Thursday, 24 July 2008

Chıll out tıme ın Icemeler and Turunc (Turkey)

Icemeler bay
Icemeler bay from above a fancy hotel

I've been chıllıng out or more precısely beıng boıled ın Icmeler and Turunc. The mıddle ımage of Icemeler ıs somewhat ıdealısed. Not ıncluded ın that are the crazed restauranteurs and bar staff who do all ın theır power to encourage you to part with your dough. These eaterıes become a gauntlet at nıght. Yet they "seem" frıendly folk. The food's been good and the EFES (beer) ıs fırst class. The place ıs a heat-trap surrounded as ıt ıs by mountaınous terraın.
I'm now off to another mountaınous place but far cooler - the Scottısh Hıghlands and I hope to post from there ın a few days.

Gold Mıd-Year 2008 Revıew - and update by John Hathaway

Found thıs on the excellent Goldtent posted by eeos and ıt's worth repostıng here.

Gold and gold shares continue to be in a consolidation phase since the dramatic rescue of Bear Stearns by JP Morgan Chase at the end of the first quarter. Credit and capital market stress continue at a high level as evidenced by the weak performance by financial sector shares during the first half of 2008. Such concerns tend to drive capital market flows into safe haven areas including gold. Following the current pause, we expect gold to achieve new highs later this year. We believe that gold shares are awaiting leadership from the metal itself. Once gold attains new highs, we believe the shares will break out of their consolidation mode. The $1000 per ounce threshold for gold is at present a psychological barrier for investors. Once that level is viewed as a floor rather than as a ceiling, we expect a significant rerating of gold shares.
We suggest that gold’s underperformance relative to other commodities will change based on one simple notion that has become wildly popular in the financial media: demand destruction. There is no doubt that high commodity prices, regardless of whether they are labeled a bubble or not, are economically destabilizing. They have the potential to cripple normal economic functioning. High inflation, perceived or anticipated, will probably alter economic behavior as it did in the 1970’s. The efficacy of a “hard asset strategy” would ultimately be undermined by the associated economic disruption. This, in our opinion, would leave gold and other precious metals standing alone in the world of commodities as true safe havens.
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Portfolio Manager of the Tocqueville Fund, will appear on CNBC’s “Squawk on the Street” on, Thursday, July 24th at 10:40am to discuss The Tocqueville Fund and its investment strategy with Erin Burnett, in a segment called “5-Star Strategy”.

A Frog ın the Pot by Davıd Petch

One of the best chartısts out there and hıs thoughts on where thıngs wıll go next ın the maın markets and the PMs.

Monday, 14 July 2008

Fannie and Freddie bail out - but what will this do for gold?

The bail out will add to the US debt and will mean increased money supply and inflation. As the FED and other central banks fear deflation more dollars will be created in the weeks and months ahead - and this will do wonders for the price of gold.

Saturday, 12 July 2008

Fresh Rout of US banks!

Dow Jones dives as Hank Paulson rules out rescue of Fannie Mae and Freddie Mac

By Ambrose Evans-Pritchard

Last Updated: 11:40pm BST 11/07/2008

Thursday, 10 July 2008

Oil price shock means China is at risk of blowing up (along with western property markets!)

In another provocative and insightful article by Ambrose he suggests that China is at risk from economic meltdown because of the price of oil.

Oil price shock means China is at risk of blowing up
By Ambrose Evans-Pritchard
Last Updated: 2:00am BST 08/07/2008

The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia.

The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete.

No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century.

Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin.

Products are sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a 40ft container from Shanghai to Rotterdam has risen threefold since the price of oil exploded.

"The monumental energy price increases will be a 'game-changer' for Asia," said Stephen Jen, currency chief at Morgan Stanley. The region's trade model is about to be "stress-tested".

Energy subsidies have disguised the damage. China has held down electricity prices, though global coal costs have tripled since early 2007. Loss-making industries are being propped up. This merely delays trouble.

"The true impact of the shock will only be revealed over time, as subsidies are gradually rolled back," he said. Last week, China raised internal rail freight rates by 17pc.

BP 's Statistical Review says China's use of energy per unit of gross domestic product is three times that of the US, five times Japan's, and eight times Britain's.

China's factories "were not built with current energy levels in mind", said Mr Jen. The outcome will be "non-linear". My translation: China is at risk of blowing up.

Middle East war threat rattles oil markets

Any low-tech product shipped in bulk - furniture, say, or shoes - is facing the ever-rising tariff of high freight costs. The Asian outsourcing game is over, says CIBC World Markets. "It's not just about labour costs any more: distance costs money," says chief economist Jeff Rubin.

Xinhua says that 2,331 shoe factories in Guangdong have shut down this year, half the total.

North Carolina's furniture industry is coming back from the dead as companies shut plant in China. "We're getting hit with increases up and down the system. It's changing the whole equation of where we produce," said Craftsmaster Furniture.

China is being crunched by the triple effects of commodity costs, 20pc wage inflation, and sagging import demand in the US, Canada, Britain, Spain, Italy, and France.

Critics warn that Beijing has repeated the errors of Tokyo in the 1980s by over-investing in marginal plant. A Communist Party banking system has let rip with cheap credit - steeply negative real interest rates - to buy political time for the regime.

Whether or not this is fair, it is clear that Beijing's mercantilist policy of holding down the yuan to boost exports share has now hit the buffers.

A worker on an oil field in China's northeastern Heilongjiang province
Foreign reserves have reached $1.8 trillion, playing havoc with the money supply. Declared inflation is just 7.7pc, but that does not begin to capture the scale of repressed prices, from fuel to fertilisers. "There is a lot more bottled-up inflation in this economy than meets they eye," says Stephen Green, from Standard Chartered.

Inflation merely steals growth from the future. It defers monetary tightening until matters get out of hand, which is where we are now. Vietnam has already blown up at 30pc. India is on the cusp at 11pc, so is Indonesia (11pc), the Philippines (11pc), Thailand (9pc) - leaving aside the double-digit Gulf.

Of course, oil prices may fall again. They plunged to $50 a barrel in early 2007 after the Saudis raised production. The scissor effect of slowing global growth and extra crude later this year from Brazil, Azerbaijan, Africa, and the Gulf of Mexico may chill the super-boom.

The US Commodities Futures Trading Commission is on an "emergency" footing, under orders from the Democrats on Capitol Hill to smash speculators. If it is really true that investment funds have run amok, we will soon find out.

I suspect that the energy markets have fallen prey to their own version of the "shadow banking system" that so astonished regulators when the credit bubble burst.

I also suspect that Hank Paulson and his EU colleagues have a surprise up their sleeve for the late-cycle über-bulls. Those who claim that derivatives (crude futures) cannot drive spot prices have overlooked a key point. The Saudis and others use the IPE Brent Weighted Average of futures contracts as their pricing mechanism. Futures now set the spot price.

But even if oil comes down for a year or two, the mid-term outlook of the International Energy Agency warns that crude markets will be tighter than ever by 2012. Call it Peak Oil, or just Peak Non-Cooperation by the dictatorships that control most of the world's remaining 5 or 6 trillion barrels (Mankind has used one trillion so far).

Come what may, globalisation has passed its high-water mark. The pendulum will now swing back from China to America. The mercantilists will have to reinvent themselves.

Saturday, 5 July 2008

USDollar on Edge, Gold on Verge by Jim Willie

Jim Willie's latest is as good as any he's written before. Amongst a myriad of points he makes intriguing comments on junior miners and how they are being shorted by hedgefunds.

USDollar on Edge, Gold on Verge

Jim Willie CB July 2, 2008

What Makes A Good Presentation - a short course by the O.U.

This is an essential skillset for the world of study and work in the twenty first century.

Well worth going through this unit to blow the socks off the opposition with the quality of your presentations!

Learning How To Learn - an excellent unit by the O.U.

This unit helps you think about the difference between what you are learning and how you organise your learning (the process). When you accomplish your essays, etc. you then need to reflect upon the effectiveness of how you learn and your understanding of the concepts that you learned.

A crucial unit by the Open University. Again, you can pick and choose the parts of the unit that you need to focus on to develop particular skills.

Approaching Prose Fiction - by the O. U.

Useful for developing skills in reading fiction. There's no need to go through every part as a course. You can select the section that you need to know more about to develop skills for the novel that you are currently reading.

What Is Poetry ? An exeptional learning unit from the Open University

As one might expect from the O.U. it is a thorough unit with brief audio interviews with established poets to aid oral learners. Sheer excellence!

Friday, 4 July 2008

About Me

I teach Film, Media and English Lit.