USDJPY stays within a downward price channel

USDJPY stays within a downward price channel on 4-hour chart, and remains in downtrend from 96.70. Key resistance is located at the upper line of the channel. As long as the channel resistance holds, the rise from 93.53 could be treated as consolidation of the downtrend, and one more fall to 92.00 – 93.00 area is still possible after consolidation. On the upside, a clear break above the channel resistance will indicate that the downtrend from 96.70 had completed at 93.53 already, then the following upward movement could bring price to 100.00 zone.


Forex Signals

On Gold — Billionaire Investor Eric Sprott Says : ‘I’m in Alex Cowie’s Camp’


Dear Reader,

The ‘Masters of the Market’ are a tricky bunch.

I’m talking about the tiny club of professional billionaire investors who tend to be a few steps ahead of everyone else.

Most Masters keep their motives and intentions well and truly hidden. Or they only share what they think is about to happen in the markets long AFTER they’ve taken positions.

Which is why I’m thrilled to announce that a bit of a coup was pulled off for Money Morning readers in Hong Kong last week.

We had our resources expert Dr Alex Cowie on the ground for the conference. Alex somehow managed to land a meeting with one of our favourite Market Masters, Eric Sprott.

Away from the media and the 3,500 attendees. One-on-one.

In that meeting Sprott shared his best investment idea of 2013 with Alex. And today, as a special Easter Monday treat, we share the full transcript of this private interview below.

Sprott is one of the few ‘Masters’ who likes gold. (He holds 90% of his assets outside of Sprott Inc. shares in precious metals).

But this Merrill Lynch analyst-turned-fund-manager is one of the few ‘Masters’ who is vocal about the mess central bankers are making of the global financial system.

Sprott recently told King World News that the Fed and other central banks have simply lost control: ‘…there is no exit plan. There never was an exit plan, and there is no exit.’

This transcript is a little long. Alex was amazed by how candid Eric was. But I urge you to read the whole thing, because Eric’s take on where the market is going and how to invest for it is fascinating. (I also urge you to look at the five local stock recommendations Alex has that are 100% in line with Eric’s view. To do so, click here.)

Enjoy… (The bolding is our take on the particularly important bits.)

Alex: We’re very lucky to be joined by Eric Sprott today for the latest Strategy Session. Eric spoke as the keynote speaker for Hong Kong Mines and Money 2013, and gave a very rousing speech on the precious metals market. As editor of Diggers and Drillers I’ve been focusing very squarely on the gold market recently. So, thrilled to be joined by Eric today, and looking forward very much to hearing Eric’s thoughts on the gold market.

Eric: Alex I’m happy to be here; anyone who spreads the word on precious metals is in my camp. We need more people to realise that that’s where they should be investing their money, so I’m happy to partake in this.

Alex: I’ve been speaking a great deal recently about the possibility of an inflection point in gold, rallying strongly from here. We’ve seen quite a few technical and fundamental signs that suggest that we could have a serious move from here. Not just in gold but in gold equities too. How are you seeing the gold market from here, what do you anticipate for the rest of the year?

Eric: Well Alex we’ve done a lot of work on gold supply and demand and I’ve written a number of articles, all of which are available at our website And I think the most important one is one we wrote about six months ago, and it basically questioned whether the western central banks had any gold left. And we like to do an analysis of the physical market for gold, not the paper market where seemingly the prices are determined. And our own analysis suggests that the demand for gold is 2400 tons more than the annual supply – which is approximately 4000 tons – which is a very great disparity between supply and demand.

Alex: Yes.

Eric: And then we get there by adding up the Chinese demand the Indian demand, the mint sales. The central banks used to be sellers of gold, now they’re buyers of gold. How do all these people come into the market when supply of gold hasn’t changed in the last 12 years? It’s still 4000 tons a year. And there’s only one answer to the question: that is that the western central banks must be selling their gold.

It’s been analysed by a number of people. The way they do it is on central banks balance sheets they have one line on the financial statement and it’s called gold and gold receivables. So a receivable is gold they don’t have that’s been leased out into the market. Whereas physical gold they have. But we see a combined number and we don’t know what percent of that is leased.

We’ve seen evidence for example the Austrian finance minister when he was challenged, ‘well where’s our gold’, he foolishly made the comment, ‘Well we’ve only got 13% in the country but the rest of it’s either in New York or London, but we made 300 million of interest on it.’ Well you only make interest because you’ve leased the gold out, right? And then that gold of course is gone to satisfy physical demand and when the central bank goes back to the counterparty and says, we want our gold back, it’s not going to be there. Because there’s a shortage.

So I’m with you that there’s going to be an inflection point.

Here we are with these financial events firing up; of course the latest one is in Cyprus, and it looks like there’ll be one in Slovenia, and in my mind it never stops. It just keeps carrying on here.

And of course it’s brought people back to realise that when you can lose money in your bank account, you are way better off owning gold than having a deposit in the bank.

When Venezuela devalued by 40%, if the citizens had owned gold they would have lost nothing. When Iceland devalued, if the residents had owned gold they wouldn’t have lost 60% of their money. I don’t know how many more countries it takes to have these events happen until the world finally clicks in to realising it’s better to own gold than it is to have a bank deposit.

Alex: What about Chinese accumulation of gold? We know from official data that they’re the biggest consumer in terms of importing.

Eric: And manufacturing.

Alex: And manufacturing as well.

Eric: There’s a voracious Chinese appetite for gold. And I don’t believe it’s just the citizens of China. I think it’s the People’s Republic Bank of China that’s actually buying the gold. If I was in China, and you see what’s going on in some of these countries and the printing of money, they should be taking all their bonds and owning gold. But they’re smart enough to know that they can’t buy so much that everyone gets tipped off to the fact that there’s no gold left. So they’re going to just slowly bleed these western central banks dry of their gold.

Alex: Well we heard from People’s Bank of China last week suggesting that they hadn’t increased their holding over the last three years, from 1,054 tons. Let’s file that under ‘fairy tale’.

Eric: I don’t believe that for a second. It seems so obvious to me. They haven’t been buying US treasury bills or treasury bonds for the last 18 months. I think it doesn’t take a rocket scientist to realise that owning gold is probably the best thing you can do these days as a central bank.

Alex: Are you up for any sort of gold price targets?

Eric: You know that’s the toughest thing in the world to analyse Alex, because you know…you tell me how much they’re going to print in the future and I’ll tell you what the gold price should be, right?

I mean lots of people have done that analysis. With this much money in the world the price of gold should be $10,000 or $12,000. And of course the amount being printed is escalating, so it’s a moving target. It’s way beyond where we are today. It’s many times higher than where we are today, is what I would say. You know, we may look back in 2017 and now we’re printing 8 trillion a year, and the number could be $20,000. It’s just a moving target, but I know it’s a lot higher than today.

Alex: Well one of the reasons I’m suspicious of an inflection point happening sometime this year is the drop in physical supply.

Eric: I get the distinct feeling that they could very well be running on fumes. There’s lots of chatter about, you know, they went into Libya to get the gold, MF Global was closed down and nobody received their gold, and there’s some chatter about Cyprus has some gold. Maybe they’ll end up getting that gold out of this whole thing, and have a little amount to supply the market.

But it’s a game that they’re going to lose here. And I certainly know why they’re doing it. Because I think their explanation of some kind of economic recovery doesn’t hold true when it comes to the man in the street. Yes the stock market’s up, because the central banks are supporting it, but when it comes to looking at the fundamental economic strength, it’s just not there.

Alex: We’ve seen food stamp participants rising to 15% of the American population.

Eric: Yeah, well it’s gone up by at least 27 million people in the last five years. And over that same time period we lost 3.6 million jobs. So you think, well how can that group of the population be better off? They’ve got less money to spend. So there is no recovery going on.

Alex: Neither in Europe?

Eric: I don’t know if it’s a recession or a depression, quite frankly. But it could be defined as either. When you have 25% unemployment in Greece and Spain, and 50% youth unemployment, I mean that’s a depression.

And one of the theses that I have is that weakness begets weakness. So for example, if somebody announces a layoff, JP Morgan says they’re going to lose 19,000 employees, it doesn’t just affect the 19,000 employees, it affects the people whose services these 19,000 people would buy. And there’s only one way to stop weakness begetting weakness, and that is through some overt policy that comes in from the outside and changes the dynamic. And typically, under Keynesian analysis, that was fiscal policy or monetary policy.

We have no room on fiscal policy; we have austerity programs in most countries in Europe, we essentially are having austerity forced on the United States because of the whole fiscal cliff and the sequestration, and so fiscal policy is off the table.

And of course the deficits are at record highs already. And in terms of monetary policy, we already have the zero interest rate, and we have money printing. I don’t see any room for some outside influence to come along and cause this change in weakness.

Alex: Under those financial conditions, macro-economic conditions, we’d be expecting gold and silver to be the indicator of just how bad things are.

Eric: You would.

Alex: You can only suppose that there’s been a bit of discrete supply into the market to suppress that.

Eric: That’s totally what I think. I think when the world wakes up to the fact that having money in a bank is a risky situation because of leveraged financial counterparties…and when this financial system caves a little…all of a sudden the balance sheets of the banks can’t support the deposit liability. Which is what we’re already saw it in Greece. We’re seeing it in Cyrpus. We’re going to see it in other countries.

I think it’s a very risky thing having money in a bank, and that’s why I keep suggesting, whether it’s gold or silver or some other precious metal, something real is the preferred asset.

Alex: I’ve certainly been buying gold and silver, physical gold and silver, taking ownership of it, not just for myself but for my children as well. So I’m taking a five to ten year view, at least. Because we’re five or six years into this crisis and clearly nothing’s getting much better.

So there’s a good opportunity there in precious metals, physical precious metals, but also equities. If we could move to gold equities. They’re at record lows whichever way you want to slice and dice them, whichever metrics you want to look at. Do you see an inflection point happening there soon?

Eric: Well I’ve always said the stocks won’t go up until the metals go up, because everyone looks at the metal price and says, ‘Oh my god the price of the metal went down I don’t want to own the stocks.’ But typically when the metal goes up, the stocks outperform by at least two to three times. So if we can get a sustained move here – and we can’t just go to 1650 and give it up again, we’ve got to look like we’re going to a new high here – then of course the metal stocks have so much to get back again. And out of the 2009 bottom, the metal stocks put on a 200% gain in about nine months, because gold went up to $1920, obviously a new high.

Alex: And that’s just for the larger producers. Whereas the smaller developers and explorers rose even more.

Eric: The small companies always outperform the big companies, because they have more room to expand. I’d much rather buy a guy whose producing 100,000 ounces who can go to 200,000 ounces, ie who could double his income, than a major guy who’s at five million who thinks he might get to 5.5 million in three years, so there’s not the same growth element. So I always prefer the small to midcap guy, as providing by far the bigger return

Alex: I was hoping that you’d say that, because that’s what I’ve been doing a lot of recently, tipping those small to midcap guys. [To find out which guys, click here. -Ed]

So you think that from this level it’s quite realistic that, when we do see a sustained move for gold above 1650 or 1700, that gold stocks could rally hard?

Eric: I think that as it approaches 1700, people will realise it’s going to be a sustained rally. And it’s not as though the stocks haven’t started moving already.

I mean they have, we had a day recently where the gold price went up half a percent and the gold stocks went up 2.5%, because they are so oversold here.

Plus you’ve got short positions on them so there’s a bit of vulnerability from the guys that are short. And particularly as they realise that ‘hold one now maybe the mood towards precious metals has changed here’, and all of a sudden they think, ‘Gee, maybe it will go higher because of the developments in the financial system.’

Alex: It’s quite amazing how quickly and how extremely the sentiment can change. And that’s why you need to be set before the event.

Eric: Right, right.

Alex: Now Eric I’ve taken too much of your time already, so we better wrap it up there. Thank you very much.

Eric: Alex, a pleasure being with you.

Alex: Likewise, thank you.


Even as Alex was talking with Eric in Hong Kong, there were significant moves in the gold sector. A number of small cap gold explorers are starting to get major interest from brokers for the first time in what seems an age.

The ‘Gee, maybe it will go higher’ theory of Eric’s seems to be panning out already. Institutional money is once again on the lookout for cash-rich explorers ticking all the boxes on the road to production.

Alex has two such companies on his recommendation list right now.

One recently punched 20% in a single treading session in this month on takeover talk. It’s pulled back since then, which in Alex’s books makes it the most urgent buy on his share list.

And on the day Alex gave his own speech on gold stocks in Hong Kong, another of his gold mining recommendations announced a $52 million share placement.

What does it need the money for?

It’s just discovered a 4.2 million ounce ‘monster’ gold deposit in Mali. It needs the cash to fast-track the project.

In total Alex has five Australian gold explorers and producers that he believes are primed for huge gains if Sprott’s thesis on a supply shortage in the gold market proves correct in 2013.

To find out what these five gold stocks are, click here.

There you’ll be offered a trial subscription of Alex’s newsletter, Diggers and Drillers.

You’ll get Alex’s gold tips, plus secure access to the names of all the other resource and mining stocks on the Diggers and Drillers share list for the next 30 days. If – for whatever reason – you don’t want to remain a subscriber, simply cancel within that 30 days.

You will receive a 100% refund of the small subscription fee, no questions asked.

Alex had gainers in 2012 including 53%, 27% and 14.7%. His star performer ended 2012 up 175%. He also helped his readers avoid carnage by completely avoiding iron ore stocks that year.

Alex’s biggest prediction so far for 2013 is a major, major comeback in gold mining shares.

Ex-Fed Chairman Paul Volker admitted that in the 1970′s ‘the biggest mistake we made was not controlling the gold price’. Eric Sprott expects that the gold price is being similarly managed today to create the illusion of recovery…when nothing could be further from the truth. If, like Eric Sprott, you agree with Alex’s thesis that gold – and gold stocks – are about to take off again, you should take a look at Alex’s plan for profiting from it.

To do so, click here.


Dan Denning,
Money Morning Australia

Related Articles

Diggers and Drillers:
Five Reasons Why Gold Stocks Are Set to Rebound

Large FX Specs trim USD longs to $24.8 billion plus Oil, Gold, VIX, 10-Year & SP500



The latest weekly Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures traders slightly decreased their total bullish bets of the US dollar last week following six consecutive weeks of increases in USD positions.

Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, registered an overall US dollar long position of $24.8 billion as of Tuesday March 26th. This was a decline from a total long position of $25.753 billion on March 19th, according to position calculations by Reuters (US dollar positions against the total positions of eurofx, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc).

Individual Currencies Large Speculators Futures Positions:

The individual currency contracts quoted directly against the US dollar last week saw increases for the Australian dollar, New Zealand dollar, Mexican peso and the Canadian dollar while the euro, British pound sterling, Japanese yen and the Swiss franc all had a declining number of net contracts for the week.

Individual Currency Charts:



EuroFX: Large trader positions for the euro decreased last week for a second week in a row. Euro contracts declined to a total net position of -49,095 contracts in the data reported for March 26th following the previous week’s total of -44,884 net contracts on March 19th. This is a change of -4,211 contracts from the previous week.

Euro spec positions are at a new low level for 2013 and the lowest standing since November 27 2012 when positions stood at -66,693 contracts. EuroFx speculative contracts have now been in bearish territory for five weeks in a row.


BritishPound Sterling:


GBP: British pound sterling spec positions continued their decline last week for a tenth consecutive week and to the lowest standing since early of October 2011. British pound speculative positions fell last week to a total of -66,555 net contracts on March 26th following a total of -61,480 net contracts reported for March 19th. This was a weekly change of -5075 in large trader contracts.

Pound speculator positions have now been in a bearish position for seven consecutive weeks since crossing over on February 5th and are at the lowest level since October 4th 2011 when positions equaled -68,724 contracts.


Japanese Yen:


JPY: Japanese yen net speculative contracts fell last week after rebounding the previous week. Japanese yen positions declined to a total of -89,149 net contracts on March 26th following a total of -79,993 net short contracts on March 19th. This is a weekly change of -9156 positions.

Yen positions are at their third lowest point since December 11th 2012 when short positions equaled -94,401 contracts.


Swiss Franc:


CHF: Swiss franc speculator positions decreased slightly last week to fall for the fifth out of last six weeks. Net positions for the Swiss currency futures fell to a total of -12,198 contracts on March 26th following a total of -10,996 net contracts reported for March 19th. This is a weekly change of -1,202 contracts.


Canadian Dollar:


CAD: Canadian dollar positions increased slightly last week to end a streak of nine consecutive weeks of decline. Canadian dollar positions rose to a total of -62,645 contracts as of March 26th following a total of -65,331 net contracts that were reported for March 19th.

This is a weekly change of +2,686 net contracts following a weekly change of -11,934 the previous week.


Australian Dollar:


AUD: The Australian dollar jumped sharply again last week to rise for a third consecutive week. Aussie speculative futures positions increased to a total net amount of +85,515 contracts on March 26th after totaling +54,055 net contracts as of March 19th. This is a weekly change of +31,460 in net positions following the previous week’s +30,789 change.

Australian dollar contracts are at their highest level since January 22, 2013 when positions equaled +97,011 contracts.


New Zealand Dollar:


NZD: New Zealand dollar speculator positions rebounded last week after decreasing sharply the previous week. NZD contracts rose to a total of +16,916 net long contracts as of March 26th following a total of +12,477 net long contracts on March 19th. This constitutes a weekly change of +4,439 net contracts.

The New Zealand dollar positions had stayed above the +19,000 contracts level for ten consecutive weeks before the March 19th decline.


Mexican Peso:


MXN: Mexican peso speculative contracts rose last week after a decline the previous week. Peso positions increased to a total of +128,162 net speculative positions as of March 26th following a total of +109,376 contracts that were reported for March 19th. This is a weekly change in net large peso speculator positions of +18,786 contracts.

Peso speculative positions have been over the +100,000 threshold for three straight weeks after falling under this level on March 5th for the first time since November 27th 2012.


Macro Financial Markets:

10 Year Treasuries:


10 Year Notes: 10-Year Treasury Notes speculative contracts surged higher last week to increase for a second consecutive week. 10-Year positions rose to a total of +98,190 net speculative positions as of March 26th following a total of -3,295 contracts that were reported for March 19th. This is a weekly change in net large speculator positions of +101,485 contracts.

10-Year Treasury speculative positions, on March 12th at -57,346 contracts, had fallen to their lowest level since July 24, 2012 before turning around the past few weeks.


Crude Oil Light Sweet:


Crude Oil: Crude Oil speculative contracts rose higher last week following five straight weeks of decline. Crude positions rose to a total of +244,607 net speculative positions as of March 26th following a total of +223,721 contracts that were reported for March 19th. This is a weekly change in net large speculator positions of +20,886 contracts.

Crude Oil speculative positions had declined for five weeks after reaching a 52 week high on February 12th at +272,875 contracts.


Gold Futures CMX:


Gold: Gold speculative contracts decreased slightly last week following two straight weeks of incline. Gold futures positions declined to a total of +132,446 net speculative positions as of March 26th following a total of +135,610 contracts that were reported for March 19th. This is a weekly change in net large speculator positions of -3,164 contracts.

Gold speculative positions have been on a steady decline since reaching an apex on October 9th 2012 at +211,949 contracts.


S&P 500 Index Futures:


S&P 500: S&P 500 speculative contracts decreased last week for a second week in a row. S&P 500 futures positions declined to a total of +4,371 net speculative positions as of March 26th following a total of +5,695 contracts that were reported for March 19th. This is a weekly change in net large speculator positions of -1,324 contracts.


VIX Futures:


VIX: VIX speculative contracts increased last week to their highest level (or lowest short level) since August 2012. VIX futures positions rose to a total of -63,583 net speculative positions as of March 26th following a total of -84,400 contracts that were reported for March 19th. This is a weekly change in net large speculator positions of +20,817 contracts.



The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)

See more information and explanation on the weekly COT report from the CFTC website.


Article by CountingPips.comForex News & Market Analysis


Monetary Policy Week in Review – Mar 30, 2013: Chance of global crises eases as 3 banks cut rates, 8 hold, 1 raises


    Last week 12 central banks took policy decisions with three banks cutting rates (Vietnam, Hungary and Georgia), eight keeping rates on hold (Israel, Angola, Turkey, Morocco, Taiwan, Zambia, Czech Republic and Romania) and Tunisia becoming the fifth central bank to raise rates this year.
    The main message gleaned from central banks last week was that the global economy continues to recover, but every time it seems to pick up a little steam, confidence is undermined by developments in Europe, the only major risk to a sustained recovery. 
    But like a resilient boxer, the global economy dusts itself off and gets back on its feet, adjusting to the fact that large bank depositors in Europe may have to share the costs of future bank bailouts with tax payers, the main lesson from Cyprus.
    After the shock from this major but ultimately positive policy shift, there was a sense of relief that Europe had muddled through, once again, and financial markets had taken the events in stride.
     “It appears that there has been a decline in the probability of a crises occurring, a development which has reduced the high level of uncertainty that prevailed in the last year,” the Bank of Israel said in its statement.
    But as both Israel and the Reserve Bank of Australia (RBA) acknowledged, the global economic picture remains mixed and “it is too early to say whether the improved market sentiment over the past six months is the beginning of a sustained recovery, or merely a temporary upswing.”
    The challenges facing Europe’s policy makers is considerable. Not only do they have to restore financial health to governments and banks, they must also find ways to strengthen economic growth at a time of growing challenges from emerging markets.
    “The renewed market tension associated with the handling of the sovereign and banking crisis in Cyprus in recent weeks has provided a reminder of the political, economic and social challenges of resolving the pervasive fiscal and banking sector problems,” the RBA said in its financial review.
     In the latest manifestation of the structural shift in the global economy – illustrated by a stagnating Europe and growing emerging markets – the leaders of Brazil, Russia, India, and South Africa and China agreed to establish a New Development Bank.
    The leaders of these five countries, known as the BRICS countries, acknowledged that their infrastructure has to be improved but currently there is insufficient long-term and foreign investment in capital stock.
    Acknowledging their role and responsibility for global governance, the BRICS leaders said a bank, which now will be established, would use global financial resources more productively and thus make a positive contribution in boosting global demand.
    They also agreed to establish a $100 billion financial reserve arrangement that would “help BRICS countries forestall short-term liquidity pressures, provide mutual support and further strengthen financial stability,” the leaders said in their March 27 Durban declaration.
     The Contingent Reserve Arrangement (CRA) would help strengthen the global financial safety net during times of market turmoil.
    Through the first 13 weeks of the year, 77 percent of the 125 policy decisions taken by the 90 central banks followed by Central Bank News lead to unchanged rates, marginally down from 78 percent after the first 11 weeks.
    Globally, 19 percent of policy decisions this year have lead to rate cuts, largely by central banks in emerging economies, a ratio that was steady from last week.
    Of the 24 rate cuts worldwide so far this year, 42 percent have come from central banks in emerging markets and the remainder from frontier markets and other countries.
    No central banks in developed markets have cut rates this year, but this is largely because many of those central banks slashed rates to effectively zero five years ago and then switched to various forms of so-called quantitative easing to stimulate demand.

ISRAEL DM 1.75% 1.75% 2.50%
VIETNAM FM 8.00% 9.00% 14.00%
ANGOLA 10.00% 10.00% 10.25%
TURKEY EM 5.50% 5.50% 5.75%
MOROCCO EM 3.00% 3.00% 3.00%
HUNGARY EM 5.00% 5.25% 7.00%
GEORGIA 4.50% 4.75% 6.50%
TAIWAN EM 1.88% 1.88% 1.88%
ZAMBIA 9.25% 9.25% 9.00%
CZECH REPUBLIC EM 0.05% 0.05% 0.75%
TUNISIA FM 4.00% 3.75% 3.50%
ROMANIA FM 5.25% 5.25% 5.25%
Next week (week 14) features six central bank policy decisions, including Australia, Thailand, Uganda, Japan, United Kingdom and the euro area.

COUNTRY MSCI          MEETING               RATE        1 YEAR AGO
AUSTRALIA DM 1-Apr 3.00% 4.25%
THAILAND EM 3-Apr 2.75% 3.00%
UGANDA 3-Apr 12.00% 21.00%
JAPAN DM 4-Apr 0.10% 0.10%
UNITED KINGDOM DM 4-Apr 0.50% 0.50%
EURO AREA DM 4-Apr 0.75% 1.00%

Sizemore on Fox: Cashing in on the Echo Boomers

By The Sizemore Letter

Watch me give my thoughts on investing in the rise of the Echo Boomer generation on Fox Business:

Watch the latest video at

SUBSCRIBE to Sizemore Insights via e-mail today.

The post Sizemore on Fox: Cashing in on the Echo Boomers appeared first on Sizemore Insights.

Money Weekend Market Digest: 30 March 2013


Health: The $1,000 Genome Challenge

Personalised Medicine. Get used to that phrase; you’ll hear it more often in the years ahead. Imagine knowing what disease you’re going to get, before you get it, and then putting a treatment regime in place to prevent you from getting sick.

It’s possible, and it’s so close it’s getting us nerd types very excited.

This all hinges around the ability to sequence DNA. You may have heard of the Human Genome Project, which began in October, 1990. It involved sequencing human DNA and then mapping out about 30,000 genes. So on April 14th 2003, about $2.7 billion later, the first Human Genome was completed. Since then it’s like the DNA sequencing industry has been in overdrive.

To see the speed at which this is all happening we have to briefly turn to computing for a moment and look at Moore’s Law.

Moore’s Law says the number of transistors on a computer chip roughly doubles every 2 years. For any industry, to keep pace with Moore’s law is as an exceptional rate of progression.

So when the cost per genome is imposed over Moore’s law you can see the amazing speed which genome sequencing has progressed in the last few years.

Human Genome Project, cost per genome Source: National Human Genome Research Institute

There are two parts to this story that have really got us in a bubble of excitement. First, this year marks the 10th anniversary of the completion of the Human Genome Project. And second, this September there’s a competition on called the Archon Genomics X Prize.

Up for grabs, a cool $10 million. This competition requires the winning team to sequence 100 human genomes in 30 days, with best-in-class accuracy and, here’s the best bit, at a cost of under $1,000 per sequence.

What this means is genome sequencing will go from being ‘research’ to a legitimate form of diagnosis and treatment for patients worldwide. It’s the dawn of real Personalised Medicine.

Energy: Is This (Finally) the Answer to Electric Cars?

It’s not just the human genome that’s got us super excited this week either. We’re excited about energy too. There’s a fair amount of talk about declining resources and an energy crisis the likes we’ve never seen before. It’s something we should all be aware of. But obviously that’s not why we’re excited about energy.

What gets our synapses firing like Bill Duke in Predator is innovation and the new discoveries in energy that are happening almost on a daily basis.

Take for example the electric car movement. It’s an energy discussion that’s been hanging around for some time. Yet no one quite believes it’s viable, and rightly so. Who really wants to drive 120km and then wait 12 hours to recharge for the next 120km? Not us. Admittedly some electric car manufacturers like Tesla have got a range of in excess of 300km now. But still, that’s three recharges on the way to Sydney.

Thankfully, innovation never sleeps, and a company called Phinergy based out of Israel thinks they’ve got the solution to our electric car problems. And it’s a pretty good solution we must say.

Phinergy have implemented their new Aluminium-Air battery technology into a car (you can see the video on their homepage). The technology uses Aluminium, Water and Air to create the energy that powers the vehicle. Not only that, Phinergy claim that it’s possible the range of their Aluminium-Air vehicle could be over 3 times that of existing Electric cars, possibly up to and over 1,000 miles.

So when the charged battery gets low, instead of spending 12 hours charging, top your car up with water (yes, plain drinking water). The reaction with the Aluminium-Air battery recharges the battery instantly and away you go.

The technology Phinergy has impressed some of the big auto makers. They’ve recently signed on with the Renault-Nissan Alliance, a partnership between Renault AG and the Nissan Motor Group.

Mercedes Benz is another major automaker that’s investing heavily in electric vehicles. They’re looking to release a full electric version of their B-Class in 2014. In September 2012 Mercedes also released a full electric version of their SLS AMG, AMG’s most powerful, and the world’s fastest, electric car.

So the electric car is once again getting some traction with the big car manufacturers, because they’ve finally cottoned on that you don’t have to compromise performance or style for ‘eco-friendliness’.

With new technologies the electric car won’t be an ‘alternative’ much longer, but could perhaps become the norm.

Technology: Why Hollywood Shouldn’t Remake Top Gun

We suspect that the movie Top Gun probably wouldn’t have done as well at the box office if it didn’t have Tom Cruise, Val Kilmer and Anthony Edwards in the cockpit of those Grumman F-14 Tomcats.

Imagine if it was a computer program playing an MP3 of ‘You’ve lost that loving feeling’ then autonomously sending off planes thousands of kilometres away. Probably wouldn’t have grossed over $353 million worldwide or inspired a generation of fighter pilots.

You see, if they remade Top Gun today, to be true to modern technology, it would be a pretty boring film. Because it wouldn’t need a cast.

The days of piloted strike fighter aircraft are almost over. And when we say unmanned, we mean no one. No pilot. No controller. Just a preprogramed drone strike fighter doing its thing.

Of course the US Military is the one pioneering unmanned strike fighters. As you would expect, with a defence spending budget in the realm of $670 billion they’ve got the money to pull this off. That’s why they’ve contracted Northrop Grumman to build and test the X-47B.

The Northrop Grumman fact sheet explains it best;

X-47B is a computer-controlled unmanned aircraft system that takes off, flies a preprogramed mission, then returns to base in response to mouse clicks from its mission operator. The mission operator monitors the X-47B air vehicle’s operation, but does not actively “fly” it via remote control as is the case for other unmanned systems currently in operation.

The real breakthrough here is the fighter can take off and land on an aircraft carrier. But we’re still dazzled by the ‘mouse clicks from its mission operator’ part!

Source: Northrop Grumman

Looking like a squished version of Northrop’s B-2 Bomber, the X-47B is fully compatible with the US Navy’s existing aircraft carriers and can carry a 4,500 lb payload. That’s a lot of weaponry.

Honestly, it scares the living daylights out of us. The whole military system seems to be going more and more down the track of automation. When it gets an injection of Artificial Intelligence, well, let’s just hope we can escape by flying to Mars by then.

Sam Volkering
Technology Analyst, Money Weekend

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From the Archives…

Why You Should Buy This Falling Stock Market
22-03-2013 – Kris Sayce

Stock Market Warning: Part II
21-03-2013 – Murray Dawes

New Developments on Whether You Can Get Your Mortgage Cancelled
20-03-2013 – Nick Hubble

Your Retirement or Your Mortgage?
19-03-2013 – Nick Hubble

Get Used to This Stock Market Action, It’s Set to Last…
18-03-2013 – Kris Sayce

Australian Stock Market to Make an All-Time High? This Analyst Thinks So…


What’s the best way to encourage a depositor to take his money out of a bank?

This question went around the office this week.

Answer: Tell him he’s not really a depositor. He’s a creditor to the bank. And from now on, he’s responsible for all the bank’s bad lending decisions!

That’s the pickle Dutch politician Jeroen Dijsselbloem got himself into this week. He said the bank restructuring in Cyprus would be a template for future problems elsewhere in Europe. A hasty retraction followed not long after as the implication became clear for European depositors: get your money out of iffy banks as quick as you can before they take it!

In the movie Margin Call there’s a quote from the head honcho of an investment bank that goes like this: ‘There’s three ways to make a living from this business. Be first, be smarter, or cheat.’ We’re not smart enough to know what will happen to the euro. But we do know we’d be first out the door if we had an account in southern Europe!

Cash Just Ain’t What it Used to Be

When you destroy trust in fractional reserve banking, you destroy the very thing that makes it work. Then you’re left with the naked truth that most banks borrow short and lend long.

On the face it, the situation in Cyprus is another bearish example of why the euro can’t survive as it is. But the bulls argue that the Cypriot case has shown once again that the political elites will stop at nothing to preserve the currency. No option is off the table. Perhaps the euro bearishness is a signal for contrarians to step in. Hmm.

Mind you, when the ‘safety’ of cash is called into question like that, shares suddenly look much more attractive as an asset class. At least they’re a claim on real assets.

That’s also a major reason editor Kris Sayce over at Australian Small Cap Investigator thinks the inflationary policies of the world’s central banks will continue to show up in stock prices. He sees the stage being set for a boom in the ASX that will take it over 7,000 points within two years.

‘Money doesn’t sit still in the financial world,’ Kris wrote in his latest report. ‘It moves constantly as the big banks and traders look to profit by investing in and betting on the next bull market. So here’s the important question for punters: where is the money heading next? Based on my experience, growth stocks are the next in line.’

Why You Want to Own Small Cap Stocks

This isn’t limited to a bit of market commentary, either. Kris has more open positions on the Australian Small-Cap Investigator buy list than at any time since 2010. If the rally comes, those positions should benefit. He’s got his subscribers in plays that range from high, medium and lower risk. And credit where credit is due. Mr Sayce called the rally since last year when a lot of others were wary of the market falling over.

This isn’t the first time the potential in small cap stocks has been discussed in Money Weekend. But we are not alone this week. The Australian Financial Review ran an article on Wednesday highlighting the opportunity in small-cap (and medium) sized stocks.

It noted the rally in the Australian share market up to 31 January had really only been in the top 50 stocks. If you take them out of the equation, the share market would only have been up 2.62%. It’s the major dividend payers like the banks that have rallied hard. But prices can only move so high before investors will start looking elsewhere for value.

To us, that means the best place to start hunting is the small to medium sized stocks that haven’t rallied. But that’s probably almost always true, anyway. Your best chance of finding mispriced companies will be in areas that don’t get as much attention from analysts. There’s less competition.

One strategy to use is classic value investing. That’s where you try to put a price on the company’s assets and overall position and buy under that price with a ‘margin of safety’.

Kris’ approach is slightly different. He’s looking for shares where the market may have mispriced the growth prospects of different companies. It’s always a subjective opinion, and certainly not without risk, but also why small cap stocks can often deliver gains of 100%, 200% or 500% if you get your homework right.

Callum Newman
Editor, Money Weekend

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From the Port Phillip Publishing Library

Special Report: Australia’s Energy Stock BLOWOUT

Daily Reckoning: Trade the Market Like a Stoic Philosopher

Money Morning: Silver ‘$100 Within Two Years’

Pursuit of Happiness: Spreading the Idea of Liberty

Australian Small-Cap Investigator:
How to Make Money From Small-Cap Stocks

Language Barriers

By Bill Bonner,

Came the news yesterday that the governor of Cyprus’ central bank is a fellow named Panicos Demetriades.

No kidding.

But even though the Central Bank of Cyprus is showing the world – in
stark naked detail – how governments will deal with their debt problems,
there is no general panic.

Panicos goes about his business… like Ben and Mario… ripping off
savers to protect the feds’ access to easy cash. In Cyprus, they even
stab their major industry – banking – in the back to… what?

Protect their economy? Nope.

They do it to protect the power of the government. The economy can go to hell, which is what will happen in Cyprus. Who will want to keep money in a Cyprus bank now? Only a fool. Or someone who reads the newspapers.

Read the papers, take them seriously, and you are ready to believe
anything. The problem is partly a language barrier. The newspapers will
tell you that that the authorities “saved” Cyprus… and the entire
European financial system.

That is the trouble with the language of public information. The
words mean little or nothing. It is just noise. Events are often exactly
opposite in meaning to the description given them in the press.

Mots Justes

Someone cuts you off in traffic, and you know just what to say. You have the mot juste on the tip of your tongue even faster than you can raise your middle finger.

But what do you say to ZIRP (zero interest rate policy), which cuts
off the earnings from your savings? What do you call QE3, which
potentially undermines the value of your savings and your earnings by
adding billions to the money supply?

We barely have words for the kind of premeditated larceny done by
central banks and central governments. The meaning of them is hidden
behind gobbledygook descriptions and noisy public information.

As an aside, the same is true in geopolitical and military matters.
One generation learns that attacking one’s neighbors is bad business.
The next forgets… and begins to invent nice new words to describe bad
old habits. We have “surgical drone strikes” now, not assassinations!
And we have “enhanced interrogation techniques,” not torture.

But it’s as hard to come up with something new in military affairs as
it is in literature and economics. “Enhanced interrogation techniques”
is a direct translation of the Nazis’ Verschärfte Vernehmung, right out of the Gestapo handbook.

Cross-Cultural Misunderstandings

Even in simple everyday matters, language is a barrier to
understanding. When you talk to people you know, who speak the same
language, and come from the same area, you can usually tell what they
are talking about. The words give you some of the meaning. The rest of
it is supplied by tone, emphasis, facial expression and body language.

We spent the week with friends from France. We speak the language
reasonably well. Even so, there are subtle meanings we never understand.
It’s not enough to know the words. You have to know the context… and
the nuances… to get the full meaning of them.

That’s what makes cross-cultural marriages and multinational
businesses so treacherous: You never know what the other side is really
saying! Sometimes it’s better that way. Sometimes, worse…

The French are very proud of their language. They despise people who
use it badly. Speak French badly to a Parisian waiter, and he will make
fun of you… usually in ways you won’t understand. Make a mistake in
front of a person from the 16th arrondissement, and he will say nothing… but his mouth will betray a slight smile of superiority.

The Argentines – at least in this part of the country – are more
generous with their language. We say something to the field hands. They
get a quizzical look on their faces. They don’t understand what we are
saying because the local dialect is different and because we don’t speak
Spanish very well. But unlike the French, the local people act
embarrassed and pained – as if it were their fault that they didn’t
understand you.

“How many calves did we get this year,” we intend to ask Jorge, our
farm manager. He looks at us intently, as one looks at a mental
defective, struggling to make sense of what he saying.

“Yes, I’ll be here on Friday,” he replies.

“How many?”

“All day long,” he responds.


Bill Bonner



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The Single Most Important Secret to Building Lasting Wealth

By Aaron Gentzler

Lewis Schiff of Inc. magazine has a new book out called Business Brilliant: Surprising Lessons From the Greatest Self-Made Business Icons.

After a dozen years of work, he has distilled seven core behaviors that explain how self-made millionaires became wealthy.

What’s struck me most about the book is the stark difference between
what wealthy people think and what “middle class” people think.

For example, Schiff reports 80% of wealthy people have equity in the businesses they are involved in.

In my wealth-building advisory service, Unconventional Wealth, I call this the principal of ownership. And I believe it’s the single most important secret to building lasting wealth. When you own a stake in what you do, you benefit more than your 9-to-5 neighbor.

That’s why it’s the mission of Unconventional Wealth to show you how to build ownership in income-producing assets.

According to Schiff just 10% of “middle class” people have equity in
what they do. And 70% said they’re not even trying to build any

Eighty percent of millionaires own what they do. Seventy percent of
middle class people aren’t even trying to own what they do. Think about

Schiff also found that 71% of wealthy people have no problem walking
away from business deals that look suspect. But only 22% of middle
class people said the same thing. The middle class seems to think
there’s a point of no return after which you must follow through.

This shouldn’t come as a surprise. Another quality of the wealthy is that they cultivate and protect capital. They don’t toss it away on bad deals.

Don’t fall into that trap. Capital is precious. The most important
step to accumulating lasting wealth is ownership. You can’t own
something unless you first have enough capital to acquire it.

I don’t care what you own. Own a car wash. Own a liquor store. Own a
tractor you rent out to people in your area who want to plant a
garden. Own real estate and rent it out.

As I tell my Unconventional Wealth readers, you build wealth by owning something tangible that returns capital to you.

Put another way, the big difference between the truly wealthy and
the middle class is that wealthy people produce, and the middle class

I don’t mean that as a reverse class-warfare claim. This is not a
political statement. I simply mean that wealthy people find a way to
break the cycle of working for a paycheck and that they find themselves
in a very different financial situation than those you might call
“working stiffs.”

So how do you follow the path laid out by the truly wealthy? You
break the model of debt reliance by finding a way to “work for

The rich aren’t brilliant. They put their pants on just like you.
The difference between the rich and everyone else is that they own what
delivers them their capital. Everything else flows from that point.

One way to own what delivers you capital is to buy a second home and
rent it out. As I’ve written many times, 30-year fixed-rate mortgages
are cheap right now. reports the nationwide average is
still just 3.75%. Historically speaking, this is a steal.

Visit or visit and search for existing homes in your area that are in your price range. Then contact a real estate agent and go tour them.

Schiff’s book might be called Business Brilliant, but you don’t have to be brilliant to become wealthy. Simply commit yourself to ownership and you control your future.

Best regards,


P.S. I’ve found a way you can make up to 12% a year owning a unique,
time-tested asset most people don’t think of as a capital producer. Click here for my full report.




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