December 2014

Silver Wheaton (SLW) reports earnings

Real Deal portfolio member Silver Wheaton (SLW) reports increased earnings for the first quarter. Earnings were up 165% year over year.

“Record net earnings of $13.8 million ($0.07 per share) from the sale of 2.7 million ounces of silver, compared to $5.2 million ($0.03 per share) from the sale of 2.3 million ounces of silver in 2005.”Reports

 ”Record operating cash flows of $13.9 million (2005 – $5.2 million).”

“These results are spectacular, obviously assisted by continuing strong silver prices,” said Eduardo Luna, Chairman. “We expect our second quarter to be even better, as a result of silver sales starting up under our new Yauliyacu silver contract.”

Analysis: This is really a case of you aint seen nothing yet. As prices for silver move higher over the next several years I expect cashflow and earnings will explode upward. However I would be cautious here in committing new money as I expect the price of silver to pullback.

Take a look at the silver chart it has definitely gone parabolic. If you are invested in silver be careful as silver will most likely retrace quite a bit of this move. Nothing goes straight up without consolidating. Don’t believe the hype.…

With crude hitting $70+ and many traders thinking we go higher this summer I submit this article from the Daily Reckoning about how the successful folks from tech are moving into alternative energy. The market is now large enough that it is attracting serious capital and brainpower. I am a peak oil advocate, however i am not a doomsdayer like Kuntsler. If there is a market smart people will step up and solve the problems and make money to boot. One quote struck me from this article,

”Energy has got to be one of the top five problems the world faces, and it’s been frustrating to watch activists and politicians fail to solve the problem,’’ Metcalfe recently griped. “Now it’s time for the entrepreneurs and scientists to give it a try…The markets for the [alternative energy] products are huge. If you can get it right it’s really a market that’s infinite. We’re hopeful.’’

I hold several alternative energy stocks in my personal portfolio and my Marketocracy portfolio. I will post some of the ideas in the forums.

David Pauly from Bloomberg writes that the commodity markets must be near a peak because he thinks everybody is invested there.

Analysis: As usual the media gets it wrong. Has there been more intrest in commodities? Absolutely however as Jim Rogers pointed out there has been no investment in any infastructure or capacity in decades. Yes producers will react but it takes time to build a mine (10 years or more depending on the local) and as Rogers has pointed out, even if a large oilfield was found it would take years to bring it online. I think there will be corrections along the way but this thing is going to levels that will make the internut and housing bubbles look sane.…

Jim Rogers was quoted in Bloomberg yesterday and said the commodity bull has a long way to go. We here at the Real Deal like to follow the old adage of going where the smart money goes thats why we like Jim Rogers. This guy has made billions trading and he has been on this commodity supercycle theme sinec 1998-99.

He said,

“The shortest bull market for commodities lasted 15 years, the longest 23 years,’’ Rogers, 63, said in an interview. So if history is any guide, “they’ve got a long way to go.’’

“Supply and demand is terribly out of balance for nearly all commodities right now,’’ Rogers said in Singapore April 17. “This is not a bubble.”

“Nearly everything makes a new all-time high in a bull market,’’ said Rogers. He didn’t predict when gold would reach $1,000 an ounce”…

More confirmation on housing deflation

Housing-Deflation

It looks like the mainstream media finally have started to pick up on what is being reported in the blogshere about the slowdown in housing. CNN has an article about the slowdown but still trys to qualify it by saying “it might just be there could be an element of self-selection, with agents suffering a slowdown more inclined to vent.” What will the FED do as this becomes apparent to even them? If the FED stops rasing rates or even has to cut rates what will happen to the dollar support? How will China and Japan react to a rapidily devaluing dollar? I think gold is sniffing this out.…