Hi Eva:
<<Many thanks for your report, appreciate it>>
You're welcome! So now I'm going to really BORE you with a *much* longer report from the conference. Below I've copied my notes from comments of the various newsletter writers who were there, regarding the "big picture". I haven't edited this because I wrote this for myself, so please forgive typos! Also, it's not necessarily in the order that I'd do it if I was to give my priority to the different speakers. For example, John Kaiser's comments are at the end, but I think really highly of him.
Finally, these are my own notes -- not the exact comments of the various speakers -- and I've paraphrased them and compiled them from the various plenary sessions, workshops, etc. that I attended. I missed quite a few sessions. And I also "edited out" a few speakers -- e.g., much of Grandich's stuff I put little weight on, and I didn't include anything Skarica said! So this is MY summary of what I thought was important! IMPORTANT... DO YOUR OWN DD... DON'T ACCEPT ANYTHING I POST HERE AS ANYTHING OTHER THAN MY OWN INTERPRETATION OF REALITY, ETC., ETC>!!! <vbg>
Hope things are going well for you Eva. It's been a long time!
Best regards,
Howy
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TRIC Conference -- Toronto -- October 21-22, 2007
*** SUMMARY OF NEWSLETTER-WRITER COMMENTS ***
David Morgan:
- The derivatives are the problem. Total derivatives are now $500 Trillion, while the US GDP is only $14 Trillion. Some trading relationships are now breaking down due to loss of trust between some major institutions.
- The PM Bull has a long way to go – at least 5 years.
Ian Gordon:
- Betting on deflation so thinks there’ll be a massive rush to gold, so he prefers it to silver. But if he’s wrong and we get inflation, gold would still be a good bet.
- Gold is in a long term bull market against all currencies. So own some gold wherever you live.
Michael Berry:
- You need some “discovery” in your PF. This could be in mining, high tech, whatever. The key to exceptional returns is to have some stocks that can cause surprises in their respective sectors.
- Stay with “tangible assets” or “stuff” for the next few years – oil sands; gold-in-the-ground; BM producers; etc. Stay away from “financial assets” – bonds, bank stocks, etc.
- He expects “lots of interest rate cuts in Canada” to prevent the Canadian $ from rising too much.
- Expect extreme volatility for the next 2 or 3 years and learn to live with it if you wish to keep investing.
- Expect China to cease exports in virtually everything. But while China is a key factor, remember that the US Consumer still generates 19% of world GDP. However, US Private Sector Debt is now 3.5 times Private Sector GDP!
- All western industrialized countries (except Canada) are running Current Account deficits.
- But the Canadian $ is only “relatively strong”. It’s still “going to zero” eventually. If the US$ goes to zero and the Can $ exchange increases to 1.00Can$ to 2.00US$, then 2 x 0 equals… Zero! So Canadians should be buying gold and silver too.
- The Commodity Super Cycle is still in Phase 2. We haven’t reached the blow-off phase yet.
Peter Grandich:
- Have a written strategy for your portfolio, including what to do when things turn against you. We’re about to enter a major Bear in US financial markets. How will you react in Canada when things turn against you as a result of this?
- The Dow has made a huge double-top over the last 5 years.
- In any sector, be prepared to hedge. E.g., with puts on PM stocks.
Danielle Park:
- Preserve capital. Don’t fall in love with any asset class or sector. If you like real estate, you should still hedge against possible major loss of property value.
James Turk:
- Even in the USA, at this point he would rather own real estate than US Blue Chip stocks.
- But if you like real estate, diversify if possible and own some outside your home country.
- The gold/silver ratio is low because either… (a) gold is artificially low… or (b) the effect of “peak oil” is already kicking in -- or a combination of both. In the medium term, he would expect it to revert to its historical mean by a major increase in the price of gold rather than a major drop in the price of oil.
- Check alternative sources such as Shadow Stats (http://www.shadowstats.com/cgi-bin/sgs to find “real” inflation data, estimates of the now-secret M3 figures, etc. Their estimates show that money supply (M3) has turned up more sharply in the last year than in recent history (+14.7%). The US$ is headed much lower.
- On a “net worth” basis, the USA is no longer the “richest country in the world”. It’s living on debt and its net worth is far lower than generally understood. For instance, the US Government has $57 Trillion of “obligations”.
- If you want to see where consumer prices are going eventually, print out a monthly chart of the CRB Index.
- A chart of the price of Crude Oil versus the US$, Gold and Silver, going back to 1945, shows that the precious metals still buy about as much oil as 60 years ago – and about as much of any other commodity. Gold is the ultimate “money” – the best store of value. [The charts Turk showed are EXCELLENT!]
- The effect of the “sub-prime” problem will be with us for years to come. The bulk of the Asset Backed Paper (ABPs) based on sub-prime mortgages in the US come due for renewal monthly from now till the end of 2008.
- Use physical gold as your bedrock investment to protect your assets. But he’s even more bullish on silver. Every month you should buy some gold and silver.
- The stock market is still going up for the same reason that it went up historically in other countries prior to their currencies collapsing – whether in the Germany of the 20s or Argentina more recently. People are switching their currency into “tangibles” as best they can.
- Although a US National, he now has NO assets in the USA and lives in the UK.
- The recent SIVs (“Structured Investment Vehicles”) are not long-term solutions – just accounting gimmickry.
Doug Casey:
- This is the beginning of “The Greater Depression”. In the USA, government will continue to bail out the financial system by printing paper – until the US$ reaches its intrinsic value of zero. Any wealth held in these dollars will be wiped out completely. Economic Depression is the opposite of Economic Prosperity. This will be bigger and worse than the 30s Depression – with ugly political, social and military consequences. “I’m the biggest bear of all”!
- Get a chunk of your assets out of your own country NOW. But Canadians should not invest in the USA! No country will be immune. Gold should be your bedrock.
- The long-term trend for commodities is still very much intact.
- Government, as an institution, serves no useful purpose. Don’t trust them! The US Government will do whatever it takes to continue it’s existence. For this reason, Canada, as a nation state, will cease to exist before the USA!
- The Greater Depression is coming SOON. Interest rates are going back to 20% and higher. The US Bond market – the biggest in the world – is going to be devastated.
- Worse, the real estate market is floating on a sea of debt and it’s all going to wash away! The entire industrialized world is vulnerable.
- Government will first destroy currencies in order to save masses of people from losing their homes.
- A mega-depression implies the opposite of the current situation of high prosperity. The standard of living for most people in the industrialized world is going to drop significantly. It’s going to be an economic and financial disaster, leading to political disaster.
- Buy gold as a hedge against this disaster. Diversify and get some offshore assets.
- Buy junior resource stocks. The rising tide will lift all the boats.
- The junior mining market has been “climbing the wall of worry” since 2003. The easy money was made before then. But the BIG money will be made from now. We haven’t got to the mania stage yet, but we could do so SOON. But the big money will be risky money and you should adjust accordingly.
Roger Wiegand:
- There’ll be another ½ point cut by the Fed by October 31st, accompanied by huge volatility and government manipulation in the markets. Meanwhile, his sources tell him that gold shorts are in serious trouble. This is why he expects gold to go to a new historical high by Dec 31st.
- Learn to deal with the new volatility. Trade more than before. When sudden profits are offered, take them. Restructure your PF in this way at least twice a year. Be more nimble.
- Your only US assets should be mining or commodity-based stocks.
- The US government will try to “make it work” – especially in the run up to the election – but ultimately it won’t work. The amount of bad paper that’s out there is massive and they don’t even know its value. All they can do is react on a short-term basis and keep applying band aids.
Jim Willie:
- The Saudi decision to not cut interest rates together with the Fed is MASSIVE. It signals a decoupling from the dollar and that the Petro Dollar standard is being broken. He expects a further 10% drop in the US dollar just as a result of this. “A huge dollar revolt is happening worldwide”.
- About 21% of all California loans in 2006 had zero down. Before it’s all over, there’ll be at least $2 Trillion in bailouts – maybe more.
- But the stimulous packages won’t work. Eventually the mining stocks will rise, but short-term the lack of solvency of lenders will force sales in all sectors. The numerous attempts to rescue bad loans will continue and you should use the opportunity to buy mining stocks on the dips.
- Wall Street will be bailed out first, so don’t expect collapses there at this stage.
David and Eric Coffin:
- The commodity super-cycle is very much intact. Expect 1 or 2 more interest rate cuts by the Fed. The US Government will always sacrifice the dollar for economic growth -- but especially in an election year they won’t allow a recession.
- Important to remember that the US$ is the world’s pricing currency. Devaluing this creates fewer problems for the USA than for all other countries.
- We are in the middle of a “millennia-scale” shift – not a “century-scale” shift in economic terms. Economic power and influence to change economic trends is moving from Europe/N.America to Asia. For example, we are NOT going to see BM prices come back to prior levels. Get used to it and plan accordingly.
- The metals-cycle is longer-term this time because very little new production has occurred so far. Most company growth has come from acquisitions. And from now on, the cost of bringing new production (new mines or expansion) onstream and of producing all metals is far higher than before. So don’t expect some sudden increase in production as a result of higher metals prices.
- All stocks with significant in-ground assets are now potential buyout targets.
- From now on, look to the smaller companies that are not purely exploration-dependent with: (a) the people skills to bring a small/medium deposit to production; (b) existing infrastructure; (c) economies of scale due to being in an existing camp (with nearby smelters, etc.); (d) the ability to build an existing deposit through exploration and drilling.
- Outside Canada, they like projects with oxide resources.
- Inside Canada, they like “small” VMS plays
John Kaiser:
- “Veneroso is dead wrong”. He and Paul van Eeden have suggested that there are huge hidden stockpiles of base metals around the world that will soon swamp the commodities markets. But there’s no evidence of this.
- Until recently, the mining industry itself was the most negative about its own prospects. It was forward-selling all production until about 2004 – but since then it has changed its tune and reversed that trend in 2006.
- We are in a super-cycle world wide and a recession in the USA will NOT put China and India into negative growth. Their rate of growth may slow down, but they’ll still be expanding.
- India is the “wild card” that nobody’s thinking about. Unlike China, it has a young and growing population and there will be a MASSIVE growth in BM consumption there over the next 20 years.
- He expects higher BM prices before “a move to equilibrium” (which will take many years). Expects $6 per lb copper before that consolidation. There is NEGLIGIBLE new supply over the next couple of years, and there’s been NO “mania” yet in this sector. Prior studies indicating new supply coming on stream keep getting pushed further into the future each year.
- Meanwhile the costs of production of all metals continue to rise, so formerly marginal deposit s continue to be marginal, even with higher sale prices.
- He sees great investment opportunities in the fact that infrastructure throughout the western industrialized world is falling apart and MUST be replaced. Meanwhile, as China/India increase their “environmental footprint”, we need to reduce ours. And there is a great necessity here to “rebuild with a smaller footprint”.
- We may see nickel and copper spike to new highs in the next 6 to 12 months. And when gold breaks $850, LOTS of juniors will move fast. Find ways of filtering out who is the cream. He likes to use filters in “people-tree” software to find competent groups and companies… “Who’s been bought out and may be investing elsewhere? What other companies are in their stable?”
- He’s still very bullish on lbs-in-the-ground companies and those targeted for consolidation. “Go for takeover targets!”
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