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35.352.230 von Investnix am 30.09.08
20:12:54Supergute Aktie. Canada heute + 17 $ (lol).
Riding Out the Storm
By Lawrence Roulston - Editor of Resource Opportunities
Investments are down across the board and around the world, but the
worst damage was inflicted on commodities
The demise of two more of Wall Street's most venerable firms
highlights the fragile nature of the U.S. financial system and
further intensifies investor insecurity. Comments from Henry
Paulsen, U.S. Treasury Secretary, link the latest troubles to the
on-going problems in the housing market.
The takeover of Merrill Lynch by Bank of America provides value for
shareholders of Merrill and makes sense from a business
perspective. The combination will seemingly create a stronger firm
in the long term.
Shareholders of Lehman Brothers were not as fortunate, as the firm
was forced into bankruptcy. After intensive efforts to find a
buyer, no company could be found to take on their massive
liabilities. The fact that no buyer was willing to take over a firm
that was once respected as a top investment bank leads investors to
wonder how bad the situation in the financial markets really
is.
The intense volatility and uncertainty over the past year has led
many investors to simply run for cover. Investments are being
dumped on the market with no thought as to the underlying value.
Speculators have fled the commodities markets, pushing most of the
prices sharply lower from their recent highs.
It is not a complete surprise that commodity prices corrected. Oil
had soared to a level that even the most bullish forecasters could
not have imagined. Wheat, rice, fertilizers and virtually every
other commodity had spiked in value.
That speculators were hard at work was evident. Even stodgy pension
funds were playing the commodities markets. Investors were putting
money into oil, potash, soybeans, platinum and other materials that
they knew little about.
For many commodity investors, it was beyond hoping for further
rises in prices. Fears of a collapse of the American financial
system and further deterioration in the value of the dollar led a
large number of investors into the commodities markets as a place
to park some wealth until the dust settled.
Since August 2007, when the extent of the idiocy in the banking
industry became evident, a favorite play among hedge funds was to
short the American financials and go long on commodities. Hard
assets, especially commodities with their world-wide appeal, were
seen as a safe place to have your money as the financial sector was
sinking and taking down the dollar.
The shorts in the financial sector were putting intense downward
pressure on the banks at a time when they desperately needed to
raise new equity to offset the massive losses from their
over-indulgence in the mortgage market. The American financial
sector was literally on the verge of collapse.
The enormous influx of capital into commodities propelled some of
the prices well beyond levels that could be supported by even the
strongest fundamentals. The soaring oil and food prices were
becoming a political hot potato in an election year.
The griping from voters about gasoline prices was bad enough. A far
greater concern to government officials was the growing sense
throughout the economy that inflation was inevitable. The
policymakers are keenly aware that the most significant contributor
to inflation is the belief that there will be inflation. As rising
fuel and food prices were working their way through to consumers,
the expectation of ever higher prices was taking hold on Wall
Street and on Main Street. Clearly, the notion of rising prices had
to be doused before there was a widespread move into inflation
mode.
Donald Coxe, chairman and chief strategist of Harris Investment
Management in Chicago, is one of the most respected investment
authorities in North America. His September Basic Points provides a
well-written and insightful account of the steps taken by the U.S.
government to head off disaster.
The Treasury Secretary and the Chairman of the Federal Reserve were
facing the biggest potential crisis since 1929. They had to move
fast to avert a catastrophe. They knew that hedge funds and other
speculators held large and highly leveraged commodity contract
positions. They were also aware that there were large short
positions against the banks and other financial firms such as
Fannie Mae and Freddie Mac.
Strong and decisive action was taken on Sunday, July 13 when the
government expressed their intent to prop up the financial sector
and to put a halt to soaring commodity prices. Their announcement
was timed to hit the open of the Asian markets.
The promise of strong government support for the financial sector
made it clear to Asian traders that the long commodity/short banks
trade had run its course. Investors moved quickly to unwind their
positions. In the thinly traded Asian markets, the prices of the
banks moved sharply higher. Commodities headed in the opposite
direction.
When the markets opened in Europe, the momentum continued to build.
By the time traders got to work in New York on Monday morning, it
had evolved to a classic short-covering rally for the banks.
Traders scrambled to lock in whatever profit remained in their
trades... or to cut their losses.
The Securities and Exchange Commission joined that concerted
government effort to right the wrongs of the market place. Their
first move was to impose new rules that restricted short selling of
American financial firms. They supported the other side of the
government mandate by announcing that they were planning to impose
restrictions that would limit pension funds and other institutions
from participation in the commodities markets.
Fund managers didn't stop to think about the legal or practical
implications of the government telling investors what they could or
could not invest in. With commodity prices already in a free fall,
they couldn't get sell fast enough.
Perceptions among some American investors that the slowing US
economy would plunge the rest of the world into recession
contributed to further downward pressure on the commodities
markets.
As always, the pendulum swings too far to either side. From a
position of overbought, commodity prices moved decidedly into
oversold territory.
Now that the speculators have been largely flushed out of the
system, what's next for commodities?
Donald Coxe, in his latest Basic Points, notes: "the next phase of
history's greatest commodity boom will have some new
characteristics that should make commodity stocks even greater
out-performers once the world emerges from the current economic
downturn."
Coxe, who has been in the forefront of commodities investment since
the beginning of the bull market stated: "We are leaving our
Recommended Asset Mix Unchanged---as are the long term fundamentals
of commodity investing." (his highlight)
He further comments: "We have no clear idea how long it will be
before we can look back to today's prices for commodity stocks and
say, "Wow! I wish I'd loaded up then!" We remain certain that day
is coming." (his highlight)
He added: "When the financials do roll over, gold and gold mining
stocks should move swiftly back into favor. Inflation remains above
central bank target levels in the US---and in many other countries
across the world. And any return to pronounced weakness among the
bank stocks will be strongly bullish for gold."
Frank Holmes, CEO and Chief Investment Officer of the hugely
successful U.S. Global Investors, which has consistently scored
among the top performing mutual funds, said the following on Sept
10, 2008 in response to our query as to his current outlook for
commodities: "Global infrastructure spending is the key demand
driver for commodities. With Morgan Stanley estimating over $20
trillion to be spent over the next 10 years and commodity supplies
constrained, the long-term fundamentals for the commodities sector
stocks look healthy. These stocks are trading at very low
price-to-earnings ratios and at large discounts to cash flow."
At Resource Opportunities, we monitor a great many publications,
covering a range of outlooks. The following are some of the other
opinions from experts in this area, all people with long and
successful track records.
David Morgan, who writes the The Morgan Report , a highly acclaimed
publication that which is available at www.Silver-Investor.com, has
said: "Coming back to the precious metals, it is difficult to
gather enthusiasm when each passing day seems to bring lower
prices, but this is exactly the type of sentiment that signifies
bottoms."
Al Korelin, whose popular radio program The Korelin Economics
Report is broadcast nationally in the U.S. and available online at
http://www.kereport.com, noted on September 5, 2008: "Most of the
current activity in this market is propelled by short-term
investors who have a real need for liquidity. They are experiencing
an increase in their cost of living, they are unable to generate
cash from their homes, some of them are losing their jobs and, as a
group, they are selling whatever stocks they can regardless of
their respective prices."
Scott Hunter, a broker at Haywood Securities, who has worked in
this industry his entire career commented: "We are seeing
frustration selling into a market with no bids. Patient investors
will be well rewarded if they take advantage of this weakness in
the market. They should have a short list of good companies with
underlying value and wait for the right price." Scott warns of the
potential for further weakness from tax-loss selling, but also
notes that a lot of the tax-loss selling that would normally occur
closer to year-end has already taken place.
In a recent interview, Doug Casey, editor of the widely read Casey
Report, said: "I think it is very much like what happened from
1974-1976 during the last great bull market when these stocks
melted down 50, 60, 70%, but that was just a prelude to the
explosion that happened from '76 to 80 when they subsequently went
10, 20, 30 times in price. I think that's what is going to happen
now." In Casey's September newsletter, he went on to say, "If your
cash for speculative investments is not fully committed, back up
the truck for the spectacular deals available right now. Don't
worry about whether or not the market has bottomed (though we
suspect it has).There are some screaming Best Buys out there."
Jim Dines, of the well-known Dines Letter, has said: "How low will
these stocks go? Until all those who are frightened complete their
selling and are afraid to repurchase."
Eric and David Coffin, authors of the acclaimed Hard Rock Analyst
publication , at the end of August said: "The big issue now is that
assets are not being valued by the markets... we suspect the
'sudden oversupply' of metal people are worried about, especially
on the base metal side, will disappear quicker than the pessimists
expect... Right now the market focus is on cash flow and near cash
flow companies, and even these are weakly priced to potential. ...
this is not the time to be selling in frustration and fear. Fall
is, on average, the best season for resource stocks. Fall is near
so we will wait this out and try to be ready to be able to bargain
hunt with confidence at a bottom that we hope will not be long in
arriving."
Jay Taylor, publisher of the highly regarded Gold, Energy &
Tech Stocks newsletter said on September 4, 2008: "It is when
others don't want to buy that you can make the most money by
stepping into a market... Right now, I think we have some fantastic
opportunities to buy stocks that are selling below their cash value
and also have ounces of gold in the ground."
Mary Anne and Pamela Aden, two influential and highly regarded
investment analysts, said in late August in their publication The
Aden Forecast: "Even though there have been some wild swings, the
major trend is still up and as long as that's the case, we
recommend holding your positions... Gold is extremely oversold.
This means it's fallen too far, too fast and it's poised to rise in
the weeks and months ahead. The same is true of silver, and gold
and silver shares... Even though it's still early, we're starting
to see some signs that the worst is probably over, or nearly over.
For example, gold, silver, oil, the base metals, and some of the
soft commodities and currencies are either stabilizing or beginning
to bottom at extreme lows. The same is true of some of the gold and
silver shares, natural resource and energy stocks. They are all
bottoming at extremely oversold levels."
The popular media is still extremely negative. That is to be
expected, as their focus is backward looking, reporting on what has
been. And, in case you haven't noticed, there is a strong bias in
the popular media to report on disasters, pending disasters and
disasters that might be there if we look hard enough. Things always
look bleakest at the bottom of the market.
Those who evaluate the past and present and use that knowledge as a
basis to look into the future see that there will be a return to
normalcy. The fundamentals have not changed in spite of government
actions to rein in the over-exuberance that was beginning to show
up in some of the commodities markets. In the longer term, the
efforts to prop up the financial sector will contribute further
weakness to the dollar and that will translate into gains for gold
and other hard assets.
Commodity prices, measured in dollar terms, will naturally rise as
the dollar shrinks. Furthermore, renewed downward pressure on the
dollar will lead some investors back to gold and other hard assets
to protect them from the falling dollar.
Looking quickly at fundamentals for the metals: Debate still
continues about whether the U.S. is or is not in a recession.
Whichever side of that line the economy eventually falls on, the
net result is that the country will use roughly the same amount of
metals this year as was used last year.
Headlines scream out that growth in China has slowed. Reading
beyond the deadlines: Growth in China in the latest quarter slowed
to 10.1%, down from a level of 11.4%. That pace of expansion, and
growth in many other parts of the world will see demand for metals
continue to grow.
Supply disruptions continue to plague the mining industry,
highlighting the tight supply/demand balance for many of the
metals.
The August 23, 2008 issue of the venerable Economist magazine
explains that future metal supplies will likely decline. "Kona
Haque of Macquarie Bank points out that copper mines have produced
1m tonnes or so less than planned in each of the past three years
(over 5% of global output), and are likely to do so again this
year." The article goes on to note that, for mines in general: "the
quality of the ore is falling as the richest seams are exhausted"
and noting that shortages of people and key components are creating
bottlenecks. "Such bottlenecks have been hampering the opening of
new mines and the expansion of existing ones."
When you add it all up, demand for metals continues to grow, supply
is constrained and mines are being depleted. Nothing has changed
the basic premise that new metal deposits are needed by the mining
industry.
With share prices of the exploration and development companies
having been beaten down to absurdly low levels, we can look forward
to a flurry of take-over bids as the larger companies take
advantage of the low prices to secure quality metal deposits.
Clearly, it will take some time for investors to get over the shock
of the past few weeks. Many individual investors will never come
back to the equities markets. Some of the institutional investors
who were hurt will steer clear of commodities. Yet, there are many
others -- both individual and institutional -- who will have the
wisdom to understand the fundamentals and see the profit potential
in this sector -- especially from the current oversold positions.