How much gold is there in the world? – BBC News 03-31-13

Salient to Investors:

Warren Buffett says the total amount of mined gold in the world could fit into a cube with sides of 67 ft. Thomson Reuters GFMS estimates the amount at 171,300 tonnes, or a cube with sides of 68 ft.

Jan Skoyles at The Real Asset Company said Tutankhamen’s coffin alone was made from 1.5 tonnes of gold, while China is not open about how much gold it is mining and Colombia has a lot of illegal mining.

The US Geological Survey estimates there are 52,000 tonnes of minable gold still in the ground and more is likely to be discovered.

The British Geological Survey estimates 12% of current world gold production is used in technology manufacturing, where it is often used in such small quantities that it may no longer be economical to recycle it, so is being consumed for the first time in history.

Read the full article at http://www.bbc.co.uk/news/magazine-21969100

Click here to receive free and immediate email alerts of the latest forecasts.

State-Wrecked: The Corruption of Capitalism in America – The New York Times 03-30-13

Salient to Investors:

David A. Stockman writes:

The US is broke – fiscally, morally, intellectually – and the Fed has incited a global currency war that will soon overwhelm it. This latest Wall Street bubble, inflated by phony money from the Fed rather than real economic gains, will burst within a few years when America will descend into an era of zero-sum austerity and virulent political conflict. Get out of the markets and stay in cash.

Since March 2000, while the Fed has expanded its balance sheet sixfold:

  • Economic output has grown an average of 1.7 percent a year, the slowest since the Civil War.
  • Real business investment has risen only 0.8 percent per year.
  • The payroll job count has risen 0.1 percent per year.
  • Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent.
  • The real net worth of the bottom 90 percent has dropped by 25 percent.
  • The number of food stamp and disability aid recipients has more than doubled, to 59 million, or one in five Americans.

The state-wreck originated in 1933, when FDR opted for fiat money, economic nationalism and capitalist cartels in agriculture and industry. World War II did far more to end the Depression than the New Deal did.

Nixon’s defaulting on the nation’s debt obligations by ending the convertibility of gold to the dollar started a four-decade spree,  ran up a cumulative $8 trillion current-account deficit, increased the ratio of total debt to GDP to 3.6 from its historic level of 1.6.

Greenspan’s loose monetary policies did not set off inflation only because domestic prices for goods and labor were crushed by the huge flow of imports from Asia. The G.O.P. embraced Keynesianism for the wealthy.

If and when the Fed even hints at shrinking its balance sheet, it will elicit a tidal wave of bond sell orders, because even a modest drop in prices would destroy the arbitrageurs’ profits.

The 10-year deficit is actually $15 trillion to $20 trillion, far larger than the CBO’s estimate of $7 trillion, which imagines 16.4 million new jobs in the next decade, versus the 2.5 million created in the last 10 years.

Even linking the cost-of-living adjustment for Social Security payments to a different kind of inflation index would save just $200 billion over a decade, or 1 percent of the problem.

With no changes, over the next decade or so, the gross federal debt will rise from $17 trillion to $30 trillion and from 105 percent of GDP to 150 percent.

Chinese infrastructure spending over the last 15 years – the greatest construction boom in history – is slowing and China faces its day of reckoning, too. Brazil, India, Russia, Turkey, South Africa and the other growing middle-income nations cannot make up for the shortfall in demand. US monetary and fiscal stimulus has reached its limits. Japan is sinking into old-age bankruptcy and Europe into welfare-state senescence.

The Fed has abetted the Wall Street casino, crucified savers on a cross of zero interest rates, and fueled a global commodity bubble that raises food and energy prices, excluded by the Fed in calculating inflation.

The solution is so radical it can’t happen – a sweeping divorce of the state and the market economy, a renunciation of crony capitalism and Keynesian economics in all its forms, and the US shifting its focus to managing and financing an effective, affordable, means-tested safety net.

Read the full article at http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=all&_r=0

Click here to receive free and immediate email alerts of the latest forecasts.

Emerging Stocks Pare Quarterly Slump on Korean Builders, Turkey – Bloomberg 03-29-13

Salient to Investors:

Prapas Tonpibulsak at Krungsri Asset Mgmt said most governments are trying to boost economic growth and employment, supportive of equity investments.

The MSCI Emerging Markets Index is at 10.5 times estimated earnings versus 13.4 for the MSCI World Index.

Most developing market companies missed analyst estimates for the last 5 quarters whereas a majority of MSCI World index companies that beat estimates.

Read the full article at http://www.bloomberg.com/news/2013-03-29/emerging-stocks-pare-quarterly-slump-as-korean-builders-rally.html

Click here to receive free and immediate email alerts of the latest forecasts.

Reluctant Bulls Key for Birinyi Amid Record S&P 500 Rally – Bloomberg 03-29-13

Salient to Investors:

Laszlo Birinyi at Birinyi Associates says:

  • The S&P 500 rally has a good year to go as investors give up their pessimism and buy. The bull is very much alive given this sort of hesitancy or reluctance instead of acceptance.
  • There is nothing troubling in view unless people start talking about S&P 2,000 or buy more Netflix.
  • It a surprise it’s not the deep cyclicals or the names that I would have expected in a really good market, which shows that people are comfortable with the market, and there’s more of a focus on stock picking than people realize.

Jeffrey Kleintop at LPL Financial expects flat earnings growth, and says the market needs earnings to rise before it can really begin to move higher. Kleintop said health-care and consumer staples leading the rally also signal the advance in the S&P 500 may slow because you don’t usually see defensive groups leading the market to all-time highs, and we may see repeat the last few years of a pullback starting in April. (The S&P 500 lost 16 percent over two months in 2010 and 19.4 percent over five months in 2011, both starting in April and both recovering when the Fed committed more QE.)

  • Investors added $14.1 billion to equity mutual funds in February and $20.2 billion to bond funds; versus $600 billion withdrawn in the 6 years through 2012.
  • Share volume on all US exchanges has declined for 4 straight years and is the lowest since at least 2008.
  • Analysts forecast per-share earnings to reach $109.40 in 2013 versus $62 in 2009, but expect a contraction of 1.8 percent in Q1 2013.
  • The average strategist expects the S&P 500 to hit 1,583 in 2013.

Read the full article at http://www.bloomberg.com/news/2013-03-28/birinyi-says-buy-mining-technology-shares-as-bull-ages.html

Click here to receive free and immediate email alerts of the latest forecasts.

Chinese Hacking Is Made in the U.S.A. – Bloomberg 03-28-13

Salient to Investors:

Alan Tonelson at the US Business and Industry Council writes:

Much of China’s hacking power was Made by the U.S.A.

The first known victims of China’s US-enabled cybercapacities were Chinese citizens, including dissidents tracked with technology sold by Cisco Systems and Yahoo! and ordinary people whose online content has been censored with products provided by Microsoft and Google.

China is designated by the Defense Department as the greatest potential foreign threat to US security.

Obama’s new cyberdefense program will be limited if American companies continue to shower China with hacking-related know-how.

Read the full article at http://www.bloomberg.com/news/2013-03-28/chinese-hacking-is-made-in-the-u-s-a-.html.

Click here to receive free and immediate email alerts of the latest forecasts.

Treasuries Fall a Second Quarter Amid Improving Economy – Bloomberg 03-28-13

Salient to Investors:

Ian Lyngen at CRT Capital said Q1 data confirms the US economy is on a better footing, and for the benchmark yield to rise to the median year-end estimate of 2.25 percent, employment must improve, Europe problems subside, and the end of QE in sight.

William O’Donnell at Royal Bank of Scotland said the economy is clearly better.

Steven Ricchiuto at Mizuho Securities USA said we’ll dance around these levels and after that it’s really up to payrolls.

Read the full article at http://www.bloomberg.com/news/2013-03-29/treasuries-fall-a-second-quarter-amid-improving-economy.html

Click here to receive free and immediate email alerts of the latest forecasts.

Treasuries Gain for Third Week on Europe Outlook – Bloomberg 03-28-13

Salient to Investors:

Steven Ricchiuto at Mizuho Securities USA expects rates to stay around current levels and says the economy is going nowhere quickly and the headwinds keep changing.

Robin Marshall at Smith & Williamson Investment Mgmt said the market finds it hard to argue what is happening in Cyprus is a one-off event, which should support safe-haven assets including US Treasuries.

Read the full article at http://www.bloomberg.com/news/2013-03-28/treasuries-underperform-s-p-500-for-fifth-month.html

Click here to receive free and immediate email alerts of the latest forecasts.

Scotiabank Leads Mutual Funds Cutting Bank Holdings – Bloomberg 03-28-13

Salient to Investors:

The Scotia Canadian Dividend Fund cut bank holdings by 40 percent from the end of 2011 on concern that lending is slowing as consumers retrench. Fund manager Jason Gibbs at GCIC said there is no question that things are going to slow down and is using the released funds to increase real estate holdings to 13 percent versus 8 percent at the end of 2011 to capitalize on increased demand for commercial real estate in North America, particularly Canada. Gibbs said there is not a lot of supply in real estate and the demand remains enormous.

The World Economic Forum ranks Canada’s banks as the world’s soundest for the past 5 years. Canadian banks expect  domestic banking profit to slow in 2013 amid record household debt.

Standard & Poor’s expects revenue and loan growth for Canadian banks to reach mid single-digits in 2013 from 9 percent and 10 percent in 2012, respectively.

John Aiken at Barclays Capital said ongoing headwinds will lead to significantly lower earnings growth through the remainder of 2013.

The ratio of Canadian household debt to disposable income rose to a record 165 percent in Q4 2012.

Fidelity True North Fund cut bank investments to 14 percent from 16 percent two years ago, TD Dividend Growth Fund cut to 41 percent from 42 percent. Investors Dividend Fund upped its bank exposure to 34 percent from 31 percent at the end of 2011.

Read the full article at http://www.bloomberg.com/news/2013-03-28/scotiabank-leads-mutual-funds-cutting-bank-holdings.html

Click here to receive free and immediate email alerts of the latest forecasts.