Addressing the Billions Underserved

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Time to Look at Gold Miners Now That the Bottom is In

The miscalculation by the Troika in Cyprus has finally put the last nail in the medium term short gold (NYSEARCA:GLD) investment thesis.  For just over a year and a half the central banks have coordinated, very effectively, to build an edifice of confidence in the global financial system that would allow the idea that quantitative easing would no longer be needed to finish the job of cleaning up the mess post-Lehman Bros.  The Troika, and most explicitly, the IMF, overplayed their hand last weekend with their demands for explicit looting of savers in order to go forward with a rescue plan for Cyprus’ over-leveraged banking system.Gold-Bars-Investor-in-the-Family

This act and the subsequent chaos it has spawned has now firmly put in place a bottom in the price of gold.  Regardless of the final outcome in Cyprus – exit from the eurozone, acceptance of the bail-in, civil unrest, etc. – the net effect will be a steady loss of confidence in the banking system, capital flight from both the US and the EU and grater movement into gold as a vehicle for savings and wealth preservation.  While I would have preferred a close above $1620 per ounce this week, closing above $1600 as we approach the end of the month is strength enough given the current sentiment.

India’s Love For Gold Can’t Be Curbed With Tariff Hikes

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The main reason for the duty hike is the rising current account deficit, driven largely by India’s traditionally large gold imports – demand which has grown with the price pulling back below $1600 per ounce and the rupee strengthening somewhat from its worst levels. The current account deficit reached an all time high of 5.4% of Gross Domestic Product in the third quarter of 2012. India’s current account deficit problems look similar to the balance of payments crisis in 1991, when the Reserve Bank of India had to sell 47 tons of gold to Europe as collateral for a loan to avert a sovereign default.

Read the rest over at Seeking Alpha.

No Organic Growth for Chemical Giants

A federal jury in the U.S has ordered Dow Chemical (NYSE:$DOW) to pay $400 million in fines over price fixing of urethane. Several companies were named in the $1 billion class action law suit filed by urethane buyers but Dow was the only one that had not settled. Other defendants in the case included Bayer AG, Huntsman Corp’s (NYSE:$HUN) Huntsman International and BASF SE. Dow will try to have the lawsuit dismissed in a post-trial motion.  However, if the verdict is sustained by the judge, then the $400 million could potentially become $1.2 billion under federal anti-trust statutes.

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ConocoPhillips’ Asia Strategy Hedges Dollar Risks

ConocoPhillips (NYSE:$COP) is showing renewed interest in the lucrative Asia-Pacific oil market.  It is gearing up to resume its biggest Chinese operations as well as having made a “final investment decision” on the Malaysian offshore project as it divests from China’s neighbor Kazakhstan.   These represent an important diversification tool as the world heads towards a stagflationary, low-growth period. ETRM_LRG_oilrig_opt

There are three big deals to look at.

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Shell’s focus on Natural Gas Will Pay in the Long Run

image.669450309Royal Dutch Shell (NYSE:$RDS.A) posted a surprise slump in profits recently but that hasn’t deterred the company from investing heavily in liquefied natural gas and unconventional fuel sources. Shell is putting its bet on increasing energy demands from emerging economies in the future. In my mind, a good bet.  The company’s annual income dropped by 6% to $27 billion as it missed analysts’ estimate for the fourth quarter. Shell posted a profit of $5.6 billion in the fourth quarter, a 15% increase, but considerably below analysts’ estimate of $6.3 billion.

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Peter Pham is an author, international fund manager, and a registered financial director by the Cayman Monetary Authority (CIMA). In 2013 he published his first book entitled, The Big Trade: Simple Strategies for Maximum Market Returns. He currently manages the portfolio of a global hedge fund and runs an asset management company, Phoenix Capital.  (read more)

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