Turning Cells into Legs

May 23, 2013

  • Regrowing human limbs: A new light flicked on by the “God switch”
  • Toting the market damage from Fed doublespeak, China slowdown, Japan smash…
  • Dumping ETFs, scooping up the real thing: Latest revealing gold moves from Asia to Texas
  • An income tax of over 100% and other dim ideas from the French Fifth Republic
  • Cues to the future gold price… coded in Byzantine coins

  “This has got to be one of the most restrained scientific announcements in the history of regenerative medicine,” says an unrestrained Patrick Cox.

Indeed, it was.

The announcement referred to “new data on purified and scalable human embryonic progenitors with molecular markers corresponding to limb bud mesenchyme.”

Before you nod off, let’s allow Patrick to translate…

  “The company has created and identified the cells that can turn into legs.”

Zowie.

“As radical as this seems,” he goes on, “this salamander-like ability actually exists in humans during the embryonic stage of human development. If something happens to the limb of a developing embryo, the entire limb can regrow. This announcement makes it clear, I believe, that this ability can be restored in adults.

“Let me emphasize that this is not transplantation technology or embryonic stem cell therapy. We’re talking about restoring embryo-like abilities in adults using the patients’ own induced pluripotent stem (iPS) cells that have been restored to embryonic youthfulness and power. As a result, there is no chance of immune rejection.”

Ah yes, iPS cells… the kind that were taken from Patrick’s arm and turned into beating heart cells — the subject of a video with which we’ve stirred up a hornet’s nest.

“Obviously,” Patrick concludes, “it’s going to require additional evidence to convince the scientific community that such radical therapies are possible. Fortunately, however, there is already considerable interest in this field of medicine, in large part because of the military’s desire to restore the limbs of injured soldiers.”

The breakthrough opens up whole new vistas of research in the science of immortalizing human cells. Controversial stuff… but enormously lucrative for early investors. Patrick unlocks the science, and the wealth potential, in this presentation that still has people talking.

100  “After the market’s torrid run this month, a move lower is just what we need,” suggests Greg Guenthner in this morning’s Rude Awakening.

Indeed, that’s what we’ve got. No sooner did Fed chief Ben Bernanke warn yesterday that “premature tightening” could harm the “recovery” (good for 150 Dow points) than he added the Fed might “taper” its bond purchases over the course of its “next several” meetings (vaporizing all 150 of those Dow points). Then came the minutes of the last Fed meeting, saying “a number” of Fed governors were willing to consider such “tapering” (whoops, another 90 Dow points gone).

Then overnight, “the Japanese Nikkei fell flat on its face,” says Greg. Indeed Japan’s benchmark stock index tumbled 7.3%. “Investors looking for an excuse to take profits received just that in the form of soft Chinese manufacturing numbers. That’s all it took for traders to mash the ‘Sell’ button.”

Once again, The Economist’s timing proves impeccable. Behold the cover of current issue…

Then again, the Nikkei is now back where it was… uh… two weeks ago. And still up 67% since last November.

“Don’t get spooked by today’s action,” says Greg. “Too many investors are easily ‘brainwashed’ when markets move in one direction for too long. Anyone who thought stocks would never have an off day is waking up on the wrong side of the bed today.”

The Dow opened down 130 points… and at last check has recovered all but five of them. The index sits a hair below 15,300. Heh…

  Gold has proven itself remarkably resilient in the face all the sturm und drang.

At $1,376, the Midas metal sits very nearly where it did 24 hours ago. Silver sits at $22.33.

  “Demand for gold bars and coins surged during the first quarter,” reads the latest quarterly report from the World Gold Council, “with the strongest growth seen in the coin segment.

“India, China and the U.S. together generated much of the increase; these three markets combined accounted for 60% of the total. Demand for bars and coins was well above its five-year quarterly average.”

“Paper gold” in the form of ETFs? Not so much…

As noted in the new issue of Apogee Advisory, inventory in the biggest gold ETF, GLD, collapsed during the April gold swoon. We won’t be surprised to see a very similar quarterly chart from the World Gold Council in three month. Not least because…

  Premiums on gold bars in Asia are setting record highs this week.

“Premiums for gold bars in Hong Kong,” Reuters reports, “touched a new all-time high of $6 an ounce over spot London prices, up from $5 last week. Singapore premiums rose to $5.”

Understand these are people buying kilo and 100-ounce bars. In contrast, a single Gold Eagle purchased from an online North American dealer will cost you a $55 premium this morning — which isn’t too shabby by recent standards!

“China premiums remain high because of a shortage in supply of the physical metal,” a Hong Kong trader told Reuters.

  “The crisis in bullion markets is worse than it was before,” adds Alasdair Macleod at GoldMoney.

“A good example of how little physical stock there is can be gained by tracking bullion deliveries on the Shanghai Gold Exchange. In the last few weeks, they have dwindled to virtually nothing, having been a truncated 190 tonnes in April and 297 tonnes in March.

“Yet we know from reports that retail demand in China has taken off; so it is only a matter of time before prices are bid up on the Shanghai Gold Exchange enough to replace lost inventory.”

  Don’t forget the demand from developing-market central banks. Russia just issued its latest figures…

  Also holding firm on gold: The nation’s second-largest university endowment.

“We always prefer that our assets go up, rather than down, but we’re not day traders,” says Bruce Zimmerman, CEO of Utimco — the firm that oversees the investments of both the University of Texas and Texas A&M.

The $29.5 billion endowment — only Harvard’s is bigger — has seen the value of its gold holdings slip from $1.4 billion to $1.1 billion since last fall. “Gold is a hedge,” Zimmerman tells The Wall Street Journal, “and it still fills that role.”

In the three months ended in February, Utimco unloaded about $375 million in bars, reinvesting the proceeds in gold futures and gold stocks.

If you’re curious, there’s still big talk in Texas about “repatriating” Utimco’s bullion, currently held in an HSBC vault in New York. “I recently had a town hall meeting in my district with 200 people, and the gold depository was the No. 1 issue,” said state Rep. Giovanni Capriglione last month.

“Most Americans,” he added, “are worried about an economic collapse.”

  Some Frenchmen are making their way toward their homeland’s exits. Why?

Because of the other capital punishment: taxes. At least 8,000 of them coughed up taxes in excess of 100% of their income last year. Ouch.

Reuters reports “that the exceptionally high level of taxation was due to a one-off levy last year on 2011 incomes for households with assets of more than 1.3 million euros ($1.67 million).

“President Francois Hollande’s Socialist government imposed the tax surcharge last year, shortly after taking office.”

That new levy was 75% of income, but the courts ruled the rate was “too” confiscatory.

“Since then, a top administrative court has determined that a marginal tax rate higher than 66.66% risked being considered as confiscatory.”

Yeah. That’s a lot better.

The ruling didn’t dissuade Hollande; he simply decided to shift the tax to businesses. As a result, many French citizens and businesses have decided to relocate to places like the U.K.

Time magazine quoted Charles-Marie Jottras, who heads up a Parisian luxury real estate company. “Jottras says the departure of wealthy clients is reminiscent of the early 1980s, when the previous Socialist President Francois Mitterrand was in power… The difference this time, he says, is that ‘it used to be just rich people who left, not business people.'”

Seems like just yesterday the Beatles were moving to France to lighten their tax burden. Oh, how the tables have turned.

  Case in point: “l’exception culturelle”.

This subsidy benefits the arts like books, movies and music. But now according to The New York Times, “a government adviser has suggested that manufacturers pay a 1% levy on the price of smartphones and tablet computers to help keep funding for such works alive, as more and more end up online and beyond the reach of existing taxes.”

A report that Hollande’s government produced on the tax offered up this logic: “Considering the weight of cultural content in connected devices, it is legitimate that those who make and distribute the equipment contribute to the financing of its creation,”

Hmn…sounds bass-ackward to us, but c’est la vie!

  “Of course,” a reader writes of gold’s April thumping, “I see myself as a pair of ‘strong hands.’

“Go ahead tear the price down, I want more.”

  “How can anyone assert that the gold ‘rally’ is over?” concurs another. “Someone who is completely ignorant of history, which is practically everyone, including a lot of professors of

history.

“Anyone who wants to understand where all this is going to end must study 5,000 years of history in detail and discover that cultures proceed in 1,500-1,700-year cycles, and how these cycles impact civilization. Then go to the National Archaeological Museum in Athens and follow their chronologically organized collection of Byzantine coins. This was one of the most important events of my life, and it was only several years later that I began to understand its meaning.

“This is what our politicians need to do.”

The 5: Dream on.

  “It doesn’t matter how long it is, I read The 5 until I get bored, writes a reader, mercifully winding down our recent length-of-The 5 thread.

“I have been reading The 5 since inception, and so far I reach the end 99% of the time without falling asleep or deciding to play a game of Spider. I don’t care if you call it the 5, the 10 or The Daily Blurb. The person who wrote in and lit the fuse on this length discussion probably doesn’t have enough to do. Otherwise, why would he/she take the time to complain?

“If the content is interesting, I don’t care how long it is, just keep it coming!”

  “Great job, folks! No complaints here,” writes our final correspondent.

“I wish it were cheaper to get this e-letter, but then we’d be haggling over how much you had to pay me and, and then I’d have to send in a punch card to let you know how many minutes I’d spent every week reading it, and then you’d have to hire extra people to keep track of the time for everyone…

“I think we better just leave well enough alone.”

The 5: Agreed. But we appreciate the sentiment!

Cheers,

Dave Gonigam
The 5 Min. Forecast

P.S. It’s been a good week for Options Hotline readers. As of the close yesterday, they’re sitting on positions that include…

  • A bearish small-cap play, up 5% in a little over a week
  • A bearish play on a major retailer, up 46% in only two days
  • A bearish play on Treasuries, up 87% in a month and a half.

If you’ve never played options before, Steve makes it as easy as possible. In fact, you could make money on your very first trade. Check out the proof right here.

rspertzel

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