The Eric Sprott Blog: HA! HA! -There is a Serious Shortage of Gold

The Eric Sprott Blog: HA! HA! - There is a Serious Shortage of Gold - (Read More)

 "I think it’s just been one big scheme to try to get people dissuaded from owning gold and to cause supply to come out. As you mentione...

So do want to buy our new book - with over 1 million pre-sold copies? The title is "The Secret to How to Make a Lot of Money Real Quick"; - write a book like this.

Sarcasm notwithstanding, Eric is basically a promoter and should disclose his personal, corporate and managed positions, so it is clear where he is coming from and fair to everyone who listens to his pitch. As well, to make this relevant for serious investors - sources, numbers and opposing views should be brought forward for objective analysis. We strongly believe, moreover, that if this was such a great investment, folks like Buffet, Bogle, Gates, Goldman and many others, would all be quietly chasing this huge home run. There is little evidence suggesting they are swinging at the plate.

In the meantime, we will continue to support the belief that gold is a psychotic placebo, that has lost substantial real purchasing power over the past 33 years, as well as being the one of the worst asset classes over that time. Making it just a speculative relic used by barbarian traders that holds none of the attributes true investors desire - like expected or defined returns.

Bottom line, we are not putting much faith in the rhetoric of gold promoters like Faber, Sprott and Rogers. For as Charlie Monger would say, "if its too good to be true, it usually is "

INVESTORS' INSIGHTS 

First Financial Insights

July 31, 2013

Our Message..

These wise guys are not "Gold bugs" for a reason -

The Dr Peter G Kinesa Blog: ECONOMIC GRAPH OF THE DAY: UK Wildlife Index

The Dr Peter G Kinesa Blog: ECONOMIC GRAPH OF THE DAY: UK Wildlife Index Decli...: (Read More)
ECONOMIC GRAPH OF THE DAY:  UK Wildlife Index Decline (1968 -2010)  To the point, forget about all the graphs, ch...

You may think that Peter's comments are absurd, outlandish or just plain funny from an investment, finance and economic point of view. We, on the other hand, view such measures and observations quite seriously. So much so, that in the end we believe that one his upcoming books "Bugonomics - The Silent GDP of Bugs" will far out pace Freakonomics as a best seller. 

Bugs by their nature are existentialists, just as Pete's Economic Doctrine plants itself in this philosophic foundation. For when man is gone, what happens to Bugs? Or is the question worded backwards? Hmm.
Read the book..

INVESTORS' INSIGHTS
First Financial Insights
July 30, 2013

BUGONOMICS - The Silent GDP of Bugs

The Marc Faber Blog (Video): “It’s Gonna End One Day… Through War Or Financial Collapse”

The Marc Faber Blog (Video): “It’s Gonna End One Day… Through War Or Financial Collapse”

(Read and View More)

 

 

No kidding, we guess Marc's finally starting to figure out what we have been saying for years. Sooner or later the abstract economy's - positive-sum game - is going to have to reconcile with the physical economy - a negative-sum game. The outcome of the imbalance correction will be brutal.

 

Or perhaps Marc picked up a copy of The Limits to Growth and discovered a practical application - Oprah calls it an "ah ha" moment when the penny finally drops.

 

INVESTORS' INSIGHTS

First Financial Insights

 

July 27, 2013

 

 

When the penny drops...

 

The Paul Krugman Blog - Detroit, the New Greece

The Paul Krugman Blog  -  Detroit, the New Greece (Read More) 

Streets of Athens, Remember? Circa 1967???

As Dr Kinesa points out in his recent article, there is a lot of analysis and navel-gazing required to sort out the problems of both Greece and Detroit, who share many similarities. By the way, a better title may be "Greece, the New Detroit?"

Why don't we just state the obvious here? That is about the differences between recent economic successes of China and for some time Japan, and failures of centres; such as Detroit, Greece, Portugal and others. Imagine over the years, that the winners actually have had a "economic business plan" that they execute to, by using both free and centralised policies and tactics. ( seems they also better learn and apply MBA thinking?) Meaning that over reliance on "invisible market forces" to attain the optimal economic state is not a panacea, in fact, it is plain foolhardy - results speak for themselves.

Anyway, when a National Business Strategy is employed, it creates a different outcome because it focuses the nation or centre on simple stuff like; What can we do better then others? Where can we build long-term sustainable comparative advantages? And thats where all that weaknesses, strengths, opportunities and threats thinking occurs, breeding realistic paths forward.

Bottom line; we see that the winners are executing successful National Business Strategies that have little to do with whatever is trending in the Schools of Economics. Imagine! 

That's our short take on it - but never forget what you paid for free advice.

INVESTORS' INSIGHTS
First Financial Insights

July 25, 2013

Streets of Detroit  -  2012

When did it really go Bankrupt???

The Jim Rogers Blog : I would rather be a Creditor than Debtor

The Jim Rogers Blog : I would rather be a Creditor than Debtor (read more)

Lets see if we can make sense of this. Now let's say China holds 1trillion in 10 year bonds and decides to cash or redeem their whole position. What could possibly happen? The Fed wires a one trillion freshly printed electronic dollars to China and takes back the bonds. So instead of holding an IOU due in ten years it now holds an IUO that is due on demand - albeit it is less less than 10% of  US's GDP or in other words all the goods and services output of the US economy for one month.Not much by some measures.

Anyway, now if China decides to convert these dollars immediately to other currencies it actually shoots itself in the foot because by depressing the US dollar they make their exports substantially more expensive to American consumers. Demand for Chinese goods would collapse in the US, that could shut down China's domestic manufacturing causing massive unemployment, and in turn social unrest followed by political change. Somehow it is hard to find a winner in such drama and both sides are thus inter-dependent - strange bedfellows indeed! .

There is a lesson - the best credit terms maybe negotiated by the creditor's biggest debtor - so borrow a lot! But somehow, Ben Franklin and Shakespeare's  wisdom also seems to ring true: neither a borrower nor lender be...

INVESTORS' INSIGHTS

First Financial Insights

Or, just tell them to go fly a kite

The Marc Faber Blog : Somewhere down the line we will have a Massive Wealth Destruction

The Marc Faber Blog: Somewhere down the line we will have a Massive Wealth Destruction

Just a short post noting that Marc's 50% prediction is in line with what we suggest is a possible valuation adjustment in our July 17th comments on Paul Krugman's Blog - Prophecies of Maestrodamus.

Not a hard one to figure out as it is really just "present value mathematics" whereby if long 30 year bond rates double, then their market value dips by 50%. Very straightforward mathematics that no amount of economic theory nor policy measures can override as it is simply a hard conceptual constraint. Mathematics cannot be persuaded, legislated nor negotiated with - and that should come as no surprise to anyone.

Down the line, looks to be a scary turbulent road ahead. 

We will post more comments from this blog later on.

INVESTORS' INSIGHTS
First Financial Insights
July 21, 2013

What waits down the line?

Bloomberg BusinessWeek - The Social Media Bubble Deflating

Bloomberg BusinessWeek - The Social Media Bubble is Quietly Deflating

Just a few months back, you may recall, along with Jim Rogers, we raised concerns about Facebook and generally the whole social media industry, referring to it as a generational fad and having difficulty seeing how a sustainable business model could be developed. Moreover, whether such tools or derivatives could find useful and profitable transitions into business markets. Guess what? Looks like the markets are tuning into Mr Rogers and ourselves as VC (Venture Capital) funding has plummeted to 2% this past quarter.

As one insider notes; what a business - "thinking about how to make people click ads"  And that pretty well sums up the industry's "Critical Success Factor" and how you build any sort of Sustainable Competitive Advantage around it, remains a puzzle.

Anyway we still believe that the big ticket, high margin objects just simply requires good ole face to face contact -  a little of that human touch!

INVESTORS INSIGHTS - February 18, 2013  
JIM ROGERS - Facebook is not an Investment, it's a Waste of TIME  

INVESTORS' INSIGHTS
First Financial Insights
July 20, 2013

Not a Happy Camper

Bloomberg - Spanish 10-Year Bonds Decline as Italian Yield Rises to 4.48%

In light of our market alert, regarding Portugal's Bonds, earlier this week, along with the growing concern for adverse circumstances in Europe, even more focus is now being given to European Bond Markets. Market activity in these markets may now have greater bearing on the global financial system than US treasuries. No kidding?

Similar to Japan, bond values and rates in the US appear to be hand-cuffed at low levels for some time. Moreover, enjoying the reserve currency status allows the US to gather the loose liquidity in the global system and harbour its flight and fright capital, thereby easing any upward rate pressures. Plus, an interest rate increase state-side would be absolutely devastating to the US economy at this juncture - and just pour gas on a stumbling economy's fires. 

Underlying the European bond markets are chronic diseases that  show no signs of abating - in fact there is growing evidence to the contrary. Like Japan and Middle East countries, Europe suffers from a physical economic overcapacity issue that cannot be resolved by abstructionist economic measures. Limited and declining physical economic inputs can only lead to one result - declining economic outputs. All of which is made worse as populations grow and per capita output consumption ratios thusly sink even further. Bad "Real" News!

Particularly after Cyprus, we are seeing signs of desperate central bankers pulling out devious last stops to cure the terminal economic cancer. The markets in Greece, Spain, Italy, Ireland and Portugal are at the greatest risk of crashing global bond prices. They are "bonded" by a common concern with a staggering rippling potential affecting markets with traumatic head to toe  effects. 

Our main message here - this one ain't over yet; 'cause, "it ain't over, 'til its over"  

INVESTORS INSIGHTS

First Financial Insights

July 19, 2013

A Bonding Crisis - the future is yet to come...

The New York Times The Prophecies of Maestrodamus Paul Krugman

The New York Times 

The Prophecies of Maestrodamus

Paul Krugman

Comments:

"I know one thing; that I know nothing" Hmm. I think we could all learn from one of Socrates’ last thoughts - but you never know!

Still we could attribute much of our current mess to too many who believe they know - then later we find that even simple notions were somehow forgotten. Or a fog had set in. (- R. S. McNamara).

Despite what may be economic headlines today, Greenspan's legacy may be his contribution to our current low interest rate trap - that has lasted for much too long. Getting out of it could trigger a massive deflation of financial assets - causing an unprecedented ASSET VALUE WRITE-DOWN. Evaporating years of value in moments.

A mere 2% rise in rates, for example, could deflate financial assets by as much as 50% - wiping out the equity boxes of financial intermediaries and banks , while creating massive unfunded pension and insurance fund liabilities on the basis of marked to market accounting calculations. =ing HUGE liquidity CRUNCH.

Moreover, the total value of US federal debt could grow substantively with a mathematical pen stroke, which has little to do with deficits or economic theory and activity. And I don’t even want think about what could happen if rates should revert to levels over their historic mean; it would be devastating.

So it seems that the Maestro knew how get us into this trap, but did not know how to get us out of it - but then again "who knows?" And as far as we know, he's still on first...

INVESTORS' INSIGHTS

Juky 17, 2013

I don't know?

ALJAZEERA - (English) Worldwide PC sales keep sliding

ALJAZEERA - (English) Worldwide PC sales keep sliding

Lenovo (China) Top PC Maker???

Bad news for everyone, except China as they take the leadership position in another market that has long been dominated by American makers for decades. Who do we blame this on? Management? Tablets? Consumers? Or China's low cost producer strategy for an industry where products are becoming commoditized, as it really does not take that much to do the reverse engineering. Again China is following a "national business strategy" much like Japan did from the 60's onwards in automotive and consumer electronics.

But the real issue is what good is the WTO? How does it ensure that everyone is on an equal playing field when labour, environmental, and health standards are barbaric is contrast to North America. Add to all that a fixed currency to the US dollar and this game becomes a one horse race.

But who loses big time? North American and European union and salaried workers. In fact, in America the real hourly wage, according to St Louis, FED statistics have not risen much since 1982! So, where are the unions???

Beyond all this meaning more doom and gloom for the ordinary American worker, here 's list of PC makers facing tougher times as this saturated market begins to consolidate. Smaller players will be forced to merge or simply fade away into the sunset - while margins face continued presures from commoditization.

TOP Five PC Makers

  41% (est) Market Share

Lenova

Hewlett Packard

Dell

Acer

Asus

INVESTORS' INSIGHTS
First Financial Insights
July 16, 2013 

Those were the days - "in our home towns... and they ain't coming back"

- Bruce Springstein

MARKET ALERT - Financial Times - Portugal's Bonds Soar 7.9% - MORE Euro Troubles

MARKET ALERT

Europe shifts back into the spotlight this week, as Euro bond yields could soar higher and then reverberating around the globe as jittery traders push the button. Bond Vigilante's may be in for an early Christmas Bonus - long before the.summer is over. It is unlikely that equity markets can protect themselves if the bonds decide to take cover. Safety first, and every man for himself.

First Financial Insights
July 12, 2013

Financial Times - Portugal's Bonds Soar 7.9% -  MORE Euro Troubles  

Just add another country to the list of European nations that are seeking "national salvation" as 10 year bonds rose to 7.9% this past Friday, settling back to 7.27% - up 53 basis points. Again the neo-classical economists have no solutions and no plan, other than to print money and provide bail-outs. Nor do they even remotely understand that the underlying issues stem from physical economic constraints - too many people and too few resources. So the economic cancer that came to the forefront in Greece, is masticating around the continent, remember Cyprus just a few short months ago . 

Here's the real problem - as Europe falls apart and bond yields move to 10% and higher in these "thinly traded markets," the fears will begin to take hold and grip the global markets as well. At the same time, the European economies are also starting to slip into one of the profoundest depressions ever to be experienced, as asset prices deflate and consumer disposal spending is over-burdened with huge increases in debt service costs. A One - Two body blow.

This could be the snowball that plunges the bond markets into a long bear-cycle. Expect the turmoil in Europe, to test the nerves of jittery bond traders in Asia and North America this week. And this could also trigger long over due downside actions in the equity markets around the world next week.

Seems like there is no where to run; no where to hide.For now.

INVESTORS INSIGHTS

First Financial Insights

July 11, 2013

Who will pull the trigger?

The Marc Faber Blog : Crude Oil is one of the very few Commodities that look attractive

The Marc Faber Blog : Crude Oil is one of the very few Commodities that look attractive

What is it about these guys? One day, Dr.Kinesa, says oil could go to $500 a barrel because the finite physical constraints are going to cause economic problems, resulting in social disruptions, political turmoil and then geo-political upheaval . What can we say? We read the same articles or fools seldom differ...

INVESTORS' INSIGHTS
First Financial Insights

July 11, 2013

Great Minds Think Alike

THE JIM ROGERS BLOG - Rogers: More Money has been lost in GOLD Mining Shares

THE JIM ROGERS BLOG - Rogers: More Money has been lost in GOLD Mining Shares than any other industry in America 

We agree for the most part, except JIM you forgot one important aspect of mining, that is many mines are polymetallic, so they extract many other minerals including gold in their process. Should gold gravitate to zero, these mines will treat it as a by-product, and thus only assign the incremental costs associated with the ore or even  possibly leave it unprocessed for a period of time. If gold is a by-product then the full weight of production costs will not be attributed.So even at $50 an ounce, some miners may still be able to produce it on a break-even cash basis  because the cost assignments are arbitrary.

Anyway we are happy you enoyed our article - "Gold is a Psychotic Placebo - NOT AN INVESTMENT." And by the way, we confirm that old story about gold mines - 99% of all stock mining ventures end up being worthless. And yes, it will be very hard for these sociopaths to attract capital in the future. That's one good thing for the greater cause - our future generations!

INVESTORS' INSIGHTS

First Financial Insights

July 10, 2013

Somewhere Under A Rainbow

The Guardian - SuperFreakonomics is SuperFreakingWrong

The Guardian - SuperFreakonomics is SuperFreakingWrong

 Business Media Protecting our Planet

This article brings out a number of salient points regarding the information propaganda game being played with climate change by the nefarious business press. Never, however, do Canadians forget that "the medium is the massage" - because media has the subtle profound power to define realities that don't actually exist. The list of outright lies built on misinformation with its brutal consequences are endless. Therefore, investors should, as a rule, have little faith in the objectivity of the mainstream business press that is sadly run by so many hidden agendas.  

Climate change as pointed out in this article is being panned or suppressed with the passion of an addict who denies their affliction. The usual media suspects are mentioned, along with other crazies, who are promoting hair-brained schemes* to remedy irreversible damages already facing the bio-sphere. More false PROFITS! 

*(Remember Get Smart? Let's Bring Down the Cone of Silence)

To invest effectively, the planet's hard physical constraints must be considered in any decisions we make. Denial or ignorance could be very costly. Is climate change that serious? The best way to answer the question is with the question: Why is, Mayor Bloomberg, spending $30 Billion on a seawall for New York City? 

That's a serious - REAL Business Agenda...


INVESTORS' INSIGHTS
First Financial Insights
July 9, 2013 

Climate Change - could be bad for Business? 

The Paul Krugman Blog - Rationality of the Euro

The Paul Krugman Blog - Rationality of the Euro

These comments reflect more on economics and thought-process rather than  markets, however that is what defines the markets when all is said and done.

Britain was certainly on the right track when it decided not to participate in the European experiment. And it remains shocking that Poland is seeking membership in this club, given the mess and clear failure of this project. What is it about Polish people? There is something that we just do not understand. All we can say, is that too often we give up long-term advantages, in order to remedy a short-term problem.

Why did the Brits decide not to join the club - by gosh, as Paul sarcastically notes in his New York tone, they did some "analysis." No one else apparently does? This point, in itself, raises some fascinating considerations when in comes to expressions such as: "they did their homework," "paralysis through analysis" analysed to death" and so on, and so forth. In fact, just writing about it makes one wonder and come to believe that analysis is much more perpetual in motion than stoic; as new ideas, devices, facts and knowledge is brought to the awareness of our cognitive processes. Particularly, for complex situations where the deterministic and subjective variables are always in a dynamic state of change, with the possibility of even  two opposites co-existing as truths at the same or different times. Go figure - the movie never ends !

So you see there is enough material here to write at least ten, five hundred page, books about the analysis of analysis. What is the right amount? the right tools? the right perspective? Or how about  analyzing the initial diagnostics and its tools - if its wrong, then so should be the supporting analysis. Then, there are the assumptions and we can assume that most people have different ones - or can we? The point being, do we ever really know if we are doing the most relevant  diagnosis, analysis and evaluation of goal, facts and constraints leading to the optimal solution for a moment or forever? I have a funny feeling that such knowledge is impossible to attain, except for those who command the arrogance to think otherwise.Why? Because they know, they know everything. 

In the end, this is a "very serious" topic and process, as it defines the fate of individuals, economies, businesses and our species in so many other ways. The case of Britain, supposedly doing the right analysis once, contrasts with years of bad analysis, that saw their Empire rise and fall, from being a political, economic and military powerhouse, to what it is today, and the tomorrows to come. Should we blame it on the analysis?

 Probably, but you may never know for sure!

First Financial Insights 
July 6, 2012

New Yorkers, eh!

ANALYZE THIS BUDDY !

The Dr Peter G Kinesa Blog : ALL ECONOMISTS ARE WRONG - DEAD WRONG

The Dr Peter G Kinesa Blog : ALL ECONOMISTS ARE WRONG - DEAD WRONG: Captain, My Captain... ALL  ECONOMISTS ARE WRONG – DEAD WRONG! Why we are in this mess: Where did it all begin? Why? ..

Good  time to do a little report and see if their is any evidence that would suggest that Economists are right, and perhaps this conclusion is wrong. Let's see there's Europe, Cyprus, Egypt, Brazil, China, Japan, Greece, and, and, and...

Then, of course, there's the Fed and the interest rate trap ready to launch us into an asset deflation spiral. As well as, overpopulation, unbridled growth, biosphere devastation and exponential resource exhaustion. Hmm. Not much has changed, so....

ALL ECONOMISTS ARE STILL WRONG!

First Financial Insights
July 5, 2013 

Not that way- your other RIGHT!

The Dr Peter G Kinesa Blog : Human Longevity OR Unbridled Growth??

The Dr Peter G Kinesa Blog : Human Longevity OR Unbridled Growth??: WHAT IS OUR GOAL: HUMAN LONGEVITY OR UNBRIDLED GROWTH? 

Stars of what we are...bringing them back into our arms -

Every now and then it is a good idea to return to prior article and look at it with a older set of eyes to discover if your thoughts and ideas have been changed, modified or turned upside down in some strange way. In this case, very little has changed and there is a strong belief that to have a shot at the universe -  the orientation of humanity's goals must be towards its longevity; not just the absurdity of growth for the sake of growth.

Again, the mathematics speaks in a way that words cannot convey, insofar as the algebra of population and resources can define our visitig rights on this planet. Obviously, the lower the population levels, the greater the time we should have as a species, with all other things remaining equal. Then! And only then, could we come to know what is unknown, a path less chosen and yet to be discovered.

Why not? For that is what makes all the difference.

First Financial Insights  
July 4, 2013

Moving hearts is like trying to catch a star - bringing their minds into its heart; back where it belongs...

The Marc Faber Blog: Low Rates FREEZE markets - Mr. Bernanke is most likely to retire ...

The Marc Faber Blog: Low Rates FREEZE markets - Mr. Bernanke is most likely to retire and unlimited QEs forever will continue

There is no doubt that Central Banks painted themselves into a corner - they have made it impossible to raise interest rates, regardless of inflation. Why? Because if they do, it will cause an unprecedented deflation in asset prices and bring consumer spending to its knees, as disposable income is siphoned away to service debt service costs that could double or worse. It would cripple consumer demand and confidence, in a horrifying way with these double knock-out financial blows, triggering a deep prolonged depression. Moreover, obliterating the balance sheets and capital boxes of  the world's biggest commercial and investment Banks, with the mere stroke of a pen.

What this also means is that governments will do all they can do to manipulate inflation numbers to fool consumers, investors and savers. Time will tell if this form of quiet debasement, confiscation and taxation will work. Probably, because all Central Banks are moving in a similar co-ordinated step - and there are no other planets offering better rates and liquidity. So far!

The big point being - is how did everyone manage to get into the same no-escape situation that Japan has been in for the past two and a half decades? We have some answers, but we will leave them for another time. Meanwhile, we concur with Marc insofar as we should get use to the QEs for a long, long time.  Pretty boring stuff.

First Financial Insights
July 2, 2013

Intergalatic Bankers Now Preside Over More Years of QE