods.  Unsurprisingly, most multinationals have taken the hint and left the country. Foreign direct investment now stands at less than 1% of GDP – the lowest in the region apart from Venezuela.  But today, I want to tell you why I reckon that could be about to change and throw up some exciting – though risky – investment opportunities in the region. In the last few years, Ecuador has been one of the fastest-growing economies in the region, with GDP averaging 6.7% since the start of 2011. ”

http://moneyweek.com/new-world-why-you-should-be-getting-excited-about-ecuador-62904/

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India’s Sonia Gandhi seeks support for law to banish hunger

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“Gandhi told MPs to send a message to the world that India was ready to eradicate hunger and malnutrition. ‘The big message which will go out to the country and rest of the world is clear and concrete: that India is taking the responsibility of providing food security of all its citizens,’ she said.  ‘Our goal for the foreseeable future must be to wipe out hunger and malnutrition from our country,’ Italian-born Gandhi told lawmakers to applause in the Lok Sabha, the lower house of parliament. Her government says the programme will add 230 billion rupees ($3.6 billion) annually to India’s existing 900-billion-rupee food subsidy bill.”

http://www.rawstory.com/rs/2013/08/26/indias-sonia-gandhi-seeks-support-for-law-to-banish-hunger/

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Jim Rogers: Need to own real assets in India

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“Jim Rogers: Your politicians have been making mistakes for decades and every time you just push into the future, the problems get build up and get worse and worse and worse. There are plenty of smart Indians and there are plenty of smart people who could help India. Unfortunately, the government does not listen to them. But if I were doing it, I would abolish all exchange controls, I would abolish all capital controls, I would abolish all subsidies, I would abolish the absurd laws governing a restraining agriculture. I would cut spending so that there is no deficit spending.”

http://economictimes.indiatimes.com/opinion/interviews/need-to-own-real-assets-in-india-jim-rogers/articleshow/22092601.cms

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How George Soros Trades Stocks

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EPJ13

“George Soros, one the greatest Hedge Fund Managers of our time, trades stocks very different than a mutual fund or hedge fund manager might today. Soros was trained in economics at the London School of Economics. His view on stocks is driven by his macro view. He is less interested in what a company does or anything about its financials or fundamentals.  Soros trades stocks in sectors he expects to perform within his macro view. When he likes a sector he usually purchases 2 stocks from it: First, the market leader usually the Largest Market Cap Company and the second stock he usually purchases is the cheapest, lowest priced stock in the sector.”

http://www.economicpolicyjournal.com/2013/08/key-lesson-how-george-soros-trades.html

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Gold Producer Write-Downs: Death Sentence or Opportunity?

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“Once a company has written down an asset, that loss no longer trickles down to the bottom line in the form of depreciation expense. Suppose you have a mine written down to zero, because operations provide effectively zero return at lower prices, but the company keeps mining because management believes prices will go up, and mine closure would be both expensive and hard to reverse. Then prices do rise, and the mine starts making money hand over fist, with no depreciation to impact net income. That’s why it’s so important to separate still-viable assets that are written down from those that really were based on foolish assumptions and are never likely to be profitable.”

http://www.caseyresearch.com/cdd/write-downs-death-sentence-or-opportunity

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Don’t Fear the Taper

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“Currently, the Fed is buying $85 billion a month in bonds and mortgage backed securities. If this was reduced by, say, $10 billion, it will be lauded as a ‘taper.’ But is it really? In my opinion, it’s still expansionary and inflationary. To the small cap sector, the data shows that it doesn’t matter. The positive performance of small caps after a rate-hike makes for a convincing argument. Different investors will recommend different strategies. Incorporating the smaller stocks in your investment portfolio might be something to consider if you fear the taper — or not.”

http://dailyreckoning.com/dont-fear-the-taper/

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