___________________________________________

___________________________________________

“Everybody likes a kidder, but nobody lends him money.”

                                                                               Arthur Miller

February 3, 2012

 

Global Markets

US stocks are still having a difficult time finding momentum. The clouds of the European debt crisis still hang over the marketplace; largely offsetting optimism over a steady stream of improving global economic data. The NASDAQ and S&P managed to finish in the green yesterday, but the Dow fell 11 points to the downside.

Stocks stayed in a tight trading range, even after initial jobless claims fell to 375,750, the lowest since June 2008. So far this week, data has showed that the private sector added 170,000 jobs, and correction spending was higher than expected, and manufacturing was in line with expectations. None of it, however, has been enough to offset uncertainty in the long term economic view.

Once again, US stock futures point to another flat opening this morning, ahead of US payrolls data.

In a side note, the so-called Baltic Dry Index, which essentially measures economic activity by means of the shipping industry, has now fallen to record lows. The global economy basically boils down to moving goods from one point to another and, as such, this may not be a good sign for the long-term.

Asian stocks finished somewhat mixed overnight. The Nikkei finished lower for a second session, with a loss of about 0.51%. Earnings reports within Japan’s technology sector have been particularly dismal and this is been a considerable drag on sentiment. Elsewhere, the Hang Seng recovered late to finish a few points higher, while the Shanghai Composite pulled off a respectable gain of about 0.77%.

The European markets are modestly higher this morning, as investors await the release of economic data here in the US. The upside ranges from 0.2% in Germany, to about 0.4% in London and Paris.

Updated Euro-zone PMI data confirmed initial reports of modest growth in the private sector. The gauge climbed to 50.4 from 48.3 the prior month. A number above 50 indicates expansion.

Meanwhile, negotiators are hoping to wrap up a deal between Greece and its creditors, which apparently will include a loss of about 70% for private bondholders.

 

Gold & Precious Metals

Gold quietly moved about $15 higher yesterday to close at $1758. This morning, as traders keep an eye on fluctuating currencies, and flat stock futures, gold has stayed in a tight range; giving up a Dollar at $1757.

Gold is likely to wrap up its fifth consecutive week of gains today, with prices about 12% higher than the start of the year. Most traders expressed confidence in the long-term trend for gold, although there is clearly some rest for a few bumps along the way.

Federal Reserve Chairman Ben Bernanke spoke to lawmakers yesterday, defending the Fed’s position to hold rates low for an extended period. Long-term easy money policy will, therefore, continue to be supportive of gold prices in the foreseeable future. Right now, with currencies and the equity markets influx, we may not see much movement today.

Gold’s safe haven status has changed a bit from what it once was, and prices have been more sensitive to economic stability. As such, recent global economic data has been relatively positive and this will be key for gold in the coming months. Global manufacturing data this week was better than expected. The latest data in the UK and Germany, as well as the wider Euro-zone has shown improvement. The numbers in China were also better than expected , which was good for economic sentiment but lowered expectations for monetary easing in China.

A possible downside risk for gold is any changes for the worst in Europe. Progress has been slow in terms of Greek debt and plans for Euro-wide fiscal coordination. Lying beneath the occasional moments of optimism is the realization that the problems run deep. Greece will face many challenges beyond any short term arrangements to avoid default. Several other EU member states also could face similar crisis in the coming months as well.

 

Energy and Commodities

Commodities are mostly higher this morning, but don’t have a whole lot of traction heading into the trading day on Wall Street.

Crude oil is drifting along, with a modest gain of 0.16% this morning up to $96.52. While traders had been keeping an eye on supply-side issues related to unrest in the Middle East and Iran particularly, attention has largely shifted to the demand side this week.

Disappointing inventories data took away all momentum from the energy markets. The Energy Department’s report on Wednesday confirmed a big jump in inventories. Crude stockpiles had risen by 4.2 million barrels last week, while gasoline inventories also climbed 3.0 2 million barrels. Other data showed gasoline demand fell to its lowest level in more than 10 years.

Adding some support has been the steady flow of positive economic data. In the US, the private sector added 170,000 jobs, construction spending was higher than expected, and manufacturing was in line with expectations. US jobless claims also fell. Global manufacturing data was better than expected this week.

 

Uranium Investing

At least one industry expert, Thomas Drolet, President of Drolet & Associates Energy Services, says he sees a supply crisis in the uranium industry by about 2016. He points out that long-standing supply is already dwindling and will be a growing issue in the next year or so. In 2010, 118 million pounds of uranium was mined, while global consumption was about 190 million pounds.

Uranium spot prices remain generally unchanged at around $52, but there continues to be a lot of deal activity within the industry.

China Guandong Nuclear Power Corporation has upped its stake in Kalahari Minerals to nearly 30% as it slowly moves toward a complete takeover

Elsewhere, Gold One International has finally completed its $250 million acquisition of Rand Uranium in a deal that was first announced back in May 2011. Gold One received approval from South Africa’s Department of Mineral Resources in late December 2011.

Elsewhere, Rio Tinto is wrapping up its Hathor Exploration acquisition, by buying up the small percentage of shares it did not already own. Rio said it will then de-list Hathor from the Toronto Stock Exchange.

Shares in Russian-owned miner Uranium One are on the rise after the company announced it had produced a record 10.7-million pounds of the nuclear fuel in 2011, which is a 45% increase from the prior year.

China’s Ministry of Environmental Protection has put together a draft of new safety rules for its nuclear industry. Once approved by the government, China may be ready to move ahead with new nuclear projects. No details of the draft have been released, but the ministry says that the new safety rules are “tougher” than earlier regulations.

 

Rare Earth Investing

The World Trade Organization basically gave China a symbolic slap on the wrist, by saying that China’s rare earth export restrictions were a violation of global trading rules. China quickly rejected the ruling and it is unlikely that any changes in policy would come as a result of it.

Recently, China’s Commerce Ministry announced a 27% reduction in exports for the first half of 2012. It should be noted, however, that China actually fell short of its quota last year, as weakening global economic conditions also reduced demand.

An Energy Department report suggested that several critical rare earth elements would remain in short supply in till at least 2015. The report highlighted dysprosium, terbium, europium, neodymium and yttrium as the key elements to watch.

The future of rare earth profits will lie largely in the heavy rare earths. This does pose a problem for some would-be manufacturers, as the refining process is complex and expensive and, as such, prohibitive to many junior miners.

 

Public Finance and Fixed Income

US Treasuries are heading for their second consecutive weekly gain ahead of today’s payrolls data. Recent economic data has been relatively positive, the traders think it has not been enough and that the Fed may find it necessary to intervene in support of growth.

Slowly improving sentiment toward Europe has helped boost French bonds in the marketplace, which have moved higher in seven of the last eight sessions. Investors have been a little more willing to move away from safer assets, such as German bunds, and toward higher-yielding investments.

Updated Euro-zone PMI data confirmed initial reports of modest growth in the private sector. The gauge climbed to 50.4 from 48.3 the prior month. A number above 50 indicates expansion.

Meanwhile, negotiators are hoping to wrap up a deal between Greece and its creditors, which apparently will include a loss of about 70% for private bondholders.

At a summit in Brussels on Monday, European leaders signed an agreement which moves them closer to fiscal coordination, which is seen by most as critical to the survival of the Euro. 25/27 EU member states signed off on the agreement.

 

International Currencies

The Dollar is a bit mixed this morning; gaining ground against most of its peers, but still about 0.15% lower on the Euro and the British Pound. Traders are waiting for the latest US payrolls data this morning and equity futures have been running flat as well.

So far this week, data has showed that the private sector added 170,000 jobs, and correction spending was higher than expected, and manufacturing was in line with expectations. None of it, however, has been enough to offset uncertainty in the long term economic view.

At a summit in Brussels on Monday, European leaders signed an agreement which moves them closer to fiscal coordination, which is seen by most as critical to the survival of the Euro. 25/27 EU member states signed off on the agreement.

Other details of the agreement include the establishment of a permanent €500 billion rescue fund and specific deficit control measures promoted by Germany.

 

Economic News & Corporate Earnings

 

______________________________________________

______________________________________________

“Difficulties mastered are opportunities won.”

                                                                Winston Churchill

February 1, 2012

 

Global Markets

In a similar pattern that we saw on Monday, stocks dipped at the open yesterday and recovered slightly as the day went on. This time, the Dow finished 20 points to the downside, while the NASDAQ was the only US index to finish in positive territory, with a gain of just 0.07%.

Better economic data in Europe, and optimism for today’s US data, has set a positive tone in the marketplace this morning. Futures indicate as much as a 100 point jump this morning on the Dow. Analysts expect to see improvement in the ADP Employment numbers and in US manufacturing in today’s reports.

New data in Europe showed that manufacturing in the euro-zone did contract but was better than expected.  Manufacturing data in the UK also beat expectations; rising to an eight month high. German PMI also came in a little better than expected.

Asia’s stock markets turned in a mixed performance overnight. The Nikkei managed to stay positive, but with a gain of only 0.08%. Meanwhile, the Hang Seng drifted 0.28% lower and the Shanghai Composite declined more than 1%.

Interestingly enough, it was positive manufacturing data in China that led stocks lower in Shanghai. China’s PMI climbed to 50.5 in January; a slight improvement from last month at 50.3. Analysts had expected a mild contraction and the better-than-expected numbers lowered expectations for further easing from China’s policymakers.

The European markets have responded strongly to better-than-expected manufacturing data across the region. Clearly many traders have been hungry for something positive as they wait out negotiations on Greek debt. At mid-day, the FTSE is up by about 1.3%, while stocks in Paris and Stuttgart have gained an average of about 1.6% so far.

 

Gold & Precious Metals

After another choppy trading session yesterday, Gold did manage to finish about six dollars higher at $1736. Gold has built more notable momentum this morning, after several positive economic reports out of Europe. Prices quickly jumped about $12, with gold now trading at $1748.

New data in Europe showed that manufacturing in the euro-zone did contract but was better than expected.  Manufacturing data in the UK also beat expectations; rising to an eight month high. German PMI also came in a little better than expected. Coincidentally, China’s PMI also climbed to 50.5 in January; a slight improvement from last month at 50.3. Analysts had expected a mild contraction and the better-than-expected numbers lowered expectations for further easing from China’s policymakers. If, in fact, the numbers showed a contraction, we probably would’ve seen a much bigger rally in gold prices this morning.

The next factor to consider is the talks between Greece and its creditors, which may conclude as early as today. Private bondholders have reportedly budged on their demands and may take what amounts to a 70% haircut on their existing holdings. Expectations surrounding these talks, however, may be a bit overblown. It would seem all too likely that, at the conclusion, many traders and analysts will turn their attention to Greece’s long-term prospects and to other EU members such as Portugal.

 

Energy and Commodities

Commodities have started gaining momentum this morning, as the equity markets looked ready to surge, and the Dollar begins to decline.

Crude oil failed to maintain its momentum yesterday, after a brief climb above the $100 mark. The latest API inventory data showed another jump in crude stockpiles, which took away the momentum. Crude oil inventories rose by 2.1 million barrels.

Oil has, however, started to gain some momentum this morning, with an upside of 0.65% back up to $99.12. Traders will anxiously await the EIA Petroleum Status Report, but those numbers may also show a sharp rise in stockpiles of crude.

It’s all about manufacturing this morning, as several data points showed improvement globally. Manufacturing across the euro-zone did contract but was better than expected.  Manufacturing data in the UK also beat expectations; rising to an eight month high. German PMI also came in a little better than expected. Lastly, China’s PMI also climbed to 50.5 in January; a slight improvement from last month at 50.3. Analysts had expected a mild contraction.

Also impacting the energy markets will be rumors that India and China may be considering ways of getting around the EU embargo of Iranian oil, set to begin July 1. More than anything, this would certainly change the overall impact of the embargo on Iran and in the energy markets.

 

Uranium Investing

At least one industry expert, Thomas Drolet, President of Drolet & Associates Energy Services, says he sees a supply crisis in the uranium industry by about 2016. He points out that long-standing supply is already dwindling and will be a growing issue in the next year or so. In 2010, 118 million pounds of uranium was mined, while global consumption was about 190 million pounds.

Uranium spot prices remain generally unchanged at around $52, but there continues to be a lot of deal activity within the industry.

China Guandong Nuclear Power Corporation has upped its stake in Kalahari Minerals to nearly 30% as it slowly moves toward a complete takeover

Elsewhere, Gold One International has finally completed its $250 million acquisition of Rand Uranium in a deal that was first announced back in May 2011. Gold One received approval from South Africa’s Department of Mineral Resources in late December 2011.

Elsewhere, Rio Tinto is wrapping up its Hathor Exploration acquisition, by buying up the small percentage of shares it did not already own. Rio said it will then de-list Hathor from the Toronto Stock Exchange.

Shares in Russian-owned miner Uranium One are on the rise after the company announced it had produced a record 10.7-million pounds of the nuclear fuel in 2011, which is a 45% increase from the prior year.

China’s Ministry of Environmental Protection has put together a draft of new safety rules for its nuclear industry. Once approved by the government, China may be ready to move ahead with new nuclear projects. No details of the draft have been released, but the ministry says that the new safety rules are “tougher” than earlier regulations.

 

Rare Earth Investing

In an effort to support softening rare earth prices in the marketplace, China has announced another cut in its rare earth export quotas. The Commerce Ministry announced a 27% reduction in exports for the first half of 2012. It should be noted, however, that China actually fell short of its quota last year, as weakening global economic conditions also reduced demand.

A new Energy Department report, however, suggested that several critical rare earth elements would remain in short supply in till at least 2015. The report highlighted dysprosium, terbium, europium, neodymium and yttrium as the key elements to watch.

China’s Ganzhou Qiandong Rare Earth Group has signed a joint venture agreement with Great Western Minerals Group to develop a rare earth separation plant in South Africa.

Germany is also getting into the game. German miner Deutsche Rohstoff has said it will develop an estimated deposit of 38,000 tons in eastern Germany. The subsidiary set up for the rare Earth project received €2.2 million from German investors and plans a public offering later this year. Exploratory drilling is planned in the Spring. This

Molycorp recently announced that about 78% of its Phase 1 rare-earth production at its Mountain Pass, California manufacturing facility has been committed. Having a product sold before it’s reduced is certainly a positive development for any company. One thing that remains in question for Molycorp is whether they will be able to process the critical heavy rare earths that are likely to be in the greatest demand.

The future of rare earth profits will lie largely in the heavy rare earths. This does pose a problem for some would-be manufacturers, as the refining process is complex and expensive and, as such, prohibitive to many junior miners. Molycorp, for one, has solid potential in this arena but does not, as yet, possess the capability to process the “heavies.” It could pose a $500-$600 Million problem that has not been discussed openly.

 

Public Finance and Fixed Income

US Treasuries have moved lower again this morning, as risk tolerance rises considerably in the marketplace, after several positive manufacturing reports around the globe.

Manufacturing across the euro-zone did contract but was better than expected.  Manufacturing data in the UK also beat expectations; rising to an eight month high. German PMI also came in a little better than expected. Lastly, China’s PMI also climbed to 50.5 in January; a slight improvement from last month at 50.3. Analysts had expected a mild contraction.

At a summit in Brussels on Monday, European leaders signed an agreement which moves them closer to fiscal coordination, which is seen by most as critical to the survival of the Euro. 25/27 EU member states signed off on the agreement.

Other details of the agreement include the establishment of a permanent €500 billion rescue fund and specific deficit control measures promoted by Germany.

German Finance Minister Wolfgang Schaeuble warned that Greece has some work to do before assuring it will receive another round of aid from the European community. Word out of Europe is that negotiators are getting closer to a deal between Greece and its private creditors and that we may see an agreement by the end of the week.

 

International Currencies

The Dollar is lower again this morning, after several new reports showed improved manufacturing activity in Europe and China. Economists expect to see similar positive momentum in US manufacturing data due out this morning.

Manufacturing across the euro-zone contracted slightly but was better than expected.  Manufacturing data in the UK also beat expectations; rising to an eight month high. German PMI also came in a little better than expected. Lastly, China’s PMI also climbed to 50.5 in January; a slight improvement from last month at 50.3. Analysts had expected a mild contraction.

Positive sentiment in Europe has pushed the Euro about 0.88% higher on the Dollar so far this morning. The British Pound has also moved about 0.5% higher.

At a summit in Brussels on Monday, European leaders signed an agreement which moves them closer to fiscal coordination, which is seen by most as critical to the survival of the Euro. 25/27 EU member states signed off on the agreement.

Other details of the agreement include the establishment of a permanent €500 billion rescue fund and specific deficit control measures promoted by Germany.

 

Economic News & Corporate Earnings

____________________________

____________________________

“We are what our thoughts
have made us.”

Swami Vivekananda

January
31, 2012

 

Global Markets

It was a waiting game again yesterday, as stocks
dropped at the open but recovered to finish nearly flat in the session. The Dow
ended up just six points to the downside, after recovering most of a 100 point
drop during the early morning. More importantly, futures are pointing
comfortably higher this morning in response to positive developments in Europe.
At a summit in Brussels yesterday, European leaders signed an agreement which
moves them closer to fiscal coordination, which is seen by most as critical to
the survival of the Euro. 25/27 EU member states signed off on the agreement.

Other details of the agreement include the
establishment of a permanent €500 billion rescue fund and specific deficit
control measures promoted by Germany.

Meanwhile, in Greece, word is that discussions
between Greece and its creditors will wrap up by the end of the week. Although
many would suggest that a deal would be only a single step in a long process to
restore Greece’s financial health, it is nonetheless a critical element in
restoring some sense of confidence in the marketplace. Today we will also have
several key economic data points and earnings reports driving sentiment in the
markets.

The Asian indices moved modestly higher overnight.
The Nikkei saw a gain of just 0.11%, while the Shanghai Composite inched 0.33%
higher. In Hong Kong, a strong performance from coal mining stocks and banks
helped the Hang Seng outperform with an upside of 1.14%.

Stocks are comfortably higher in Europe this morning
as well. In London, the FTSE is up by 0.66%, Germany’s DAX has gained almost 1%,
and the French CAC is the leading performer with an upside of nearly 1.5%.

A sense of progress at the EU summit in Brussels
yesterday has helped boost sentiment quite a bit in Europe this morning. There
is still some apprehension regarding Greece, as a final agreement has not been
reached between Greece and its creditors. Talks will wrap up at the end of the
week according to reports and this will be another important step in restoring
some level of confidence in the markets.

Meanwhile, there has been some indication of
worsening conditions in Portugal and that this may be the next shoe to drop in
the European debt crisis.

 

Gold & Precious Metals

Gold, like stocks,
suffered an early decline yesterday, but gained momentum in the afternoon to
finish at $1730. The morning trade has been a bit choppy but, nonetheless, Gold
has managed to tack on another $8 to $1738.

An interesting rumor has
emerged that India and China are secretly considering paying for Iranian oil in
gold, in order to bypass the European Union oil embargo on Iran, which is to
take effect July 1, 2012.

In the likelihood that
this proves false, and that progress continues to be made in Europe, it would
appear that there is still considerable downside risk for gold in the
near-term.

Reports out of Europe say negotiators are getting
closer to a deal between Greece and its private creditors and that we may see
an agreement by the end of the week. Meanwhile, German Finance Minister
Wolfgang Schaeuble warned that Greece has some work to do before assuring it
will receive another round of aid from the European community.

 

Energy and Commodities

With the Dollar a bit lower this morning, and
sentiment growing more positive in the marketplace, commodities have rebounded
to the upside.

Crude oil has surged more than 1.3% higher to
reach $100.07 again. In fact, the $100 mark as shown to be a level of
significant resistance and, as such, we may see some leveling off during the
day.

Traders will anxiously await the latest inventory
data this week after somewhat mixed results in the latest reports. Meanwhile,
it’s all about Europe and investors are a little more confident after a
relatively successful summit of European leaders yesterday in Brussels.

European leaders signed an agreement which moves
them closer to fiscal coordination, which is seen by most as critical to the
survival of the Euro. 25/27 EU member states signed off on the agreement.

Also impacting the energy markets will be rumors
that India and China may be considering ways of getting around the EU embargo
of Iranian oil, set to begin July 1. More than anything, this would certainly
change the overall impact of the embargo on Iran and in the energy markets.

Meanwhile, Iran says it is ready to
go back to the table to discuss its nuclear program and says it is the West but
that is unwilling to do so. Tensions with Iran continue to represent a factor
that could quickly impact the marketplace on any given day.

 

Uranium Investing

At least one industry
expert, Thomas Drolet, President of Drolet & Associates Energy Services,
says he sees a supply crisis in the uranium industry by about 2016. He points
out that long-standing supply is already dwindling and will be a growing issue
in the next year or so. In 2010, 118 million pounds of uranium was mined, while
global consumption was about 190 million pounds.

Uranium spot prices
remain generally unchanged at around $52, but there continues to be a lot of deal
activity within the industry.

China Guandong Nuclear
Power Corporation has upped its stake in Kalahari Minerals to nearly 30% as it
slowly moves toward a complete takeover

Elsewhere, Gold One
International has finally completed its $250 million acquisition of Rand
Uranium in a deal that was first announced back in May 2011. Gold One received
approval from South Africa’s
Department of Mineral Resources in late December 2011.

Elsewhere, Rio Tinto is
wrapping up its Hathor Exploration acquisition, by buying up the small
percentage of shares it did not already own. Rio
said it will then de-list Hathor from the Toronto Stock Exchange.

Shares in Russian-owned
miner Uranium One are on the rise after the company announced it had produced a
record 10.7-million pounds of the nuclear fuel in 2011, which is a 45% increase
from the prior year.

China’s Ministry of
Environmental Protection has put together a draft of new safety rules for its
nuclear industry. Once approved by the government, China may be ready to move ahead
with new nuclear projects. No details of the draft have been released, but the
ministry says that the new safety rules are “tougher” than earlier regulations.

 

Rare Earth Investing

In an effort to support softening rare earth
prices in the marketplace, China
has announced another cut in its rare earth export quotas. The Commerce
Ministry announced a 27% reduction in exports for the first half of 2012. It
should be noted, however, that China
actually fell short of its quota last year, as weakening global economic
conditions also reduced demand.

A new Energy Department report, however,
suggested that several critical rare earth elements would remain in short
supply in till at least 2015. The report highlighted dysprosium, terbium,
europium, neodymium and yttrium as the key elements to watch.

China’s Ganzhou Qiandong Rare
Earth Group has signed a joint venture agreement with Great Western Minerals
Group to develop a rare earth separation plant inSouth Africa.

Germanyis also getting into the
game. German miner Deutsche Rohstoff has said it will develop an estimated
deposit of 38,000 tons in eastern Germany. The subsidiary set up for
the rare Earth project received €2.2 million from German investors and plans a
public offering later this year. Exploratory drilling is planned in the Spring.
This

Molycorp recently announced that about 78% of its
Phase 1 rare-earth production at its Mountain
  Pass, California
manufacturing facility has been committed. Having a product sold before it’s
reduced is certainly a positive development for any company. One thing that
remains in question for Molycorp is whether they will be able to process the
critical heavy rare earths that are likely to be in the greatest demand.

The future of rare earth
profits will lie largely in the heavy rare earths. This does pose a problem for
some would-be manufacturers, as the refining process is complex and expensive
and, as such, prohibitive to many junior miners. Molycorp, for one, has solid
potential in this arena but does not, as yet, possess the capability to process
the “heavies.” It could pose a $500-$600 Million problem that has not been
discussed openly.

 

Public Finance and Fixed
Income

Treasuries have retreated this morning, after yields
on 5-year debt fell to record lows yesterday. A sense of progress on resolving
the debt crisis in Europe has boosted sentiment in moving investors into
riskier assets.

At a summit in Brussels yesterday, European leaders
signed an agreement which moves them closer to fiscal coordination, which is
seen by most as critical to the survival of the Euro. 25/27 EU member states
signed off on the agreement.

Other details of the agreement include the
establishment of a permanent €500 billion rescue fund and specific deficit
control measures promoted by Germany.

German Finance Minister Wolfgang Schaeuble warned
that Greece has some work to do before assuring it will receive another round
of aid from the European community. Word out of Europe is that negotiators are
getting closer to a deal between Greece and its private creditors and that we
may see an agreement by the end of the week.

International Currencies

The Dollar has turned lower again this morning, on
rising optimism in the marketplace for a Greek debt deal and fiscal harmony in Europe.

At a summit in Brussels yesterday, European leaders
signed an agreement which moves them closer to fiscal coordination, which is
seen by most as critical to the survival of the Euro. 25/27 EU member states
signed off on the agreement.

Other details of the agreement include the
establishment of a permanent €500 billion rescue fund and specific deficit
control measures promoted by Germany.

Meanwhile, in Greece, word is that discussions
between Greece and its creditors will wrap up by the end of the week.

All of this has given a boost to the Euro this
morning, leaving it to a gain of about 0.35% on the Dollar. The British Pound
is up by more than 0.4% against the greenback. The Dollar has gained slightly
on the Yen, as investors turn away from the traditional safe havens.

 

Economic News & Corporate Earnings

 

_______________________________

_______________________________

“There are two sides to
every question.”

Protagoras

January
30, 2012

 

Global Markets

The Dow closed the week 74 with a loss of 74 points.
Futures are pointing lower this morning,
over renewed concern for Greece and whether it can resolve its debt crisis. German
Finance Minister Wolfgang Schaeuble warned that Greece has some work to do
before assuring it will receive another round of aid from the European
community. Word out of Europe is that negotiators are getting closer to a deal
between Greece and its private creditors and that we may see an agreement by the
end of the week.

Stocks moved lower in Asia overnight, as some
traders were returning for the first time in a week after a holiday. The Nikkei
trimmed 0.54%, the Hang Seng 1.66%, and the Shanghai Composite fell 1.41%. The
markets in Asia are largely focused on Europe as well, in addition to some
sense of disappointment over the lack of any policy announcements in China. Many
had thought that recent signs of slowing would lead Chinese authorities to
introduce easing measures in support of growth, which hasn’t happened yet.

In Europe this morning, bank stocks are leading the markets
lower, as traders await details on progress in Greece. At mid-morning, all of
the major indices are lower by a little more than 0.8%. EU officials arrive
this afternoon in Brussels for a summit, where the leading topic will be, of
course, Greece.

 

Gold & Precious Metals

 

Gold has been trending
lower as the Dollar gains ground on rising safe-haven demand. After giving up
another $13 in early trading, gold is now resting at $1724.

Reports out of Europe say negotiators are getting
closer to a deal between Greece and its private creditors and that we may see
an agreement by the end of the week. Meanwhile, German Finance Minister
Wolfgang Schaeuble warned that Greece has some work to do before assuring it
will receive another round of aid from the European community.

 

What we have here are growing prospects for
long-term debasement of global fiat currencies, which is leading some investors
to see gold is the only viable alternative for while. Bank of England Governor
Mervyn King also hinted this week that the BoE stood ready to increase its bond
purchases if need be, after new data in the UK showed fourth quarter GDP had
contracted by 0.2% from the prior quarter.

The World Gold Council, in its quarterly commentary,
pointed out that historically, a strong pullback like we saw at the end of 2011
typically precedes another strong rally for gold. The report also noted that
gold holding exchange traded funds built up their positions in the fourth
quarter.

 

Energy and Commodities

Commodities are considerably lower this morning, the
Dollar strengthens on growing demand for safety. Many traders are in a holding
pattern waiting for clear direction as economic data, and the situation inEurope, continues to leave some doubt.

Crude oil is another 0.54% lower this morning at
$99.02. The prospects for an extended period of easy money from the Fed
provided a bit of a boost to the energy markets last week, although the latest  inventory data was a bit vague, and
disappointing in some respects.

The EIA Petroleum Status Report showed a
surprising decline 3.44 million barrels, after Tuesday’s API report showed an
increase of 7.33 million barrels in US crude inventories. Gasoline stockpiles
grew by another 3.72 million barrels; a third consecutive increase. The API
numbers showed a drop of 573,000 barrels.

Meanwhile, Iransays it is ready to go back to
the table to discuss its nuclear program and says it is the West but that is unwilling
to do so. Tensions with Iran
continue to represent a factor that could quickly impact the marketplace on any
given day.

 

Uranium Investing

At least one industry
expert, Thomas Drolet, President of Drolet & Associates Energy Services,
says he sees a supply crisis in the uranium industry by about 2016. He points
out that long-standing supply is already dwindling and will be a growing issue
in the next year or so. In 2010, 118 million pounds of uranium was mined, while
global consumption was about 190 million pounds.

Uranium spot prices
remain generally unchanged at around $52, but there continues to be a lot of deal
activity within the industry.

China Guandong Nuclear
Power Corporation has upped its stake in Kalahari Minerals to nearly 30% as it
slowly moves toward a complete takeover

Elsewhere, Gold One
International has finally completed its $250 million acquisition of Rand
Uranium in a deal that was first announced back in May 2011. Gold One received
approval from South Africa’s
Department of Mineral Resources in late December 2011.

Elsewhere, Rio Tinto is
wrapping up its Hathor Exploration acquisition, by buying up the small
percentage of shares it did not already own. Rio
said it will then de-list Hathor from the Toronto Stock Exchange.

Shares in Russian-owned
miner Uranium One are on the rise after the company announced it had produced a
record 10.7-million pounds of the nuclear fuel in 2011, which is a 45% increase
from the prior year.

China’s Ministry of
Environmental Protection has put together a draft of new safety rules for its
nuclear industry. Once approved by the government, China may be ready to move ahead
with new nuclear projects. No details of the draft have been released, but the
ministry says that the new safety rules are “tougher” than earlier regulations.

 

Rare Earth Investing

 

In an effort to support softening rare earth
prices in the marketplace, China
has announced another cut in its rare earth export quotas. The Commerce
Ministry announced a 27% reduction in exports for the first half of 2012. It
should be noted, however, that China
actually fell short of its quota last year, as weakening global economic
conditions also reduced demand.

A new Energy Department report, however,
suggested that several critical rare earth elements would remain in short
supply in till at least 2015. The report highlighted dysprosium, terbium,
europium, neodymium and yttrium as the key elements to watch.

China’s Ganzhou Qiandong Rare
Earth Group has signed a joint venture agreement with Great Western Minerals
Group to develop a rare earth separation plant inSouth Africa.

Germanyis also getting into the
game. German miner Deutsche Rohstoff has said it will develop an estimated
deposit of 38,000 tons in eastern Germany. The subsidiary set up for
the rare Earth project received €2.2 million from German investors and plans a
public offering later this year. Exploratory drilling is planned in the Spring.
This

Molycorp recently announced that about 78% of its
Phase 1 rare-earth production at its Mountain
Pass, California
manufacturing facility has been committed. Having a product sold before it’s
reduced is certainly a positive development for any company. One thing that
remains in question for Molycorp is whether they will be able to process the
critical heavy rare earths that are likely to be in the greatest demand.

The future of rare earth
profits will lie largely in the heavy rare earths. This does pose a problem for
some would-be manufacturers, as the refining process is complex and expensive
and, as such, prohibitive to many junior miners. Molycorp, for one, has solid
potential in this arena but does not, as yet, possess the capability to process
the “heavies.” It could pose a $500-$600 Million problem that has not been
discussed openly.

 

Public Finance and Fixed
Income

Treasuries are moving higher again this morning, with
yields falling to fresh new lows. Renewed uncertainty over Greece has led to
new demand for safe-haven assets, once again.

German Finance Minister Wolfgang Schaeuble warned
that Greece has some work to do before assuring it will receive another round
of aid from the European community. Word out of Europe is that negotiators are
getting closer to a deal between Greece and its private creditors and that we
may see an agreement by the end of the week.

New data in Europe also shows a decline in private
lending, which is something economists have been concerned with and watchful
for; fearing the possibility of a damaging credit crunch.

In Europe, there seems to have been some progress on
the Greek debt swap deal. Reports have surfaced that private bondholders have
agreed to take slightly lower rates on the new long-term bonds they receive.
They originally called for a rate of 4%, which European finance ministers
essentially rejected. Private sector creditors will now put forth a proposal in
which the average yield will be 3.75%.

 

International Currencies

 

The Dollar is much stronger again this morning.  As renewed
uncertainty over Greece has led to new demand for traditional safe-haven assets.

The Dollar is up by nearly 1% on the Euro and only
0.35% on the British Pound.

At the conclusion of the two-day FOMC meeting last
week, Chairman Bernanke said
rates would likely remain at near zero for three more years, and hinted that
the Fed stood ready to initiate further quantitative easing if necessary. “We
need to be thinking about ways to provide further stimulus if we don’t get improvement
in the pace of recovery and a normalization of inflation,” Bernanke told
reporters at a news conference.

Bank of England Governor Mervyn King also hinted
last week that the BoE stood ready to increase its bond purchases if need be,
after new data in the UK showed fourth quarter GDP had contracted by 0.2% from
the prior quarter.

 

 

Economic News & Corporate Earnings