March 28, 2013
- Precious metals trifecta: on-the-ground report of Gold Eagles in short supply… Silver Eagles about to set another record… while a “platinum cartel” is in the works
- One indicator that points to “a significant bottom” in precious-metals mining shares (and the ideal “one-stop shopping” play for PRO-level readers)
- Patrick Cox on how “a single dose” of an experimental drug can wipe out a disease that afflicts one in every 20 people worldwide
- The bank run that wasn’t… shades of the Zero Hour scenario coming to life… a reader knocks our new “adult toy” (!)… and more!
“I recently visited my local precious metals supplier in Augusta, Ga.,” a reader of Greg Guenthner’s Rude Awakening writes, “and he was totally out.
“Told me if he received a monster box of Gold Eagles in the morning, it would be gone by the end of the day and that the premium is currently more than $200.”
Hmmm… We pass along this tidbit in the event it jibes with your own experience wherever you are. We performed a wholly unscientific survey of one online dealer this morning and found a far more reasonable premium of $73. Then again, maybe all those folks filtering into Augusta for the Masters know something we don’t.
That, or they are all customers of ABN AMRO, the Dutch banking giant.
A few days ago, ABN AMRO sent its clients word that effective next Monday, it will no longer offer delivery of its clients’ gold holdings.
Or at least that’s what feverish bloggers are deducing from a Dutch-language notice on ABN AMRO letterhead that’s making its way around the Internet. Well, that’s after they ran it through Google Translate: “You can have your precious metals to your investment account no longer physically let us extradite.” OK, we get the idea.
Here again, there may be less than meets the eye, but we pass it along as a point of interest. We see the Voice of Russia — the outlet known back in the day as Radio Moscow — has picked up the story. The ABN AMRO notice “prov[es] that the physical gold and ‘paper gold’ are different commodities with different prices. The world’s financial system is short on gold, and no gold bars, except those that are kept by the owners, are safe from confiscation.”
Which sounds a great deal like the “Zero Hour” scenario we’ve posited in Apogee Advisory. You can get a taste of how the scenario might unfold at this link, but if you want actionable advice on the back of our analysis, we encourage you to subscribe.
The “paper price” of gold this morning has again slipped below $1,600. At last check, the bid was $1,596.
Silver remains mired in the mid-$28 area, currently $28.55.
U.S. Silver Eagle sales are this close to setting a record for the month of March.
As of this morning, March sales total 3,356,500 ounces — just shy of the March 2010 total of 3,381,000. Should March sales set a record, that would be three monthly records in a row.
Year-to-date Silver Eagle sales already topped the 14 million figure a few days ago. Last year, that didn’t happen till mid-May.
Gold Eagle sales appear lackluster by comparison: Year to date, 292,500 ounces have exited the Mint’s doors — better than a year ago, but well below the 342,000 sold in the first three months of 2009.
Russia and South Africa are teaming up to create “the OPEC of platinum.”
“We are now forming working groups to work out joint actions on this market,” says Russian Natural Resources Minister Sergey Donskoy, speaking during a BRICS summit in South Africa. “There will be a meeting in the summer to discuss mechanisms in detail.”
As we explained two days ago, Russia and South Africa make up the bulk of world platinum group metals (PGM) production — about 80%. Still, our guess is that an aging mine supply in Russia and labor trouble in South Africa will do far more to prop up PGM prices — Rick Rule says a 50-100% increase isn’t out of line — than any attempt to form a cartel.
Insider buying of gold and silver stocks is near historic highs. According to INK Research, for every one precious metals stock on the Toronto Stock Exchange that has executives or directors selling shares… there are seven with insiders buying.
“That is the type of insider buying we saw in the broad market during the height of the great financial crisis in late 2008 and early 2009,” says INK’s CEO Ted Dixon. “It looks like a significant bottom in precious metals mining shares may be in the process of forming now.”
Gold stocks have been in a world of hurt since gold set a record of $1,900 an ounce 19 months ago. All the gains from a big rally last summer? Gone by last month…
“Historically,” reports the Toronto Globe and Mail, “insider transactions often foreshadow market moves six-36 months in advance.”
“Executives sell their company stock for many reasons,” says our own Dan Amoss; “they only buy when they see great value. Gold mining stocks are so cheap and despised that insiders have started buying aggressively. Apparently, they don’t share the concerns of other gold mining shareholders who have fled the sector.”
In today’s 5 PRO, we spotlight a well-managed fund full of top-quality gold mining stocks.
The S&P 500 finally followed in the Dow’s footsteps this morning and topped its October 2007 high. At last check, it’s settled back a bit, to 1,566.
Among the numbers in traders’ sights…
- GDP: The Commerce Department’s third and final guess at the fourth-quarter 2012 number comes in at an annualized 0.4% — better than the previous guess, but less than the “expert consensus” was expecting
- First-time unemployment claims: biggest upward move this year, to 357,000 last week
- Chicago PMI: This measure of both manufacturing and services in the Midwest clocked in at 52.4 — still above the 50 level that’s the dividing line between expansion and contraction, but much lower than the Street was counting on.
If mediocre economic numbers can’t drag down stocks, neither can the bank run that wasn’t in Cyprus. Tweets and pictures of the banks reopening for the first time in nearly two weeks are… uh, underwhelming…
“There’s going to be queues,” a jeweler told the AFP newswire, “so I’m not going to spend so many hours there to get 300 euros.” Sounds as if a lot of others thought the same.
The withdrawal limit is, indeed, 300 euros — about $385. Other limits in place…
- Checks can be deposited, but not cashed
- Credit or debit card payments destined for other countries are limited to 5,000 euros per month
- Travelers leaving Cyprus may take only 1,000 euros with them
- Commercial transactions greater than 5,000 euros will be reviewed by a committee; transactions greater than 200,000 euros must be approved on a case-by-case basis.
So much for the European Union’s “foundational idea” that capital should move freely across borders…
“We believe a single dose of this drug will devastate the hepatitis B virus,” reports our Patrick Cox on the science-and-wealth beat.
The hepatitis B virus, or HBV, afflicts 5% of the world’s population at any given time. “One-third of the global population becomes infected with HBV at some point in their lives,” reads an article from the journal Nature. Patients who develop it in childhood are often chronically infected. For many, the road ends in liver failure.
Researchers at the Texas Biomedical Research Institute have recently treated a chimpanzee using an experimental drug. Result: The drug reduced the HBV antigens in its body by 90%. “This therapy provided highly promising results in a very short trial,” said one of the scientists on the case.
“Hepatitis B is a market at least as big as hep C, which is enormous,” says Patrick, “but there are no effective or practical cures.” Remarkably, the company working on the HBV drug is the same one developing a unique weight-loss drug we’ve shown you in The 5 — one that actually kills fat cells.
[Ed. Note: As lucrative as that play sounds, another has Patrick even more excited right now: “If ever there was an opportunity to enjoy the bounty of a company so far off the radar, yet nearly guaranteed to become an overnight profit behemoth,” says Patrick, “this company is the one.”]
“In 2009,” writes a British reader with the Zero Hour scenario in mind, “I invested 365,000 pounds sterling in Gold PHAU; 18 months later, I discovered that the gold was held by HSBC in the USA. I trembled at the possible consequence of my action.
“Within a day or two, I had sold and reinvested in Central Fund of Canada (gold/silver).
No one in his right mind thinks Fort Knox contains a significant amount of U.S. gold. Nixon may have started the sell-off, but who knows? The fact that no audit takes place or that no independent referee is allowed to visit is totally and obviously crooked.
“If you guys think the gold is there, please say so, bearing in mind that Germany will probably have to wait until the year 2020 to get all its gold back. It’s totally laughable.”
The 5: We have no idea if it’s there. The last audit took place during the Eisenhower administration, and Ron Paul’s efforts to instigate a new audit came up short.
“Good info,” a reader writes after our student loan bubble update yesterday, “but the core is this: College costs too much.
“There are lots of ways to reduce the cost, and one of them (it takes a while) is to eliminate all government-sponsored loan programs. Eliminate the special rules about loans. Get the gummint out of the loan business.
“Result? Banks won’t loan as much; students can find other ways to finance college or (the horror!) go to a tech degree that will give them an excellent job after two years or less.”
The 5: You’ve heard of the expression, “preaching to the choir”?
“How can The 5 have a problem with this statement?” writes our correspondent in Cyprus after we noted the Dutch finance minister’s remarks that uninsured deposits are fair game in future eurozone bailout deals. Here’s a quick refresher…
“If there is a risk in a bank, our first question should be ‘OK, what are you in the bank going to do about that? What can you do to recapitalize yourself?’ If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalizing the bank and, if necessary, the uninsured deposit holders.”
“Your usual rants,” our correspondent goes on, “are against taxpayers having to pay for the stupidity, bad luck and greed of others. The quote above seems in accord with your usual position.
“The option to not agreeing with the statement is to expect the taxpayers somewhere to cough up! The only thing missing in the list of responsible parties in a bank failure is the management and directors — they too should lose — be held at risk… only then will we see a return to honest and conservative banking.”
The 5: No argument here. We merely pass along the minister’s remarks as a warning about things that can no longer be taken for granted.
At least large depositors at non-Cyprus eurozone banks are now on notice… which is a better deal than they got in Cyprus.
“At best, your new acquisition is an adult toy,” a reader writes cynically of the new 3-D printer we’ve installed next to our fax machine.
“It works well for plastic busts, if you can get Addison’s head into the scanner. Try to print something out of metal — something with enough strength to use as a repair part.”
“How about cool chess pieces?” reads a more constructive suggestion.
The 5: That’s totally doable with our early-generation model. We’re still in the early stages of a very long game; as we said earlier this week, the technology is analogous to dot-matrix printing on paper 30 years ago.
But even now the possibilities are staggering: By year’s end, architects in Holland hope to use their custom-designed unit to build the first 3-D printed house on a canal in Amsterdam…
“Hey, how about making a copy of my wife!” reads a fanciful suggestion. “That way, she’d be doubly as beautiful. And… there would be the chronically domestic version as well as the frisky, sexy version in the naughty French maid outfit.”
The 5: “Chronically domestic”?
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. “This one company’s acreage,” Byron King advises by email, “might hold as much as 7.4 billion barrels of oil.”
Hmmm, that works out to $703 billion. Give or take. The company’s market cap? A tiny fraction thereof.
As we write, all the elements are coming together on a profitable tale Byron’s been tracking for 3½ years. Watch for a time-sensitive update in your inbox tonight.