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A Manifesto, of Sorts

The Daily Reckoning - 1 November 2014 - 9:54am

This post A Manifesto, of Sorts appeared first on Daily Reckoning.

[Ed. Note: Our co-founder, Addison Wiggin, re-entered the email edition fray today. He took the opportunity to think aloud about what we do in these pages and how he got started. Read on...]

Human relationships… and passion. Those are the subjects that propel us forward.

Our beat is money — but a lot of what we write about isn’t directly related to money. It’s about people.

“You can’t write about investing every day or your readers will go crazy.”

“You can’t write about economics every day or you’ll go crazy,” explained our writing partner, friend and mentor Bill Bonner last week. “You can’t write about investing every day or your readers will go crazy. You have to write about something that is richer, fuller and actually more important.”

And so we re-enter the fray with a story… one you may already be familiar with. If not, it helps explain a little about who we are… and what we do.

“Tell us a little about Bill Bonner,” a reporter for The Daily Bell once asked me.

“Umn…” I began. “Here’s an anecdote I’ve used to roast Bill at awards ceremonies that illustrates his laissez-faire approach to business and life.”

I’m going to share it with you on this fine Halloween for a very good reason… it will improve your outlook on life… and make you richer, happier, healthier and more successful.

No small order, mind you. But a proven fact all the same.

In 1999, I was working at the Cato Institute in Washington, D.C., when I’d heard Bill needed a writing assistant in Paris. I’d known Bill for nearly a decade at that point, but was still wending my way toward a professional career I could live with.

From my desk in Washington, I wrote to Bill offering my services. “Bill, would you like me to come to Paris and write for you?” I asked.

“Yep,” was the three letter email I received in response.

For some background, I’d just gotten married. My wife and I had had our first child only three months before. But I quit my job, boarded a plane and moved them to Paris. It was a rather momentous occasion in our young lives.

When we arrived in Paris, I went to the address given to me. It was an old apartment on the Boulevard Saint Germain, where I found, behind a stack of newspaper clippings and dog-eared books laying open with notes in the margins, Bill, typing away on an old laptop.

Mr. Bonner looked up and said: “Addison! What are you doing here?”

He’d forgotten I was coming. Forgotten I’d moved my family to Paris just to work with him.

“Hmn… well, since you’re here, why not pull up a seat?”

He moved the stack of papers, and I sat down at the desk next to him. The same desk. On the same side as he was sitting. There was no other place to sit… and there I stayed for the next three months, pounding out the format for and editing The Daily Reckoning.

At the time, I was using an old “loaner” laptop from Agora with a crack in the screen. The battery no longer functioned. So every time Bill had an idea and leaned back in his chair, he’d knock the power cord out of the wall and I’d lose all my work for the day.

Occasionally, his pile of research papers would collapse and spread all across my keyboard. We eventually moved to a larger space, but from those auspicious days arose one of the more interesting and engaging e-letters on the Internet.

“The model that the mainstream media uses, along with mainstream economists, is flawed.”

The Daily Reckoning has reached millions of readers… inspired thousands more… and became the nucleus of a world-spanning company that now sports offices in 18 different countries.

All great drama is derived from the passions of men (and women) and how they interact with one another. Fear, greed, mob mentality and insanity are just a few of the very interesting human emotions.

The study of economics is an exploration of human passion writ large across history. It’s inexact. It’s frustrating. It’s fascinating.

“Addison Wiggin and Bill Bonner,” the reporter summarized, “have been in the forefront… of writers in predicting the current economic crisis long before it occurred. We have pointed out before that the hard-money community is consistently accurate in its forecasting, yet the mainstream media seem blissfully ignorant of this fact.

“The issue is much bigger than failed forecasts, however. The model that the mainstream media uses, along with mainstream economists, is flawed. It didn’t anticipate the problems of the 1970s, nor of the early 2000s, and it certainly didn’t anticipate the difficulties of the later 2000s.”

Today, we renew our passion for the project.

If you take heed of Jim Rickards‘ current forecast, the next shoe to drop is going to be a doozy. With luck and hard work, the ideas we publish will be unique and will benefit you in ways you cannot find anywhere else on the Internet or in print. Ideas that we guarantee in writing will make you richer, happier, healthier and more successful… even in the face of what are likely to be hard times.


Addison Wiggin
for The Daily Reckoning

P.S. Whither goes the economy and the financial markets, so goes The Daily Reckoning. You’d think “contrarian” opinions would react counter to the broader trends in the marketplace, but that’s just not true. When the markets — stock, bond, housing, credit, you name it — are on fire, the marketplace for new and interesting ideas is on fire too. To make sure you’re accessing that entire marketplace — rather than just the small sliver offered you by the mainstream financial media —  we invite you to join us in our email edition by signing up for FREE, right here.

The post A Manifesto, of Sorts appeared first on Daily Reckoning.

Categories: Economics

4 DIY Halloween Costumes You Can Make in 10 Minutes or Less

The Daily Reckoning - 1 November 2014 - 8:51am

This post 4 DIY Halloween Costumes You Can Make in 10 Minutes or Less appeared first on Daily Reckoning.

Trick-or-treating is right around the corner!

If you’re like us — you’ve waited until the last second to think about what you’re wearing to your friend’s shindig.

Lucky for you, we’ve got your back.

We’ve taken the liberty of whipping up four Halloween costumes on your behalf. We’re sure you’ll agree they’re some of the scariest this season.

Best of all, you can make each in 10 minutes or less.

Each one requires a pair of scissors… cardboard or thick paper… a glue stick… tongue depressors from your medicine cabinet… clothes you probably have around your home… and a nerdy appreciation for the themes and characters we write about in these pages.

Simply right click on the mask image and select “Open link in a new window.” Then right click again and select “Print.”

Then simply print the mask out on a 8.5×11 sheet of paper. Lay it over a piece of cardboard or another sheet of thick paper, and cut along the lines. Then, glue the mask cutout to the cardboard or paper backing.

Then, glue the tongue depressor to the bottom so you can hold it up to your face. If you’re ambitious and have some string… punch two holes in the side of the mask and tie it to your head.

We have four personas for you… inspired by our daily reckonings:

#1 Alan “The Maestro” Greenspan

Perhaps the scariest of all, few people will walk around tonight with the Maestro’s mug. Which is ironic, because at 88, he’s practically the walking dead.

You’ll get a few laughs… or, at the very least, start an economic argument about whether the Fed helps or hurts the economy. (In case you need some fodder, click here.)

Putting the costume together is easy.

Take this mask and put on your cheapest suit.

Grab a cane… and mumble about irrational exuberance and how nobody can really predict anything in financial markets.

Use long sentences with superfluous words in them. The less sense your sentences make sense, the more realistic your Greenspan persona will seem.



#2 Janet “The Black Widow” Yellen

This one may take you 14 minutes to put together. Grab the stiffest looking pants suit from your wife’s closet… try on your best Brooklyn accent. (If you’re taller than 4 feet… you may want to kneel in your shoes. It all depends how realistic you want to be).

Tell everyone you meet you’re the most “powerful woman in the world” and that you control the levers that make the economy move.

Be forgiving if they confuse you with the Albino from the movie, Princess Bride.

#3 The Dreaded Tapir

An homage to our late friend, the Tapir, all you need are black shoes, black pants, black shirt, this mask and your best tapir call (watch this video to get some ideas:)

Granted — you’ll spend most of your night ’splainin’ what you’re dressed as… but the Tapir mask is ideal for any long-suffering reckoner. Especially if you have a penchant for our running gags.

#4 Paul “Dead Wrong” Krugman

This is another “put on your cheapest suit” DIY costume.

Annoying people with a high-pitched whine will bring it home.

For added effect, borrow the latest issue of the Gray Lady from the bottom of your bird’s cage and carry it around under your arm.

Other realistic affectations include rolling your eyes… scoffing… and bobbing your head from side to side as if to say “Yeah I hear what you’re saying, but you’re wrong…”.

Happy Halloween,

Peter Coyne
Managing editor, The Daily Reckoning

P.S. If these masks strike you as completely random… then you’re out of the loop. Or, at the very least, you’re not signed up to get the Daily Reckoning sent to your inbox each day. Every day the market’s open, we lampoon and set the record straight in the world of finance and economics so you can build your wealth safely and have a laugh at the mainstream’s expense. These masks are based on just a few of the characters we write about. Click here right now to start receiving the most entertaining, informative and best of all, free, daily 15 minute read.

The post 4 DIY Halloween Costumes You Can Make in 10 Minutes or Less appeared first on Daily Reckoning.

Categories: Economics

4 Basic Truths to Help You Navigate the Financial News

The Daily Reckoning - 1 November 2014 - 7:40am

This post 4 Basic Truths to Help You Navigate the Financial News appeared first on Daily Reckoning.

[Ed. Note: Today marked the official return of Daily Reckoning co-founder Addison Wiggin to the digital pages of our email edition. Together with Bill Bonner, he has spent over a decade writing the Daily Reckoning, reporting from the fringes of the financial news media, trying to make better sense of the financial markets. Today, in honor of Addison's return, we bring you this DR Classique from Bill Bonner which details the 4 dicta he follows to help him navigate the financial news. Read on...]

After three decades in the business and writing our daily chronicle of the stock market and economy, The Daily Reckoning, for 10 years, we have distilled our advice down to four dicta, a few basic truths to guide you as you navigate your way through the financial news.

Dictum Number 1: People do not get what they want or what they expect from the markets; they get what they deserve.

Of course, people would like the downturn to be over. Many are counting on it. But the market doesn’t give a hoot. He’s got a “Capitalism at Work” T-shirt on and a sledgehammer in his hand.

What’s he up to? He’s demolishing a quarter century’s worth of mistakes.

The economic model of the last quarter century caused more mistakes than usual.

There are always mistakes made. Investments go bad. Businesses go under. People go broke. When many mistakes are corrected at once, it’s called a “recession.” And when an entire economic model goes bad, it’s called a “depression.”

The economic model of the last quarter century caused more mistakes than usual. It encouraged people to spend, borrow, and speculate. And each time the market tried to make some corrections, the authorities came along with more money and easier credit. Businesses that should have gone under years ago kept digging themselves in deeper. Homeowners kept running up more debt. Speculators kept taking bigger and bigger gambles.

Fish gotta swim, birds gotta fly, and bubbles gotta blow. The bubble in the financial sector — including subprime debt, housing prices, bonuses on Wall Street, and derivatives — hit the fan in 2007. And what a mess!

And why shouldn’t it be? Which brings us to the second of our dicta:

Dictum Number 2: The force of a correction is equal and opposite to the deception that preceded it.

The delusions and absurdities of the bubble epoque were monstrous. Naturally, the correction must be huge, too. World stock markets were nearly cut in half post-2008. Property prices, too, have been knocked down almost everywhere. The total loss of nominal wealth has been estimated as high as $50 trillion.

Could these losses have been prevented?

Certainly many of them could. If the U.S. Congress had never created Fannie Mae, for example, it never would have distorted the mortgage market as much as it did. And if the feds hadn’t created the Federal Reserve Bank, it couldn’t have provided so much ready money for so many speculators and borrowers.

And if the Fed under Alan Greenspan had done what it was supposed to do — that is, to “take away the punch bowl” before the party got out of control — the bubble in the financial sector probably would have been much more modest.

…the Fed’s low lending rates said: “Step on the gas!” Congress… helped push down the pedal.

Of course, people drew all the wrong conclusions. They thought “capitalism failed.” They saw the car drive off the cliff… but didn’t notice how government had twisted the road signs.

Instead of warning investors of the dangerous curve ahead, the Fed’s low lending rates said: “Step on the gas!” Congress, despite their recent collective cry of disbelief, helped push down the pedal.

Dictum Number 3: Capitalism doesn’t always take an economy where it wants to go; but it always takes an economy where it ought to be.

Whoever was responsible for the mistakes, capitalism went about correcting them with its customary élan. It hit imprudent investors with trillions in losses. It knocked down mismanaged corporations. It whacked homeowners… and pounded housing-based derivatives to dust.

Capitalism operates by a process that the great economist Joseph Schumpeter called “creative destruction.” It destroys mistakes to make room for new innovations and new businesses. Unfortunately, this puts it at odds with government and what most people want. When people make mistakes, they maintain that they are blameless. “Who could have seen this crisis coming?” they ask. “And,” they say, “someone else should pay for the loss.”

So today the feds, who mismanaged their regulatory responsibilities during the bubble epoque are bailing out mismanaged corporations to protect lenders who mismanaged their money. They are determined to prevent capitalism from making major changes — in the worst possible way.

What’s the worst possible way? Simple. Leave the mismanagers in place. Keep the brain-dead companies alive — along with the zombie banks. Let the government take ownership of major sectors of the economy. And stick a debt-ridden society with even more debt!

The federal government is expected to borrow $2 trillion this year alone. From whom? And who will repay it?

The feds’ efforts to stop the progress of capitalism will have some spectacular consequences.

Dictum Number 4: The severity of a depression is inversely correlated with government’s efforts to stop it.

The more the feds try to delay and distract the process of creative destruction, the longer it takes to get the job done. And the higher the eventual bill.

There are only two fairly clear examples in modern history. After the crash of 1929, the Hoover and Roosevelt administrations tried desperately to stop the correction. They could not make bad debts disappear, or turn bad decisions into good ones. All they could do was to retard the necessary corrections — and cause new mistakes! It wasn’t until after WWII, 15 years later, when the New Deal was largely forgotten, that the United States got back to work.

Similarly, when Japan was confronted with a major correction in 1990, its politicians followed the Hoover/Roosevelt model. Over the years, an amount equivalent to almost an entire year’s output was applied to recovery efforts. But all they did was to prevent and forestall the needed changes. Now, 24 years later, the Japanese economy is still in corrective mode… still fighting deflation.

Is that the end of the story? Not at all. The feds’ efforts to stop the progress of capitalism will have some spectacular consequences. The fireworks will start when the bond market cracks sending yields through the roof, for a nation addicted to debt cannot sustain a credit crisis for long.


Bill Bonner
for The Daily Reckoning

Ed. Note: Knowing these four dicta are a great start to helping you navigate the financial markets — and filter out the noise in the financial media. But there’s another part of the story — one that helps you translate these points into a smart and profitable investment strategy — that we detail each day in The Daily Reckoning email edition. Long-time readers have seen multiple opportunities to help turn this basic knowledge into something far more valuable. And you can do the same. Just click here right now to sign up for The Daily Reckoning, for FREE, to get started.

The post 4 Basic Truths to Help You Navigate the Financial News appeared first on Daily Reckoning.

Categories: Economics

How YOU Can Help Pass the Swiss Gold Referendum

The Daily Reckoning - 1 November 2014 - 5:38am

This post How YOU Can Help Pass the Swiss Gold Referendum appeared first on Daily Reckoning.

[Ed. Note: Over the last few days, we've been featuring a series of essays by Grant Williams on the Swiss Gold Initiative. (In case you haven't yet, you can read the first two parts here: Part I and Part II.) Those who've been reading our email edition, first heard about it back in Sept. when Dr. Ron Paul graced our pages with his assessment. Then again when our resident currency maven Jim Rickards weighed in on the issue -- describing it as one of the "snowflakes" that could lead to a global financial collapse. Today, Mr. Willaims' explains just how likely it is the Swiss Gold Referendum will pass, and how you can influence the decision for yourself. Read on...]

Until now, the whole idea of the Swiss Gold Referendum has been written off as inconsequential and largely ignored by all but the most buggy of gold bugs. It was written off when Luzi Stamm announced it. It was written off when they needed to get 100,000 signatures; and, amazingly, it was ignored even once they HAD reached the magic number; but recently a number of things have happened which are making some serious waves and causing considerable unease amongst the Swiss banking establishment.

While in San Antonio recently, I was fortunate enough to chat with a displaced fellow Brit who came to meet me at the Casey Summit to talk about the Swiss Gold Initiative, and what he had to say fascinated me.

The gentleman explained a few of the nuances surrounding the framework within which the vote on the Gold Initiative will be conducted, and as I listened I realised that this little vote could potentially become a very big vote indeed.

Firstly, he noted the fact that there isn’t any “no” campaign running against the initiative. Not one that actively campaigns, at least. There will be no billboards, posters, or leaflets distributed making the case for a vote against the SGI. Thus, it’s basically up to the organizers of the initiative to get the word out and educate the Swiss public about the importance of what they’re trying to do in a vacuum.

That, of course, requires money.

During these campaigns, there is no TV or radio advertising allowed, only an old-fashioned leaflet/poster/billboard campaign (how very Swiss), which is an expensive operation to have to finance.

However, a curious quirk of Swiss politics allows anybody (and I mean ANYBODY) to make a donation to campaigns such as these from anywhere in the world — with 100% anonymity.

As our conversation continued, I learned that the initiative plans to blanket the country with billboards, posters, and leaflets and to conduct a comprehensive social media campaign to engage the vital 18-44 demographic — a strategy completely new to the somewhat antiquated world of Swiss politics.

All this felt like it was going to be rather expensive for such a small campaign, but with the donation system certainly helping their chances, Stamm & friends embarked upon their fundraising venture; and, as I mentioned previously, their first move was a masterstroke.

Over the past several years, I have been extremely fortunate, through regular encounters around the world, to have found myself in a position to call Egon von Greyerz my friend.

Egon is a wonderful man with a keen intellect, a great sense of humour, and a code of ethics which is utterly above reproach. He is also now the “face” of the Swiss Gold Initiative to the gold industry.

I recently chatted with Egon about the progress being made, and what he had to say was fascinating:

Switzerland now has the opportunity to be the first country in the world with official partial gold backing of its currency. A currency backed by gold means the government and the central bank cannot manipulate the currency at will and print worthless pieces of paper that they call money. This would stabilise the real value or purchasing power of the Swiss franc. A currency with stable purchasing power leads to stable prices and promotes savings and investment rather than spending and credit. Officially Switzerland, like most countries, has a low inflation rate; but for the average person, consumer prices in the shops for food and other necessities continue to rise.

Even though the official Swiss inflation is low, there is massive inflation in some sectors like housing and financial assets. The money printing in Switzerland combined with artificially low interest rates have led to a major housing bubble.

Swiss housing prices are now unaffordable for most Swiss and in relation to income prices are now in an unsustainable bubble. An increase of Swiss mortgage rates from current 1-2% per annum to a more normal 4% could lead to major mortgage defaults and a housing collapse.

The Swiss have a history [of] putting some of their savings into the Vreneli, the Swiss 20 franc gold coin. In recent times, as spending on credit rather than savings has been the norm, the Swiss have bought less gold, but in spite of that they have more affinity with gold than most Western nations. The Swiss gold industry is also very significant, since Swiss refiners produce nearly 70% of the world’s gold bars.

The most prolific savers in gold are of course the Indians, mainly by buying jewelry. But in the last few years China has been the biggest buyer of gold. There is a constant flow of gold going from the West to the East. This has created a shortage of gold in the West.

The government and SNB will be very concerned about the poll results and will intensify their propaganda concerning how bad this would be for Switzerland. But as you know, the Swiss are an independent lot and don’t like the government telling them what to do. It will be extremely interesting.

Interesting indeed.

The poll that Egon refers to is the next of those things that are making waves.

The official press launch of the SGI campaign was held this past week, with Luzi and his committee and Egon speaking to the Swiss media; but AHEAD of that launch, a poll was conducted in 20 Minutes, a popular German-language free daily newspaper published both in print and online.

The question asked was simple: “How will you vote in the upcoming Save Our Swiss Gold referendum?”

The results were a surprise to just about everybody — including Luzi and Egon.

A total of 13,397 people were polled from all across Switzerland on October 15, and the poll clearly demonstrated that already — without any campaigning — there is a solid block of voters inclined to vote FOR the initiative:

With the establishment being unable to actively campaign AGAINST the Initiative, all has been quiet for many months (which is why you probably haven’t heard anything about the SGI); but with the dawning awareness that this little campaign might actually grow some legs, a few members of that establishment have been getting a little antsy.

Firstly, last year when the proposal was tabled in parliament, we had this reaction:

(Centralbanking.com): Switzerland’s upper house gave the thumbs down to a controversial proposal yesterday that would force the Swiss National Bank (SNB) to more than double its gold holdings by requiring the bank to permanently hold 20% of its assets in bullion — but the rule could still ultimately become law in a popular referendum later this year.

The “gold initiative”, the brainchild of the right-wing Swiss People’s Party (SVP), which also calls for SNB gold to be repatriated to Switzerland — much of it is currently stored in London, New York, and Canada — is slated for a public referendum after the SVP secured 100,000 signatures in support of the measures last year.

Switzerland’s political establishment, however, remains vehemently opposed, fearing a gold quota would severely undermine the SNB’s ability to carry out its mandate — and their case has been helped by the poor performance of the metal over the past year.

Speaking before the upper house yesterday, finance minister Eveline Widmer-Schlumpf warned the “credibility of monetary policy” would be “greatly impaired” if the floor was introduced. She also described gold as “among the most volatile” and “riskiest investments” on the central bank’s books. The SNB took a $16 billion loss on its gold holdings last year as prices fell 30% — contributing significantly to a Sfr9.1 billion loss on total assets, as shown by data released by the bank today.

SNB governor Thomas Jordan has also slammed the idea, arguing it would severely restrain the SNB’s policy choices by restricting the flexibility of its balance sheet. In a worst-case scenario, he warned last April, the assets side of the SNB’s balance sheet would over time be largely comprised of unsellable gold, which could force the bank to turn to money creation to finance its expenses.

“For the SNB to fulfil its mandate at all times, its capacity to act in monetary policy matters must not be compromised by rigid rules on the composition of its balance sheet,” Jordan stressed.

It’s laughable, actually.

No word from the finance minister on the huge potential gains which were foregone when the SNB sold their gold at the lows (gains which, at today’s prices, would have been in the region of CHF 27.5 bn). No. We won’t mention those. Nor will we even bother to go anywhere near Jordan’s fears that the SNB might be “forced” to (GASP!) “turn to money creation to finance its expenses.”

No. We’ll leave those well alone and instead visit a “dossier” opened by the SNB on its website a couple of weeks ago as the realization dawned upon them that the SGI won’t just “go away” if they don’t talk about it:

(Centralbanking.com): …Now, with less than two months until the vote, the central bank is intensifying its communication. It opened a “dossier” on its website yesterday where it will post materials outlining why it “reject[s] the initiative”.

“Monetary policy transactions directly change our balance sheet. Restrictions on the composition of the balance sheet therefore restrict our monetary policy options,” [SNB Vice-chairman Jean-Pierre] Danthine explained.

“A telling example is our decision to implement the exchange rate floor vis-à-vis the euro… with the initiative’s legal limitation in place, we would have been forced during our defence of the minimum exchange rate not only to buy euros but also to buy gold in large quantities.

“Our defence of the minimum exchange rate would thus have involved huge costs, which would almost certainly have caused foreign exchange markets to doubt our resolve to enforce the rate by all means.”

Sometimes I think these people are completely delusional.

So, let me get this straight: gold is a relic which restricts your ability to do such vital things as… oh, I dunno, promise to print unlimited amounts of your currency in order to peg it to another, failing currency and thereby debase it by 9% in 15 minutes? Or it might mean the market doesn’t have complete faith that you might be completely relied upon to do really smart things like that?


Somebody. Please? Make it stop.

The Swiss establishment has been reliant upon the public’s ignorance in these matters, but now they are up against a formidable opponent in Egon von Greyerz. Not only that, but they can clearly see that, as elsewhere around the world, the public is fast becoming disenchanted with the status quo; and that is potentially very dangerous for these people.

What is important to understand here is that if the initiative passes it will be part of the Swiss constitution IMMEDIATELY — not in two years, as many blogs and websites are suggesting. This means that the government and parliament cannot touch it. Only another referendum can change it. This is proper democracy for you.

The closer we get to the vote on November 30, the bigger this story is going to become, and the bigger it becomes, the higher the chance that the yes vote wins.

Should that happen, it will undoubtedly set off alarm bells throughout the gold market, as yet more physical gold will need to be repatriated and another sizeable, price-insensitive buyer will enter the marketplace.

Curiously, as awareness of this initiative has risen in the last month or so, two strange things have happened in the gold markets, one in the murky world of central bank gold operations, the other in the equally murky world of China’s Shanghai Gold Exchange.

Firstly, the Russian central bank (which, unlike its Western counterparts, happily publishes its dealings in the gold market for the entire world to see) made its biggest monthly purchase in 15 years in September when they purchased 1.2 million ounces:

Source: www.sharelynx.com

While in China, withdrawals from the Shanghai Gold Exchange suddenly spiked to 68.4 tonnes (the third-highest level on record):

Do either of these moves have anything to do with pre-positioning ahead of the Swiss referendum outcome? I have absolutely no idea.

What I DO know, though, is this:

Most people have written the SGI off as a sideshow of little consequence. Most people assume that it won’t get passed. Most people assume that, if it IS passed, it won’t make any real waves.

I think most people are wrong.

I think there is a VERY good chance the motion will get passed; and I think that, when it does, it will spark calls for similar actions in neighbouring countries such as Austria, for example, or maybe the Netherlands.

I also think that the physical gold market is far too tight to be able to handle any sudden widespread demand for large-scale repatriations of gold.

This story is going to be getting more attention in the coming weeks. Already, Rick Santelli has spoken about it on CNBC, and so has Eric King in a tremendous interview, and this is only the beginning. More polls will follow, as will increasingly desperate rhetoric from the SNB.

Amidst it all, calm and confident will be my friend Egon and the tenacious Herr Stamm.

Don’t bet against them.

The official website for the Swiss Gold Initiative is here.

And if you’d like to make a completely anonymous donation in any amount to help the initiative fund their campaign to restore sound money at the heart of Europe, then click HERE.

At the top of the page, you’ll see a button marked “Donate.” (I’ve done it and it’s easy — oops, there goes my anonymity.)

Oftentimes, it’s movements like the Swiss Gold Initiative that cause ripples which change things for the better, and I have a feeling that the time is ripe for an unexpected outcome.

Either way, I think you’ll be seeing a lot more of this little piggy in the days and weeks to come.


Grant Williams
for The Daily Reckoning

Ed. Note: When the Swiss Gold Referendum comes to a vote on Nov. 30, gold investors (and central banks) around the world will be watching with rapt attention. We’ll have to wait to see what the good people of Switzerland decide, but if you want to stay up-to-date with this and the other goings-on in the market, your best bet is to sign up for the FREE Daily Reckoning email edition. Once inside, you’ll get regular updates on exactly how this story is playing out and actionable advice on how to profit no matter what happens. Click here now to sign up for The Daily Reckoning, completely free of charge.

Click here to continue reading this article from Things That Make You Go Hmmm… – a free newsletter by Grant Williams, a highly respected financial expert and current portfolio and strategy advisor at Vulpes Investment Management in Singapore.

The post How YOU Can Help Pass the Swiss Gold Referendum appeared first on Daily Reckoning.

Categories: Economics

A Conference On Finance For Everyone Else

The Baseline Scenario - 1 November 2014 - 4:22am

By Simon Johnson

It is hard to move around in Washington these days without bumping into a conference on the future of finance. But most of these are either closed to the public, or run on behalf of large banks as part of their lobbying efforts.

Next week, there will be a conference open to everyone at George Washington University to discuss where we really are on financial reform, and what still needs to be done. You should register in advance through the web page (link given above), but there is no cost to attend.

Featured speakers include Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, and Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation. We also have a wide range of other technical experts – on issues from resolution to “shadow banking” – who are willing to speak frankly and engage in honest discussion.

GW Center for Law, Economics and Finance (C-LEAF), Stanford Graduate School of Business, Max Planck Institute for Research on Collective Goods, and Better Markets generously made this event possible.

If you want to understand what has really happened to finance, show up.

Categories: Economics

How one Brazilian slum is blurring the boundary between forest and city - The Guardian

Transition Towns in the media - 1 November 2014 - 4:18am

How one Brazilian slum is blurring the boundary between forest and city
The Guardian
“Brasilândia has established an institute for the acceleration of our social enterprises,” says Mônica Picavea from Transition Brasilândia, part of the transition towns movement which aims to help community projects build more resilient towns. “We are ...

Categories: TT news

How Small Cap Stocks Saved the Market

The Daily Reckoning - 1 November 2014 - 3:05am

This post How Small Cap Stocks Saved the Market appeared first on Daily Reckoning.

“Do you have the guts to buy the crash?”

That was the question I asked my Rude Awakening email readers on October 16th — just one day after the market hit bottom.

Sure, it took nerves of titanium to pull the trigger on that one…

But as it turned out, buying at that point was the right thing to do…

Because sure enough, stocks have since snapped to attention — as we predicted they would. The Dow is up over 1,000 points since it bottomed on October 16th. The S&P is up over 130.

OK, now it’s quiz time…

Do you know what pulled the market out of its nosedive? I can practically guarantee it’s not what you think. The answer is (solemn rolling of drums) small cap stocks.

That’s right, small cap stocks — the 98-pound weaklings of this year’s market. If you chickened out the first time around, now’s the time to scoop them up. Because they’ve turned a major corner, and they’ve got a long run ahead of them.

Let me explain why…

The big boys have been kicking sand in the face of the small caps all year. On October 13th (the first day of the week when the market went haywire), the Russell was down nearly 10% year-to-date, compared to about a 2% gain in the S&P. No one wanted small cap stocks in their portfolio.

But just two weeks ago — when most investors saw nothing but chaos in the plunging market — I detected a “silent buy” signal on small cap stocks. (I mainlined a gallon of ice water when the market started collapsing. Having the stuff in your veins helps you keep cool when things start going to seed.) And within the next few days, the magic began to happen. The small cap stocks began to rise. Here’s what we were watching:

None of the stammering sock puppets — sorry, experts — noticed when the small caps started sneaking higher. I don’t remember seeing it anywhere else in the financial media. Do you?

But for us, that signal tripped the buy button on the Russell 2000 small-cap index. And now that the rest of the market has found its legs… that “silent buy” is a shining beacon that could finally lead the hated small cap stocks out of their almost year-long darkness.

The Russell 2000 actually finished higher after the carnage of two weeks ago — while the larger stocks sank like a stone. And remember, these little guys were tanking all year. No one wanted small stocks in their portfolios. Small cap stocks have endured their bear market. Investor sentiment had swung so far to the downside that small-caps really have nowhere to go but up…

Over the past three weeks, the Russell 2000 has gained 10%, while the large-caps in the S&P 500 have squeaked out less than a 5% gain. That’s a huge difference for such a short time period. And it’s a brand new trend that I think will only get stronger.


Greg Guenthner
for The Daily Reckoning

P.S. Count on smaller stocks shedding their status as laggards as we approach the end of 2014. The road ahead just became a lot smoother. If you want up-to-date info on how to profit from this trend, you can sign up for my Rude Awakening e-letter, for FREE, right here. I’ll be giving my readers detailed info every single trading day, right around the opening bell, on this and other great opportunities in the market. Don’t miss out on your chance to profit. Click here now to sign up for FREE.

The post How Small Cap Stocks Saved the Market appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - And Now, The Reality of That CS Degree

The Market Ticker - 1 November 2014 - 12:15am

I have often said that H1Bs are poison, and offshoring labor more so.

I made my money in the computer field.  It used to be a good field to go into; good money could be made as a programmer, even working for someone else (my first "real" job was doing exactly that.)

Not any more.

Ever heard of Electronics for Imaging? We hadn't either until this morning, but it's apparently a multimillion dollar, multinational, public corporation based out of Fremont, California. And the United States Department of Labor just caught EFI red-handed in an investigation, which found that "about eight employees" were flown in from India to work 120-hour weeks for $1.21 per hour. EFI apparently thought it was okay to pay the employees the same wages they'd be paid in India (in Indian rupees).

This is why companies want H1b visas, it is why they're offshoring labor, and it's why college degrees are being rendered worthless at an ever-increasing rate.

There are still a few places where they make sense -- but virtually the entire computer science field is moving this way, toward being paid a buck an hour -- and if they can't do it here, they'll hire people from India over there where they still shit in the outdoors (really!) and thus don't have to pay for indoor plumbing and sanitation.

Thank both political parties and all those big companies.

Categories: Economics

Energy Crunch: Losing power?

Energy Bulletin - 31 October 2014 - 11:58pm

Should we be worried about the threat of a cold dark winter?

Categories: Peak oil news

ShareHub: at the Heart of Seoul's Sharing Movement

Energy Bulletin - 31 October 2014 - 11:47pm

Supported by the municipal government and embedded in numerous parts of everyday life in Seoul, the Sharing City project has proven to be an inspiration to city leaders, entrepreneurs, and sharing enthusiasts around the world.

Categories: Peak oil news

The Market Ticker - But I Thought It Worked?

The Market Ticker - 31 October 2014 - 11:21pm

Beware the tricks in your bag today....

Today’s decision to expand Japan’s monetary stimulus may be regarded as shock treatment in the central bank’s effort to affect confidence levels.

Bank of Japan Governor Haruhiko Kuroda’s remedy to reflate the world’s third-largest economy through influencing expectations saw the yen sliding and stocks climbing. Kuroda led a divided board in Tokyo in a surprise decision to expand unprecedented monetary stimulus.

Remember, folks, QE works.

It works so well that it has be repeated.  Time and time again.  Every time.  All the time.

Where's the exit for Japan?  Two decades in coming, and yet here we still are, needing evermore.

What you got out of this was a big (~2%!) move in the Yen -- weaker.  That of course translated into a big move northbound in the futures.  Remember that a collapsing currency results in a skyrocketing stock market priced in that currency, but whether this is "good" depends on whether you can eat your (electronic) shares.

Given this enormous move (weaker) in the Yen would you mind explaining where the inflation is that the BOJ wants to see?  Since it has not materialized perhaps you might also muse on exactly what the impact of this "program" actually is.

And that's the paradox, you see -- despite the outrageously-large move in the Yen over the last few years there has been no inflation to be found in Japan itself -- at least as measured from the government's point of view, and thus what has been reported.  But that there's no reported inflation does not mean that your standard of living improved.  One need only look here where there has been essentially no inflation over the last several years either (as reported by the government) and square that with the median family income numbers, or for that matter other periods of time here in America, to see that these so-called reported numbers mean exactly bupkis when it comes to whether your net purchasing power, as measured in the goods and services you can buy with an hour of labor, have improved or deteriorated.

So what's to come for Japan?

Hint: If you're a Japanese citizen I hope you enjoy grabbing your ankles.

Categories: Economics

Are We Hard-Wired to Think We Can Grow Forever?

Energy Bulletin - 31 October 2014 - 11:07pm

If rational arguments were primary catalysts for social change, perhaps a steady state economy would already be a reality.

Categories: Peak oil news

Frack Waste Investigation Launched by Pennsylvania Congressman

Energy Bulletin - 31 October 2014 - 11:03pm

In light of an increasing number of studies showing that fracking produces toxic emissions that have serious human health impacts throughout the entire process, Pennsylvania Congressman Matt Cartwright, a first-term Democrat, has opened an investigation into how toxic wastes from fracking are regulated.

Categories: Peak oil news

The Market Ticker - BOO!

The Market Ticker - 31 October 2014 - 11:01pm

Yeah, this is smart....

Another quarterly earnings report, another slam dunk for Facebook. The company made $3.2 billion in the third quarter, up 59 percent year-over-year, and grew to 1.35 billion monthly active users. More than 700 million people check Facebook on their phones every single day. These are impressive numbers. But Facebook is about to toy with the hearts and minds of investors, shareholders, and analysts by spending the next year investing heavily in its passion projects: WhatsApp, Oculus, and Internet.org.

Really?  Slam-dunk?  Like Spamazon?

Well, sure.  Why not?  As long as investors will put up with executives paying themselves billions via either cash or (worse) "buybacks" (that are not really buybacks, because the stock is not canceled -- it is instead put in the Treasury and then used to pay executives) while the firm returns zippo in dividends and earns no net profit, what's to deter this behavior?

The oddity in this isn't that it happens.  It's that traders and "investors" (if there are any left) sit back and allow it while holding their shares, permitting Bezos and Zuckerburgler to loot them under the guise of "future investment."

Uh huh.  Amazon has run this line of crap now for more than a decade sequentially and gotten away with it, so why not?  As long as Bezos can walk on water, who cares?  As long as Zuckerburgler can do so, who cares?

Well, obviously, not you and not I.  I find it utterly amazing -- and amusing -- that the so-called analyst community continues to give this sort of crap a pass as well, but I guess I shouldn't be.

After all, so long as there's someone standing around willing to bid up yet another zero-net business (FaceBook has a P/E of nearly 70, and Amazon's is negative) why, if you're an executive, should you not keep taking cash from the idgits that insist on shoving it into your hand?

Categories: Economics

The Peak Oil Crisis: A Reality Check

Energy Bulletin - 31 October 2014 - 10:06pm

For the last four or five years, we have been bombarded with a stream of stories about the “shale revolution.

Categories: Peak oil news

Resilience Roundup - Oct 31

Energy Bulletin - 31 October 2014 - 9:53pm

A roundup of the news, views and ideas from the main stream press and the blogosphere.

Categories: Peak oil news

Ways to Create a Democratized Economy

Energy Bulletin - 31 October 2014 - 9:36pm

Is there any path toward a more democratic, equal and ecologically sustainable society? What can one person do?

Categories: Peak oil news

Boys get to core of harvesting - Redditch Standard

Transition Towns in the media - 31 October 2014 - 12:13pm

Redditch Standard

Boys get to core of harvesting
Redditch Standard
Pupils at Skilts School worked with Fay Yeng from Yum Tum Club using a traditional apple press from Transition Town Redditch and apples donated by Biddle's. As well as sampling the juice and different varities of the fruit, they also had a kite flying ...

Categories: TT news

The Market Ticker - The BlackBerry Passport: Now THAT'S A Modern Device!

The Market Ticker - 31 October 2014 - 11:17am

When you open the box your first reaction is oh my God is that thing big!

It is.  If you have an American (or most other nation) passport, go get it.  That's the size of the phone, almost to the millimeter.

It's substantial.  Neither light or ridiculously heavy, and reasonably svelte.  Unlike many devices these days the body has an outside metal band that appears to be stainless steel, punctuated with the charging connector on the bottom, the volume and mute keys on the right, and the power button and headphone jack on the top.  The rear surface is a lightly-rubberized plastic and soft to the touch, providing a good gripping surface.

The rear of the phone sports a flush camera (it does not stick out, unlike the new iPhones) while the face is taken up by the screen and...... a keyboard.

Up top a small cover comes off (at the center top there is a small notch for a fingernail to be used) to reveal the nano-sim and SD-card slot.  The battery is enormous but not directly replaceable (although the unit has been disassembled at this point by some and it appears to be reasonably serviceable -- which is nice.)

Will it fit in your pocket?  Yes, as will an actual passport.  Unless you wear those ridiculous skin-tight jeans that won't fit a proper-sized wallet, you're fine.  The standard pair of men's Levis swallows the phone in the front pocket without complaint.  So does a pair of dress pants, or (of course) a suit jacket pocket, which is where you would typically keep your passport when traveling. The bound paper one, that is.

I swapped my T-Mobile account to a nano-SIM (the Z10 takes a micro), popped in the 64GB SD card that I had in my Z10, then powered it up.

My first impression on going through the setup and mandatory quick tutorials -- which now include teaching you how to use the touch-sensitive keyboard (yes, it works like a trackpad as well as a keyboard!) revealed that this device is smoking fast and the screen is simply gorgeous.  Colors are vibrant, clean and the resolution is outstanding.  Not wanting to screw the software up I elected to set it up from scratch rather than attempt to port over my most-recent backup from the Z10 -- which I might have been able to accomplish, but it wasn't worth the risk.

First things first -- I used Sachesi to load SNAP, so I could easily get the Android apps I had on the Z10 back, then went into BlackBerry World, signed in and it transferred my credentials over.  All my previous purchased apps from the Z10 were available and I narfed them, setting up my folders as I had previously.

The task of telling the phone where to find my calendars, contact database and such was then upon me, along with re-setting all the customizations for various people I communicate with (custom ring tones, etc.)  The entire process, and remember that I'm migrating from a Z10 I've used for the last year and a half (with all the data and apps you might expect I'd have over that time!) took about an hour to complete.  Note that I keep my calendars and contact database on my infrastructure -- the Passport will talk to Google's systems among others, but then Google has your calendar and contact database.  No thank you; I will run my own over an encrypted link, and BB10 devices support that with minimal hassle in setup.

It was during this process that I discovered that this phone has one hell of a pair of stereo speakers in the bottom bezel.  You won't be playing concert halls with it, but it's very unlike what you think of as a "phone".  The sound is loud, clear, and has surprisingly good definition for coming from that tiny little case.  This augurs well for those who want to use the phone as a speakerphone for small groups -- good (and acceptably loud) speakers are, of course, a big part of being able to do that.

The keyboard took only minutes to become acclimated to -- I'm fast and more-importantly, accurate with it.  I've never been a fan of physical keyboards other than "sliders" as I have been unwilling to give up the screen real estate, but this implementation won me over quickly.  Being able to swipe backward across the keys to perform a backwards word delete, for example, is one of many intuitive touches that just plain works.  I thought the context soft keys above the physical keyboard would be a gimmicky pain in the butt, but they're not.  It's much faster to use than on-screen "soft" keyboards -- even the really nice-working ones as are found in the more-modern smartphones like the Z10, Swype on Android devices and similar.  In short the keyboard is a winner -- a big winner if you actually type things.

The phone has 3Gb of system RAM along with 32Gb of device flash storage, and has no problems with keeping multiple things going at once.  Should you wish to have more (and you should for music, video, picture and similar storage) an SD card of up to 128Gb can be used.  Note that for cards larger than 32Gb the phone downloads (on first use) a driver for exFAT; on first boot my Passport wanted to grab a software update and refused to load that SD card driver until it completed, which took a few minutes.  But as soon as the update completed and I allowed it to reboot (it was polite enough to ask and allow me to defer until it was convenient) it all was good from there.

Cold boot time for this device is quite short.  I measured 55 seconds from pressing the power button with an "off" phone until the lock screen was displayed.  That's exemplary -- and a lot faster than previous BB10 devices.  But -- there's no real reason to shut the phone off; I've not had a crash on a BB10 device since the very early 10.0 days roughly 18 months ago....

About this time into my use I started to find surprises in the new hardware and software combination -- all good.

First, in Android apps if you swipe down from the top you'll see a "Zoom out" option.  If you choose it the unit will resize for the full screen resolution instead of a "clipped" phone-style Android app size, and tell the app it has the full resolution available.  Some apps will go into tablet mode when you do this -- which is really, really nice.  Think trading apps, for example (e.g. ThinkOrSwim), or the Kindle e-book reader.  Speaking of which the Passport works exceptionally well for that application, should you be into book-reading.

Next, a double-finger swipe down on the physical keyboard brings up a full virtual keyboard (above the physical) complete with all the symbols, and a second double-finger swipe changes to a second set of symbols.  A third dismisses it.  Very handy.

The BlackBerry "signature" multicolor LED on the front is present; get the BlackBerry App BeBuzz Pro for greatly enhanced capability in this regard.  To give you some sort of idea what I do with it I have two contacts (my daughter and g/f) that have their own "colors" -- yellow and pink -- that I have blinking for any sort of message (email, facebook, text, missed call etc) from them.  Thus if I have anything pending from them (unseen) I know instantly without having to wake up the phone.  For unread general texts, the LED blinks green, for emails blue.  Then there are patterns I have set for missed calls (red/blue) and there's another one for no Internet connectivity (e.g. in an area with a crap signal) -- red/red.  As a result I know the status of the device at a glance, and what if anything I haven't seen.  This is one of those features that Apple has never figured out the need for, and while some Android devices have it, not all do.  I consider it essential after having had it for the last couple of years and would never buy a device without it.

The BB10 "bedside mode" is another nice feature; your phone is your alarm clock.  We all charge our phones at night, yes?  So buy a little stand for your bedside table, plug in there, and pull down the top menu -- you get "bedside mode."  The screen appropriately dims way down to red so your eyeballs don't get blasted out and adjusts for the room light (or more to the point, the lack thereof.) You can set this to allow phone calls (and only phone calls!) to ring through or silence all alerts while in that mode.  Alarms are of course supported as well (what good is a clock without an alarm, and of course you can wake to any music from your collection.)  Now you have a travel alarm clock that really works (including snooze) that is your primary clock, both home and away.  Excellent.  Note that in 10.3.1 firmware, which I have on my Z10 but is not yet available for the Passport, notification profiles can be radically customized for any mode -- including this one, so if there are people who you must hear from irrespective of when you can tell it to do that.  This is one of those little BlackBerry features that has replaced a device I used to have both in my home and when traveling -- the old mundane clock.

One "random" note -- if you're one of those people who texts in the car while driving (and you know damn well you shouldn't) I will tell you right now -- don't get this phone.  It is very difficult to operate one-handed, especially for entering text.  So if you're hellbent on trying to kill yourself or others by being distracted while driving this phone isn't for you.

On the other hand in an airvent clip holder as a GPS device the Passport is incredible.  The screen is very crisp, brightness auto-adjusts nicely (as do the other BB10 devices; BlackBerry got this right on the entire line) and overall it's a great user experience.  Mireo works well also if you have purchased it (offline nav with maps on your SD card or in device memory.)  Want Google's maps?  Yes, that works -- you can't sign in (since BlackBerry doesn't formally support Google Play) but the navigation portion is fully functional.  Just remember that whenever those apps are running you're giving your location, direction of travel, speed and identity to both the company involved (e.g. Google) and the NSA.  If you'd like some privacy pony up the few bucks for Mireo, but in using it rather than BlackBerry's (or Google's) mapping app you will give up active traffic (e.g. wrecks, etc) avoidance.

Now let's talk about BlackBerry Blend.  It only works at present on the Passport, and it's a game-changer.  It connects over WiFi, cellular data or USB (your choice of any or all.)  You load an app on your desktop, laptop and/or tablet; when activated it mirrors your phone messaging and calendar screens on your computer.  When you get a message, email, BBM, anything -- you have it available on your computer, which means your phone can remain in your pocket all the time when you're at your desk, especially if you have a bluetooth headset to take a phone call.  Oh, and did I mention that the file manager is available from Blend, so you can copy files to and from the phone, including from your linked cloud accounts such as Dropbox, Box and even your PC or Mac if you set that up via Link as well?  The exceptions are that the Twitter and Facebook clients don't mirror.  I also am not terribly impressed with the calendar visualization and interaction, but for messaging (which is the part I find most-compelling) it's flat-out awesome.

Back in my Android days I had a rather kludgy version of this that sort-of worked.  This is different -- Blend is awesome sauce and it's a unique feature.  It's secure (it uses the internal tunneling that BlackBerry has in Link), it's reasonably quick, it works from and to pretty-much anywhere (on my laptop and desktop transparently, for example) and I don't have to pull the phone out of my pocket at my desk or pick it up; as long as the network can "see" it the functionality is there.  Essentially, unless you need to charge the device (the charge status is visible in the lower right corner as well) provided you have a headset to take a call with you never need to take the phone out of your pocket, purse, briefcase or otherwise while at your desk for the common things you do with it while working.  I like it -- a lot.

Now onto Android compatibility, because I know a lot of people care about it.  You have the Amazon app store that's preloaded if you wish to use it.  I don't and haven't.  I use SNAP so I have all my Android apps available.  You choose. Those who argue that "sideloading" is difficult have rocks in their head; you simply plug in the USB cable once and drop the BAR file on the window.  Done.  It's that simple -- no "development mode" is required or anything else.  I had to do it exactly once when I put SNAP on my Z10, and I had to do it once for the Passport.  Whoopie.  It's no harder than loading a program on a Windows computer or a Mac; if you can drag a file from one place to another you can do it.  Once done you simply use the app like any other on the phone itself.

Performance-wise Android apps run very well on the Passport.  There have been some that were constrained -- severely so -- on the Z10.  It's simply a matter of running the Android apps in a virtual machine and the constraints of doing so alongside the rest of QNX and the BlackBerry apps in a device with only so much RAM.  This has gotten worse over the last year or so as app developers in the Android world started counting on devices having more and more memory native -- Fox News and MyFitnessPal are two that over the last six months have seen multiple updates that rendered them quite-severely constrained performance-wise on the Z10 -- while previous versions were great.  The Passport's 3Gb of RAM eliminates this consideration entirely and the difference is a quantum level of improvement in the user experience.  In short a large number of Android apps ran really well on the Z10.  Nearly all of them, provided they don't need Google's Pay service (e.g. in-app billing) run really well on the Passport.

How about the camera?  It has 720p and 1080p video recording at both 30 and 60fps, the latter being "slow motion" of course when played at 30fps.  The shooter itself has a 12Mbps sensor, a dedicated image processor and hybrid IS (both optical and digital); it works extremely well.  It is capable of shooting in single-shot, burst mode (hold down the button and it rapid-fires frames) and of course video.  Stills in 1x1 (square) format are 3120x3120 pixels; f/2 aperture.  Your options for aspect ratio are 1x1, 4:3 and 16:9.  I am getting clear pictures without flash at 1/5th of a second in dark locations such as my local neighborhood bar; the IS works amazingly well in low light.  IMHO the JPEG algo is a bit too aggressive with sharpening but it's not awful by any means. In short while the camera will never be mistaken for a dSLR it produces very credible imagery -- even without flash in challenging lighting conditions.

Battery life is as expected -- that is, excellent.  I've spent the last couple of days intentionally not plugging the phone in at all and being that it's a new device and I'm playing around with it a lot I'm using it very heavily.  I've yet to run out of power with a full day's heavy use spanning 18 hours, even when I include a half-hour or so of navigation.  That's something you typically cannot do on any phone without plugging it in -- nav is pretty much the worst-case scenario as it heavily exercises the radio (if you're using maps over the cell link), GPS receiver, display (of course) and the CPU -- add it all up and you have a major power pig on your hands. Nonetheless, even with intentionally not plugging in while in the car I've yet to run out of power before retiring for the evening, although I have gotten into the single-digit percentage remaining range.  Bravo.

The 10.3.0 OS provided has the browser "auto-font size" problem that is in all of the previous versions of BB10 back to when manual font size selection disappeared (~10.1 if I recall correctly), and which I've reported on before. It's not particularly serious but is a bit annoying.  This is fixed in 10.3.1 but there is currently no leak available nor any official update for the Passport -- and the Z10/Z-30/other device leaks that are available to date have no flash available in the browser at all which some people will find unacceptable.  10.3.1 will come, and has other advantages -- but for right now it's definitely a bit of a bleeding edge in that in addition to flash being missing IKEv2 VPNs are broken.  The latter is a serious problem for me as I really, really like the automatic connect-back to my VPN for any "open" WiFi network -- it secures such connections very effectively and completely but simply doesn't work right now on 10.3.1.  On the other hand the profile customizations are awesome, so I'm very much looking forward to its availability for the Passport.

Reading content (e.g. books, web pages, etc) on the screen is wildly satisfying -- dramatically better than any other "pocketable" device I've used.  The Kindle app works fabulously and I strongly recommend using the "Zoom Out" mode with it, as it then goes into tablet configuration and is just a flat-out joy.  Incidentally, if you select that mode for an Android app the mode is "sticky" on a per-app basis across invocations.

In the end this is where the magic of the balance that BlackBerry put forward with the Passport design really shines -- they managed to get the utility of a tablet in your hands in terms of reading pleasure, whether your "reading" emails, books or viewing images and business data while not forcing you to try to stuff a 7" tablet in your pants.  While the device is only about 30% wider than my Z10 in point of fact, and about the same thickness, it is dramatically more-usable for content consumption and inspection.  Some of this comes from the screen size, and the rest comes from the visual resolution and fidelity -- with 453ppi the screen surpasses what Apple calls "retina" (in fact it's best-in-class) and keeping with the Z10's design it's an IPS panel as well.  It's a matter of balance and BlackBerry hit the ball out of the park in that regard.  

Any bigger would be too big; like Goldilocks' porridge the Passport is "just right."

Oh, and it fits in my sporran -- yes, that's what you wear with a kilt.  I have one (for hashing) and it can be used while running (it's sort of a "front mount" fanny pack.)  I was concerned that I wouldn't have a running solution for music with the Passport but in fact I do.

I've written much about BlackBerry's OS 10 in the past and how I consider it to be a revolutionary operating environment; the Hub standing alone is revolutionary compared against either Android or IOS.  Another example is BlackBerry Travel -- it reads your email accounts and picks up anything travel related, automatically updating itineraries and similar.  Make a hotel reservation and it will pick up the confirmation email back to you without your interaction; you can then point at the hotel in Travel and tell the phone to navigate there and it will do exactly what you'd expect -- open up the maps application and route you there.  There's no keying in the address of the hotel necessary; it picks it up automatically.

Another example of this integration: I had Travel alert me of a gate change while sitting in front of the gate at the airport in Dallas before the board in the airport updated!  It's that good, that fast and if you travel at all for business or pleasure it's enough reason to use a BB10 device all on its own.  None of the competitive offerings come close.

Being able to run my own email, calendars and contact databases on my infrastructure without hassle (or having to load an external app) is extremely useful, as is the integration of all of this into the Hub.  Android still doesn't handle this sort of thing properly; Android is great if your email, contacts and calendar are all Google based, but what if it's not -- or you don't want it to be?  What if you have a half-dozen email accounts in different places and want all of them available on a seamless basis?  K9Mail works well on Android in providing this functionality, for example, but it's an app and not integrated as a result.

10.3 has extended the BB10 environment in many meaningful ways, including nice touches such as knowing when you pick up the phone from a flat surface (it wakes up) to the picture password option (incredibly secure yet very fast and easy to use), quick "triage" for your various accounts (allows filing and deleting with a single touch) and more.

My complaints in terms of missing features are all of the OS variety -- there is still no S/MIME standalone support (for those not on BES) and there should be, and PGP would be nice.  This is something that's quite-important and not just for encryption -- digital signatures provide evidence of lack of tampering, and are valuable standing alone. PGP is rumored to be coming, but there's been silence on S/MIME for non-BES users and IMHO that's idiotic. 10.3.1 has a decent set of contact-based overrides for profiles but I'd like content-sensitive capabilities (e.g. "If a text message from Joe comes in AND contains the word URGENT, override the profile settings") that are specific to each profile (e.g. the preceding is ONLY VALID in "Bedside mode".)  The problem with the overrides is that if I have the phone set to silent I probably really mean it, while if it's in "Bedside Mode" I'd like certain things to override and ring through, but only certain things (and from certain people.)  10.3.1's customizations get me halfway there; the other half would be fabulous. BlackBerry absolutely should allow modification of Android app permissions on an individual basis (yes, I know this can break an app but that's ok -- it should be my choice individually as it is for native apps) and there's nothing other than BlackBerry's decision in coding their Android VM keeping them from permitting it.  Finally, BlackBerry needs to improve its IMAP integration; it is nearly perfect, but for one flaw -- "delete" means delete, unlike virtually every other implementation that lets you choose between that option and having the mail client move the message to an archive (or "trash") folder instead.  I deal with this by having a "mirrored" email setup but fixing that problem would make for a true "one mailbox, many clients" implementation that works.

None of this is Passport-specific and they're mostly things you've heard from me before.

I have discovered one glitch specific to the Passport that annoyed me -- if you have "instant previews" turned on and get a message pop-up (e.g. a text message, etc) while using an Android app, and reply to it, the soft keyboard appears above the physical keyboard as expected (for numbers, symbols, etc.)  It does not always disappear when you hit "send".  That's a bug in that the soft line of keys will cover a piece of your app's screen and should disappear when you're done with the pop-up notification; closing and re-opening the app clears it.  For a first-release software version, I'll note, one glitch that is mildly annoying is pretty darn good!

What could BlackBerry do that would advance things even further?  Improve Blend so that it can fully mirror the screen environment and port OpenOffice (or LibreOffice).  If they then implemented my previous suggestion to use WiFi as a means to support an "external" screen (with effectively unlimited resolution) you now have a very effective desktop replacement for many applications and for those heavier users you have a seamless integration option too.  The Passport has the processing and RAM capacity to support this, along with the connectivity required.

So what's my verdict, in summary?

BlackBerry's Passport brings to the forefront a device that is rationally-priced ($599 unlocked and no-contract at introduction; it will go $100 higher soon) while having top-of-class specifications, a fabulous screen that rivals tablet capability for reading books, working on spreadsheets or browsing images, the iconic BlackBerry keyboard in a new incantation that works exceptionally well, 32Gb of NVRAM (instead of the more-common 16Gb), 3Gb of system RAM (eliminating contention issues in my experience) and a SD slot that will accept up to a 128Gb card.  Add to this incredible battery life, excellent performance, Blend for game-changing desktop integration and the total package winds up making time for you in your day instead of wasting time.

The bottom line is that the Passport is a device that fundamentally fulfills the promise made years ago yet not delivered until now -- that is, to be smart.  Such a device should learn from you, it should do things intuitively and it should make your life easier -- not because it enables you to do things if you go through some convoluted set of steps but because it does the logical thing for you and thus reduces the time you have to spend to get your work done.

BlackBerry has a winner in the Passport.

Simply put it's an actual, as opposed to promised but not delivered, smart phone.

PS: A note on carrier compatibility -- this is a GSM/HSPA+/LTE "world phone."  As such in the US it is a T-Mobile, AT&T and similar technology regional carrier device.  There are multiple reports that it does work on WalMart's Straight Talk service (provided you're using the "pink" T-Mobile SIM they supply with their starter kit.)  It will not work on Verizon, as they still have their legacy bastard CDMA system in use.  If you're an AT&T customer you may need to talk to their customer service people to get LTE to come up, as AT&T does some really bizarre things with IMEI validation before permitting LTE connections.

Update 10/30: 10.3.1 OS is up for the Passport; AT&T's carrier code is showing it available.

Categories: Economics

Why a Strong Dollar is the Mortal Enemy of Gold and Oil

The Daily Reckoning - 31 October 2014 - 10:15am

This post Why a Strong Dollar is the Mortal Enemy of Gold and Oil appeared first on Daily Reckoning.

The United States is doing better than it has in years. Jobs growth is up, unemployment is down, our manufacturing sector carries the rest of the world on its shoulders like a wounded soldier and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession.

As heretical as it sounds, there’s a downside to America’s success, and that’s a stronger dollar. Although our currency has softened recently, it has put pressure on two commodities that we consider our lifeblood at U.S. Global Investors: gold and oil.

It’s worth noting that we’ve been here before. In October 2011, a similar correction occurred in energy, commodities and resources stocks based on European and Chinese growth fears. But international economic stimulus measures helped raise market confidence, and many of the companies we now own within these sectors benefited. Between October 2011 and January 2012, Anadarko Petroleum rose 58 percent; Canadian Natural Resources, 20 percent; Devon Energy, 15 percent; Cimarex Energy, 15 percent; Peyto Exploration & Development, 15 percent; and Suncor Energy, 10 percent.

Granted, we face new challenges this year that have caused market jitters — Ebola and ISIS, just to name a couple. But we’re confident that once the dollar begins to revert back to the mean, a rally in energy and resources stocks might soon follow. Brian Hicks, portfolio manager of our Global Resources Fund (PSPFX), notes that he’s been nibbling on cheap stocks ahead of a potential rally, one that, he hopes, mimics what we saw in late 2011 and early 2012.

A repeat of last year’s abnormally frigid winter, though unpleasant, might help heat up some of the sectors and companies that have underperformed lately.

On the left side of the chart below, you can see 45 years’ worth of data that show fairly subdued fluctuations in gold prices in relation to the dollar. On the right side, by contrast, you can see that the strong dollar pushed bullion prices down 6 percent in September, historically gold’s strongest month. This move is unusual also because gold has had a monthly standard deviation of ±5.5 percent based on the last 10 years’ worth of data.

Here’s another way of looking at it. On October 3, bullion fell below $1,200 to prices we haven’t seen since 2010, but they quickly rebounded to the $1,240 range as the dollar index receded from its peak the same day.

There’s no need to worry just yet. This isn’t 2013, when the metal gave back 28 percent. And despite the correction, would it surprise you to learn that gold has actually outperformed several of the major stock indices this year?

As for gold stocks, there’s no denying the facts: With few exceptions, they’ve been taken to the woodshed. September was demonstrably cruel. Based on the last five years’ worth of data, the NYSE Arca Gold BUGS Index has had a monthly standard deviation of ±9.4, but last month it plunged 20 percent. We haven’t seen such a one-month dip since April 2013. This volatility exemplifies why we always advocate for no more than a 10 percent combined allocation to gold and gold stocks in investor portfolios.

Oil’s slump is a little more complicated to explain.

Since the end of World War II, black gold has been priced in U.S. greenbacks. This means that when our currency fluctuates as dramatically as it has recently, it affects every other nation’s consumption of crude. Oil, then, has become much more expensive lately for the slowing European and Asian markets. Weaker purchasing power equals less overseas oil demand equals even lower prices.

What some people are calling the American energy renaissance has also led to lower oil prices. Spurred by more efficient extraction techniques such as fracking, the U.S. has been producing over 8.5 million barrels a day, the highest domestic production level since 1986. We’re awash in the stuff, with supply outpacing demand. Whereas the rest of the world has flat-lined in terms of oil production, the U.S. has zoomed to 30-year highs.

In a way, American shale oil has become a victim of its own success.

At the end of next month, members of the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna. As Brian speculated during our most recent webcast, it would be surprising if we didn’t see another production cut. With Brent oil for November delivery at $83 a barrel—a four-year low—many oil-rich countries, including Iran, Iraq and Venezuela and Saudi Arabia, will have a hard time balancing their books. Venezuela, in fact, has been clamoring for an emergency meeting ahead of November to make a plea for production cuts.

Although not an OPEC member, Russia, once the world’s largest producer of crude, is being squeezed by plunging oil prices on the left, international sanctions on the right. This might prompt President Vladimir Putin to scale back the country’s presence in Ukraine and delay a multibillion-dollar revamp of its armed forces. When the upgrade was approved in 2011, GDP growth was expected to hold at 6 percent. But now as a result of the sanctions and dropping oil prices, Russia faces a dismally flat 0.5 percent.

The current all-in sustaining cost to produce one ounce of gold is hovering between $1,000 and $1,200. With the price of bullion where it is, many miners can barely break even. Production has been down 10 percent because it’s become costlier to excavate. As I told Kitco News’ Daniela Cambone, we will probably start seeing supply shrinkage in North and South America and Africa.

The same could happen to oil production. Extraction of shale oil here in the U.S. costs companies between $50 and $100 a barrel, with producers able to break even at around $80 to $85. If prices slide even further, drillers might be forced to trim their capital budgets or even shelve new projects.

Michael Levi of the Council on Foreign Relations told NPR’s Audie Cornish that a decrease in drilling could hurt certain commodities:

“[I]f prices fall far enough for long enough, you’ll see a pullback in drilling. And shale drilling uses a lot of manufactured goods—20 percent of what people spend on a well is steel, 10 percent is cement, so less drilling means less manufacturing in those sectors.”

At the same time, Levi places oil prices in a long-term context, reminding listeners that we’ve become accustomed to unusually high prices for the last three years.

“People were starting to believe that this was permanent, and they were wrong,” he said. “So the big news is that volatility is back.”

On this note, be sure to visit our interactive and perennially popular Periodic Table of Commodities, which you can modify to view gold and oil’s performance going back ten years.

With fresh volatility in oil production comes the fear that the most price-sensitive states will be hurt the most. Exceptionally vulnerable states include Oklahoma, Wyoming and North Dakota. Texas, the nation’s leading oil producer—one of the world’s top producers, in fact—is diversified well enough to not feel the pain as much.

What’s bad for oil producers, though, turns out to be good for American consumers, who are already benefiting from lower gasoline prices. As of this writing, the national average for a gallon of gas is $3.10, down from $3.35 a year ago, according to AAA’s Daily Fuel Gauge Report.

As a result, American consumers are looking at huge savings—$40 billion this year alone. According to Deutsche Bank’s Joe LaVogna, every penny that’s saved at the pump equates to a billion dollars in household energy consumption that can be put back into the economy in other ways.

I like to think of this as an unexpected and very welcome tax break. Automobile sales are already up from 2009. Lower gas prices might encourage some families to spring for that Suburban instead of a Prius.

As I said earlier, gold stocks have been hurting lately. One mining company that’s managed to not only survive in this uncertain climate but actually thrive is Klondex Mines, our largest holding in both our Gold and Precious Metals Fund (USERX) and World Precious Minerals Fund (UNWPX), with additional exposure in our Global Resources Fund (PSPFX). Headquartered in Vancouver, Klondex has complete ownership and control of the Fire Creek Project and Midas Mine, both in Nevada.

The chart below, based on our own research, shows Klondex’s relative strength to its peers and why we find the company so attractive in the long term. The y-axis indicates profit margin, the x-axis, enterprise value. The size of the spheres represents the amount of revenue generated by each one of these companies in the second quarter of 2014, Klondex’s first quarter of full commercial production.

What the chart conveys is that, in relation to its peers, Klondex has a significantly higher profit margin than companies with a market cap two to three times its size.

“This is going to be very positive for Klondex shareholders as we go into the year-end,” portfolio manager Ralph Aldis said during our webcast. “The third quarter should be another great quarter, and that’s when people will say, ‘Hey, that second quarter report wasn’t a fluke.’ They’re going to start buying the stock and get it moving.”

Indeed, Klondex has managed to stay above the Market Vectors Junior Gold Miners ETF for the 12-month period, delivering a positive return of 7 percent versus the index’s -7.5 percent.

On numerous occasions I’ve written about our research on the typical lifecycle of a mine, most recently in my whitepaper “Managing Expectations: Anticipate Before You Participate in the Market.” Below you can see the relationship between a mine’s lifecycle and the company’s share price.

As experts in mining stocks, it’s imperative for us to know which production stage the mine is in to manage our exposure to the company.

In the case of Klondex, its price action mimics the movements in share price based on the chart above, confirming our research.

It also supports the benefits of active management.

“When you buy an indexed fund, you’re basically just buying the market capitalization of those companies,” Ralph said. “You’re not getting the benefit of active management where we go out, meet the company’s management team and know its history. We’re familiar with the lifecycle of the mine in question, the money, the burn rate and the minerals the company is involved in.”

I couldn’t have said it better myself.

Frank Holmes
for The Daily Reckoning

Ed. Note: Regardless of how strong the U.S. dollar is, there will always be great investments in the resource markets. Readers of the FREE Daily Resource Hunter know that better than anyone. In each issue, subscribers are given unique access to the most exciting stories in the resource and energy markets, and are treated to at least 3 chances to discover the world’s most incredible profit opportunities. Don’t miss out on your chance to profit from this incredible market. Click here now to sign up for Daily Resource Hunter for FREE.

The post Why a Strong Dollar is the Mortal Enemy of Gold and Oil appeared first on Daily Reckoning.

Categories: Economics
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