Market performances since September 11, 2001

September 9, 2011 Leave a comment

If someone were to ask you where the best place to put your money was the last 10 years, two particular items that might come to mind are oil and gold. While both have dramatically outperformed the stock markets, with returns of 568% and 225% respectively, it has in fact been silver which provided the best return as an asset.

From it’s September 10, 2001 price of a pitiful $4.16, at $41.57 it has produced a whopping 900% return.

Hopefully you didn’t buy and hold US Dollars while Greenspan and Bernanke have been cranking them out.

If we consider a few sectors in the S&P 500, we see that energy and materials performed the best. Consumer staples and consumer discretionary are next in the list. Utilities and healthcare have been essential flat, making them losers. Telecoms and especially financials are the worst performers of the last decade.

What was the best stock pick of the decade? Well, if you bought Apple on September 10, 2001, just a couple of months before they released the first iPod, you made a KILLING. A 4300% killing. Which is pretty good, but not as good as if you’d invested in soda and juice.

Because soda and juice maker Hansen’s Natural (HANS) made an earth-shattering 17,300% return, going from $0.49 to about $85 in 10 years. Honestly, I don’t even know anyone who’s ever heard of this company, but I would like to try their soda.

Filed under CMR, Energy, Investments, Precious Metals Tagged with

Oil down, stocks down, gold up!

August 8, 2011 Leave a comment

The TSX got hammered pretty hard last week, and given how oil is trading right now I think we can expect another rough day when trading begins on Monday morning. The most amusing thing about the big sell-off on Thursday was how gold corrected by about 0.5% only and there were various “experts” on CNBC and Bloomberg talking how this was some kind of notable event and gold was set to reverse.

These people have been wrong on gold from the beginning. You should not listen to anyone like this, because they are not paying any attention. They seem to ignore that central banks are buying gold like crazy. South Korea’s central bank bought gold for the first time in 13 years.  Russia, Mexico, Thailand… their central banks want gold. Chinese and Indian people with their rising incomes want gold.

Here is a one-year chart on the gold price.

 

 

When it was $1000 an ounce, people said it was a bubble. In 2010, it just wasn’t the right time to buy gold (what the hell, Mr Ferguson?).  It’s a “barbarous relic,” they say (is Nouriel Roubini an idiot or what?), or “it doesn’t do anything,” say others (Buffet is an amazing investor who completely fails at economics). Even people who were generally favorable to the concept of investing in gold timidly said, “Well, it’s gone up so much, it’s too expensive right now, maybe I’ll buy it on the dips, neuhrg...” All of this was completely wrong. And it is still completely wrong.

When something rises so quickly, one would normally be wise to be skeptical. Yet gold’s price in the modern era does not represent a “normal” situation. Currency crisis is coming. Europe is basically going straight to the ninth circle of economic hell. The ECB has pledged to buy all the bad debt in Europe. QE3 through 13 is coming from the Fed. You can count on it.

This is all positive for gold. What is bad for gold’s price? Deflation — but we don’t face deflation, at least not until the final phase of the crisis, when the Federal Reserve and other central banks finally say, “No.” We still have a ways to go, I promise. This is Bernanke and like folk we’re talking about, after all.

Instead, what we face now is systematic, global currency depreciation. That will ensure gold will continue to rise for a long time to come. Buy yours now — start with a single coin or two. Work your way up to $10,000 in coins by the end of 2011. I strongly anticipate gold to reach $2000 by year’s end, and even then it will have a lot of assured upside.

Filed under Energy, Gold, Investments Tagged with ,

BP’s Statistical Review of World Energy: highlights

June 8, 2011 Leave a comment

BP has put out its latest Statistical Review of World Energy, and it is a pretty good read. Here are a few highlights:

  • Even with an economy half the size of the US, China has surpassed America has the largest consumer of energy, at 20.3% of the world’s share.
    • 2010 saw the largest increase in the world’s consumption of primary energy since 1973, at 5.6%. OECD countries’ consumption grew 3.5%. Non-OECD countries’ consumption grew 7.5% (63% above 2000 levels).
    • China’s energy consumption increased 11.2%.
    • World proved oil reserves for 2010’s numbers would be sufficient to meet 46.2 years of consumption.
    And here are the best charts from the report:

    Reserves-to-production ratios:

    Crude oil prices in real terms:

    World trade movements of crude:

    Basically, we can be assured that oil is going to go a lot higher, barring a deflation, another financial crisis, and the ensuing collapse of commodity prices. And such a collapse could only be temporary, as trend is unmistakable. We need cold fusion or something at this point.

    Filed under Energy, Oil Tagged with

    What will happen to commodities in 2011?

    November 30, 2010 Leave a comment

    First, consider the following:

    Commodities are up across the board, in some cases quite dramatically. This boom is international — manufacturers are bidding up prices and there are strains on available supplies.

    Yet consumer prices are not rising significantly. Canada currently has a higher official inflation rate than the US, but not much more. Commodity prices have been bid up in anticipation of rising consumer demand, a prediction which is not panning out.

    Remember the insight of Austrian economics — consumers set final prices, not producers. Consumer spending is weak. Unemployment remains high. Without a surge in consumer spending, these prices are unsustainable. If there is a recession in Asia, and I think there will be (probably next year), then these prices are likely to tank.

    Western banks are stockpiling excess reserves. If this money does not get lent out, unemployment will remain high and consumer spending will continue to suffer. There are no signs that bankers will suddenly become optimistic. China is slowing down. Same with South Korea and Japan.

    What about gold? Gold follows a different set of rules. Central banks buy and sell gold. It is a hedge against the currency crises and mass inflation, rather than recession, where currency appreciates. China is encouraging its citizens to buy gold. When Austrian business cycle theory bites back at China’s bubble, there may be less drive to build shopping malls where no one buys or sells anything, but people will still yearn to preserve their savings with the precious metal as their government devalues money like its going out of style.

    Filed under CMR, Commodities, Energy, Oil, Precious Metals Tagged with , , , , , , , ,

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