February 6, 2013
- Rogers holding off on gold, China buying with both hands… The record the Middle Kingdom just set
- Counterintuitive proposition of the day: Endless budget wrangling in Washington may be good for the market
- Could a “high-tech Pez dispenser” be a godsend to surgery patients? Patrick Cox on an unusual medical-tech opportunity
- Argentina fights price increases by banning them… Canada throws in the towel on its penny
- Gun control gambit takes its cue from the health care law… the most outrageous parking citation ever… the real story in the Middle East in 2013… and more!
“Gold has been up 12 years in a row, which is extremely unusual for anything,” says adventure capitalist and Vancouver veteran Jim Rogers.
Thus he “wouldn’t rush in right now” to add to his stash, he tells Yahoo Finance. But if prices take another dip, he’ll buy.
The Chinese bought the dip two months ago.
With prices at the low end of a six-month trading range, gold imports to China via Hong Kong set a monthly record in December — 114 metric tons.
Even more impressive are the annual totals. China imported 834.5 metric tons last year — a 94% increase from the 2011 total. That’s more gold than the entire stash held by the Bank of Japan.
Remember, the Chinese government keeps its lips sealed when it comes to gold imports. So these figures via Hong Kong are the best we have to go on. The real numbers are undoubtedly higher.
“It’s pretty obvious,” says Byron King, “that China’s leaders seem intent on significantly reducing their reliance on the dollar and U.S. Treasuries. That leaves them with only one viable option: Transform their own currency into a globally accepted currency.”
Which brings us back to something the research director at the People’s Bank of China said a little over a year ago: “No asset is safe now. The only choice to hedge risks is to hold hard currency — gold.”
Byron is wrapping up a comprehensive research project into China’s gold grab and its potential impact on the price. Watch for it later this month.
In the meantime, you can start, add to or diversify your own stash via the Hard Assets Alliance. You can take delivery or you can store it in their vaults overseas. Take your pick of London, Zurich, Melbourne or Singapore. The fees are reasonable and the website is hands down the easiest to navigate. Opening an account is free; you can get started here. Full disclosure: We may be compensated once you fund your account, but we wouldn’t give the Hard Assets Alliance our backing if we didn’t believe it offered outstanding value.
Gold remains mired in the range where it’s been for six weeks now. At last check, the bid was $1,675. Silver is holding its own at $31.78.
The price of platinum appears to be firmly reclaiming its traditional spot above the gold price. This morning, it’s up to $1,731 — a 17-month high — as traders continue to fret about supply coming from South Africa.
After yesterday’s run-up, the major U.S. stock indexes show little movement this morning.
The Dow is a touch below 14,000. There are no economic numbers to move the market, no earnings reports of note. Traders can’t even rouse themselves to react to the end of Saturday mail delivery come August.
And they certainly don’t care about the latest budget drama in Washington, an attempt to avert automatic spending cuts as of March 1.
“The suits in Washington have fumbled every pass since the credit crisis,” opines Greg Guenthner in today’s Rude Awakening, “injecting historic levels of stress on businesses and citizens.”
A research group called Economic Policy Uncertainty has found a way to express that stress in numbers.
“When you line up the spikes in the U.S. Policy Uncertainty Index (times when ‘business uncertainty over government policy’ was at its highest),” Greg explains, “you see how policy worries led to long-term buying opportunities:
“Since 2009, we’ve waded through a river of political dung of historic proportions. Political ineptitude has sparked record anxiety in the uncertainty index, culminating with an off-the-charts reading during the 2011 debt ceiling dispute. Current readings continue to hover above historic spikes from the first Gulf War and the Sept. 11 terrorist attacks.
“Despite looming all-time highs, blood is still very much in these streets,” Greg concludes. “The lost decade is slowly (and sometimes painfully) coming to an end.”
“Where there’s life, there’s pain,” says our tech savant Patrick Cox. “We mortals have been working on the problem of physical pain for about as long as we have been walking the planet.” But one technology he’s discovered may set the new standard in human pain relief.
“Postoperative analgesia is a multibillion-dollar global marketplace,” he says. “Today, morphine is a mainstay in hospitals for dealing with pain after an operation.” But morphine has its drawbacks. “Anesthetics delivered during surgery depress the respiratory system. Morphine administered after surgery only increases the problem. And morphine delivery via an IV drip brings its own problems: ‘It presents an infection risk, and tubing can be blocked by a kink or a patient who has rolled on the line.'”
Enter Patrick’s findings. He tells us one company has come up with a one-two punch of a solution. The first part is a drug called sufentanil. It’s been around since the ’70s; the problem is it’s not very effective if delivered intravenously. So the second part of the solution is an ingenious method to deliver the drug orally. “It consists of three main components,” says Patrick: “a controller, a cartridge…and a tongue dispenser.
“When my colleague Ray Blanco and I first saw it, we both thought: High-tech Pez dispenser. This technology will save money and improve outcomes.” The company has several issued patents and its program is already in Phase 3 trials. We have Patrick on the record: This company “has tremendous commercial potential for its painkilling technology.”
Readers of Breakthrough Technology Alert are already up to speed with the latest monthly issue. Subscribe now and you’ll also get the full story on Patrick’s most groundbreaking — and potentially profitable — research to date.
From the “yeah, that’ll solve everything file” comes word that Argentina has imposed a two-month price freeze on grocery stores.
“The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1,” reports the AP.
Brilliant! By imposing price controls, Argentine politicians mask a symptom of inflation (rising consumer prices) and ignore the root cause of inflation (government deficits and money printing).
Shoppers will empty grocery store shelves at artificially low prices over the next two months. Until the price freeze is lifted, farmers and food companies will limit production, and shortages will worsen.
“A useful law of economics tells us that price ceilings cause shortages,” says our macro strategist Dan Amoss. “Yet even after its painful experiences with price controls and inflation, Argentine politicians still don’t get it. Instead, they shift blame and argue for more government intervention.
“Independent analysts estimate inflation is at least twice the official 10.8% inflation rate. Economy Minister Hernan Lorenzino said Argentina plans a new inflation index by late 2013, after a survey of consumer trends. It’s not a coincidence that the new survey comes after government-mandated prices for grocery items go into effect.”
From Canada comes a different manifestation of inflation: As of Monday, the Royal Canadian Mint has ceased distribution of pennies.
The Finance Ministry announced the move a year ago, saying it cost 1.6 cents to make a 1-cent coin.
For the moment, 35 billion of these remain in circulation…
“Across the country now,” reports the Ottawa Citizen, “big and small merchants are beginning to round cash transactions to the nearest five-cent increment. For example, a $1.02 transaction would round down to $1, but a purchase of $1.03 would round up to $1.05.”
There you have it: The nickel is the new penny in Canada.
[Ed. Note: Don’t think the U.S. Mint isn’t watching this closely. Only they have a different scheme in mind. It could prove quite lucrative… if you make the right move now. We walk you through it at this link.]
“I was moved,” California Assemblyman Philip Ting told Fox News, “like many others, being the father of two young children, by the Sandy Hook incident and looking for constructive ways to manage gun violence here in California as well as the rest of the country.”
Alas, Mr. Ting thinks the solution is to throw a stick in the spokes of a constitutional right: requiring gun owners to buy liability insurance.
“There’s basically a cost that is borne by the taxpayers when accidents occur,” Mr. Ting goes on. “I don’t think that taxpayers should be footing those bills.”
Right… the taxpayers.
Well, there’s precedent for this, i.e., Obamacare. As of next year, “Insurers will have to offer a policy to anyone who wants one, regardless of their health, and will not be allowed to charge more in premiums to people with expensive medical conditions,” says The New York Times. Act responsibly with your own health… and you pay for the irresponsible acts of others. Because anything else wouldn’t be fair to taxpayers, dontcha know?
Gun Owners of California is putting up a fight, questioning “whether it is constitutional to require someone to buy insurance to exercise a constitutional right,” in the words of the Fox story.
Heck, all lawmakers have to do is impose a penalty on gun owners who don’t buy insurance and the courts can label it a tax…
Our ongoing chronicle of “new taxes and weird fees” has reached new and ridiculous heights… or depths. This story didn’t happen in America… but it’s undoubtedly giving someone ideas, somewhere.
Hila Ben Baruch parked her car on a street in Tel Aviv. While she was away, city contractors swooped in to paint white lines around the car… and a wheelchair symbol behind it. With that, she was parked in a spot reserved for the disabled… and her car was towed away.
“Within five minutes, they turned me into a criminal,” Ben Baruch posted on Facebook. “But who cares? The important thing is that Tel Aviv sucked some more blood.” She faced fines and towing costs of $365.
Until she tracked down surveillance video that showed exactly what happened…
The fines and fees were dropped. “This was indeed a serious error, and schlemielism that is unacceptable to the Tel Aviv-Jaffa municipality,” said a statement from the city. “We apologize for the distress and will examine our conduct for the future, so that these kinds of things won’t happen again.”
Schlemielism?
Or would that be schlemielosity?
“What is your thinking,” a reader inquires, “on the highly likely possibility of Iran having a deliverable bomb this year? Any thoughts on U.S. or Israeli actions?”
The 5: Iranian leaders will be more concerned this year with keeping the peace during their presidential election than with anything else.
The real story in the Middle East is the one Byron King’s been warning about for years — the Sunni vs. Shia conflict breaking out into the open. You see it right now with the grinding civil war in Syria. The rebels are backed by Sunni regimes in Saudi Arabia, Qatar and Turkey (with help from the Americans). The Shia regime clings to power with support from Iran.
“This region is always tense, but right now a series of separate conflicts are rapidly beginning to intersect,” writes veteran foreign correspondent Eric Margolis — just back from the region. “The Mideast is stumbling into one of its most dangerous crises in decades.”
If you were alive during the Yom Kippur War 40 years ago, you remember the result — the OPEC embargo, gas lines and the worst recession at that point since the Great Depression. Prepare your portfolio accordingly.
“Patrick Cox was big on a tobacco-derived anti-inflammatory supplement for quite a while. He even stated he was using it himself. Now I don’t hear anything in The 5 anymore. Did it work for him? Is he still as enthusiastic as he was?”
The 5: Absolutely. “Two years ago,” says Patrick, “there was simply no way that I could have downhilled on a longboard, even as badly as I do it now. What has changed is that my flexibility, strength and endurance have steadily improved over the last two years as the supplement undoes the damage caused by decades of chronic age-related autoimmune disorder.” Patrick shares the full story here.
“Of course it’s payback,” a reader writes of the feds’ lawsuit against Standard & Poor’s, “but in addition, what better way to prevent Moody’s and Fitch from issuing their already hinted at downgrade?”
The 5: “Investigator interest in Moody’s apparently dropped off around the summer of 2011,” reports McClatchy Newspapers, “about the same time S&P issued the historic downgrade of the U.S. government’s creditworthiness because of mounting debt and deficits.
“‘After the U.S. downgrade, Moody’s is no longer part of this,’ said the person familiar with the case, who demanded anonymity in order to speak freely about the matter.”
Regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Maybe it should be “schlemielitude.”