 US companies with AAA rating: 1979: 61 2011: 4 - Microsoft, Automated Data Recovery, Johnson
and Johnson, Exxon Mobil. Visit grmike.blogspot.com for indepth coverage |
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Every portfolio should have a strong foundation and I think thatenergy stocks specifically those with a lot of commodity price exposure (etf's, oil, gold, silver, palladium stocks) are a great place to start (gold companies, for the most part have wide profit margins, making them attractive to all types of investors).Key Factors: In August 2011 South Korea added to its gold reserves for the first time in 13 years (882,000 ounces).In the 20 years leading up to 2010, central banks were net sellers of gold but that changed dramatically since with even Greece and Thailand adding to their reserves. In fact UBS recently polled the central banks and found that 22% of them consider gold the most important reserve asset for the next 25 years. About 1/10th of reserves are held in gold however there's a disparity between developed (50%) and emerging (1-3%) economies. Did You Know? Sixtyfour percent of Ron Paul's investments are in mining stocks and 5% of the total is in Canadian based juniors. Did You Know? COMEX owes futures and futures options investors $80b in silver but they only have $2.7b in deliverables. Did you Know? Royal Gold gets 24% of its revenue from a mine that only produced 13,070 oz gold in 2q2012. more on Royal Gold. Walmart same-store sales fell for 9 straight quarters before a 1.3% increase in the three months ended October 2011. Goldman Sachs expects the price of oil to reach $140 by the end of 2012. US oil and gas mergers, acquisitions valued at $186.5B +35% in 2011. US oil prices +19% in 2011 at $95.12. Europe's oil embargo on Iran WILL affect both Europe, Iran: Oil makes up 60% of Iran's gdp, 45% of its food is imported, Iranian oil is Europe's 8th largest source of imports 4.39%. Apple's $13B in 4Q 2011 profit was an industry record. In fact it was more than google made in revenue during the quarter ($10.584B). That's even with google's Android platform reducing iPad's share of the tablet market to 60% in 2011 and Android taking a 48% share of the smartphone market globally compared to 30% for iOS. So google may be getting more sales evidenced by the $865 million quarter to quarter increase in revenue in the last quarter of 2011 but it's still not helping earnings which fell $23 million in the same quarter. Apple sold smartphones at a rate of 285 per minute in December; Total was 15.43 million in the last quarter which exceeds the entire 2010 fiscal year of 14.8 million. Manufacturing growth in China slowed in December 2011 for the second month in a row, according to HSBC's purchasing manager's index. Below 50 denotes contraction, in December it was 48.7 compared to 47.7 in November so the contraction was a bit smaller than it was in November. In November China lowered the reserves banks are required to have on hand to cover their own obligations for the first time in three years. These effects can be considered a consequence of deflation and slower economic growth. China's repurchase rate is also at a five month high of 5.6%; Repurchase rate is the rate at which the central bank lends shot-term money to the banks against securities. When the rate increases borrowing from the central bank becomes more expensive. The commodities market is entering a consolidation and deflationary period caused by the new US debt ceiling cap for 2013, dollar rally as well as gold and silver's post 2008 rally. The gold to silver ratio is nearing 60 which represents a doubling since April. Central banks continue to buy with Russia, Mexico, Belarus and Colombia purchasing 26 tonnes in October. Poor debt sale showings in Italy, Germany and Spain mean debt may literally be insurmountable for a number of key countries including the U.S., Japan, Italy which are the three leading bond markets; they all have debt problems in fact according to Barclay's Italy is "mathematically beyond the point of no return", Italy's bond yields have surpassed the critical 7% mark). That will lead to greater central bank buying. In September, JP Morgan forecast palladium at an average spot price of $938/oz for 2013, that's nearly 50% higher than palladium's price in October 2011 ($610/oz); JP Morgan also forecast oil at $121/bbl (output 91M bbls/d in 2013). Research In Motion apps world has around 40,000 apps, or about 6X less than Android. North America's biggest gold deposit (Kerr Sulphurets Mitchell Iron Cap + Snowfield) has nearly 65 million ounces of proven-probable gold reserves. The 2 companies controlling the entire deposit, combined, have a market value of only $1.9 billion!! the deposit also has significant silver, copper and molybdenum reserves. MEG Energy is only valued at around $10B by the market but has oil reserves comparable to companies valued 5-6 times higher!! In 2011 between April and August 2 acquisitions by Aurico raised reserves by over 100% after it spent more than $1.9 billion on takeovers (Capital Gold, Northgate Minerals), 87% more than its own market cap in 2010.Companies with an unusually high beta value: Hecla Mining, Stillwater Mining, Research In Motion.Real Estate Investment Recovery: North Americans bought €4.95 billion worth of real estate in central London during the 12 months leading up to June 2011 which is up significantly from 2009 (€1.56B) and 2008 (€173M) but still down from 2006/2007 (€5.6B). In 1h11 Greater London received €5.1B or 39% of North American commercial real estate investment in Europe (North Americans account for 55% of non European investment). Gold: If, as many suggest, the People's Republic of China lets the RMB increase in value relative to the USD, that will weaken demand for gold in the short term as investors see the new exchange rate as a sign of economic stability but in the long run, the stronger RMB will increase Chinese demand for Gold due to its greater purchasing power. Also, a stronger RMB will raise Chinese import demand, indirectly increasing Gold demand from abroad too. October 1, 2011: 737,000 ounces of silver sold by the US Mint in a single day breaking the previous record. In fact that day's purchases represented 42% of all the silver purchased during the month of December 2010. It brought the year to date sales up to 32.9 million ounces. Molybdenum: Over half of demand comes from steelmakers producing molybdenum grade steel/iron alloys. Only about 15% of it is used in chemicals (last graph below shows the breakdown). In chemistry some of its advantages are: low toxicity, popular compounds requiring its high oxidation states. It easily binds sulfur ligands (organic & inorganic) and is a versatile industrial catalyst (catalyst demand comes mostly from the petroleum/petrochemical industry which values its ability to react with/bind sulfur thereby reducing the sulfur content of petro products (important since low sulfur content petroleum is becoming harder to come by).  Images in order: 1 year gold/silver ratio, 4 year gold/platinum ratio. Something to keep in mind: In 2009 when precious metal prices took a nose dive, gold was the only one with an ISO currency code to record positive growth on the year. (Rhodium fell from a high of $10,000 in October 2008 to an average of $1,500 in 2009). Some applications of rhodium: used to make nitric acid (used most notably in gold testing), plating of mirrors (very reflective).
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