Recommendations this issue:   Taseko Mines (TGB) Lynas (LYSCF) Continental Resources (CLR) Vanguard Extended Duration Treasury Index ETF (EDV)   A report on the oil market from Sanford C. Bernstein & Co. that was picked up by Bloomberg earlier this week echoes what we’ve said in the past about… Read More

The ratio of the price of crude oil to natural gas recently hit a record high of more than 26-to-1. This record spread tells the tale of two divergent economies: the emerging markets and the United States.   Crude oil is a global commodity: Even modest demand from any… Read More

Small companies, particularly those domiciled abroad, often slip through the cracks and are relatively unknown to U.S. traders. They are higher-risk investments than larger companies because they may encounter difficulties financing operations and have less capital buffer available to weather hardships. And because of their comparative anonymity, they are often… Read More

Lynas (LYSCF), our Australian rare earth minerals exploration company, announced recently that it has acquired all of the apatite mineral rights to leases at Mt. Weld from CSBP Ltd. a fertilizer manufacturer. The acquisition has no immediate impact on the company’s prospects, but it does simplify legal ownership of the… Read More

Despite signs of economic stabilization upon us and oil prices at more than double their lows, oil and gas producers haven’t exactly set the world on fire this year. The American Stock Exchange Oil Index, for instance, has barely managed to stay above water year to date. One stock… Read More

Last issue, we added the Vanguard Extended Duration Treasury Index ETF (EDV) to our portfolio as insurance against a broad market decline. The ETF mirrors the performance of the Barclays Capital U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index, an index of long-term zero coupon Treasury bonds.  … Read More

In recent days, several well-noted investment authorities called the public’s attention to the future Dollar demise. Warren Buffet, perhaps the most famous investment guru of our time, chose The New York Times to express his worries. In an op-ed piece called “The Greenback Effect,” Buffett concentrated on the consequences of our unprecedented levels of debt and loose monetary policy. His opinion should not surprise you: he thinks that these policy actions, while necessary, will have destructive inflationary side effects down the road. Fiscally, Buffett says, we are in uncharted territory. Federal debt levels are going up, and, while we may not have reached the tipping point yet, sooner or later the ballooning national debt is going to call into question our country’s ability to honor all this debt. This will inevitably impact the value of the dollar. As everything he does, Buffett makes understanding the numbers seem easy: Even if other sovereign nations buy $400 billion worth of Treasuries, and Americans saved $500 billion and invest them in Treasuries, the Treasury Department would still need another $900 billion to finance the rest of the $1.8 trillion it’s issuing this year. The flood of dollar supply will threaten to erode its value. Our beloved Dollar is on shaky ground. Read More

Recommendations this issue: Schlumberger (SLB) Transocean (RIG) Continental Resources (CLR) Ultra Petroleum (UPL) Vanguard Extended Duration Treasury Index ETF (EDV)   One sign the trend in commodities is more than just a flash in the pan (and why it’s bad news for U.S. consumers) can be seen in the rising value of currencies from resource rich nations. Global demand for iron ore, nickel, aluminum, and a host of other industrial inputs is making the currencies of countries that supply them more attractive.   As you can see from the graph on p.2, the Canadian and Australian dollars and the Brazilian real, for instance, were all in broad uptrends until the financial storm reached full strength a year ago. The resulting economic slowdown caused a temporary decline in demand for industrial commodities. It also prompted a flight to safety to the greenback which, despite all its faults, is still the world’s reserve currency. But the bull trade in these currencies is back on.   Read More

Inflation is starting to rear its ugly mug once again. June’s readings on both the Producer and Consumer Price Indices exceeded consensus expectations. Although the year-over-year readings were negative, they’ve experienced big increases over where they stood last December. The CPI, for instance is up 1.4 percent in the last six months. By year’s end that figure is likely to be much higher. And by 2010 we could once again be looking at inflation above 5 percent. As you know from its actions in the wake of the credit crisis, the Federal Reserve will do everything in its power to avoid deflation and the debilitating effects falling prices have on our economy. That means they’ll tolerate an inflation rate far higher that we’ve become accustomed to.   But as much as we believe inflation will be a growing threat (and opportunity) in the coming years, deflationary bouts will also occur from time to time. As we saw in the second half of last year, such periodic price declines can be painful to weather, especially in our highly leveraged world.   Read More