Continue reading Serious Money: Chavez & Gaddafi, Real Blues Brothers

Serious Money: Chavez & Gaddafi, Real Blues Brothers originally appeared on BloggingStocks on Thu, 24 Feb 2011 14:30:00 EST. Please see our terms for use of feeds.

Continue reading Hugo Chavez Racing Toward Economic Peril

Hugo Chavez Racing Toward Economic Peril originally appeared on BloggingStocks on Tue, 16 Mar 2010 12:00:00 EST. Please see our terms for use of feeds.

"Silver Standard Resources (NASDAQ: SSRI) has set a new standard for silver resources; simply put, its boasts the largest published in-ground silver resource of any publicly-traded silver company," says mining stock specialist Brien Lundin.

In The Gold Newsetter he adds, "We were fortunate over the years that the great idea behind this company was combined with a great management team, as CEO Bob Quartermain is among the best in the business."

"Silver Standard has 1.127 billion ounces in measured and indicated resources, plus another 195 million ounces in proven and probable reserves, and another 456 million ounces in inferred resources.

"Its resources come from a portfolio of properties spanning the globe from Argentina, Peru, and Mexico, to Canada, Chile, the US and Australia. Now the companyis making the transition to production with aggressive development programs on five core properties.

Continue reading Silver Standard (SSRI) sets the standard in silver mining

Silver Standard (SSRI) sets the standard in silver mining originally appeared on BloggingStocks on Thu, 08 Oct 2009 09:30:00 EST. Please see our terms for use of feeds.

It's bad enough that Coca-Cola (NYSE: KO) killed its C2 brand a few years ago -- I still have one memorial (empty) can I keep in my china cabinet for posterity. Now Coke Zero, the soft-drink behemoth's alternative for those of us that don't quite dig the Diet Coke taste, poses a "danger to health" in South America? What the what?

Yesterday, the Venezuelan government ordered Coca-Cola to pull the Coke Zero brand from the country's shelves, claiming unspecified health risks. The nation's health minister simply said that the zero-calorie fizzy drink "should be withdrawn from circulation to preserve the health of Venezuelans."

Continue reading Coke Zero, dangerous? Venezuela says yes

Coke Zero, dangerous? Venezuela says yes originally appeared on BloggingStocks on Thu, 11 Jun 2009 12:00:00 EST. Please see our terms for use of feeds.

Here are several reasons why we may see things stay as they are. First and foremost is that OPEC members "talk the talk" but they all do not "walk the walk." For example, Saudi Arabia has cut production by 16% since September but Iran cut its production only 4.3% and Venezuela cut its production by 8.3%. So as usual OPEC has difficulty holding each of its members to an agreed upon reduction.

Continue reading Has the oil price slide ended?

Has the oil price slide ended? originally appeared on BloggingStocks on Tue, 10 Mar 2009 15:40:00 EST. Please see our terms for use of feeds.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I own shares of CX but not XOM .

Hugo Chavez wants those bad capitalists to bail him out of a jam originally appeared on BloggingStocks on Thu, 15 Jan 2009 14:40:00 EST. Please see our terms for use of feeds.

Oil moved above $46 yesterday. According to The New York Times, "One year after crude oil eclipsed $100 a barrel for the first time, the new year's trading began Friday with prices roughly half their year-earlier levels, and some believe oil could be headed even lower."

It is hard to make a bull case for oil, but not as hard as some imagine.

The stock market yesterday signaled that investors think that the economy is making a bottom and that perhaps the second half of the year will actually bring a recovery. If oil traders buy into that, they will begin to trade futures up. It is a fair assumption that an improving economy will require more crude.

Another, more obvious, reason is that OPEC will cut supply until prices go up. Some oil producers, both inside and outside OPEC, need the money from crude sales to keep their economies from sharp contraction. Russia and Venezuela are high on that list.

People watching the news think the war in Gaza will push prices up by interrupting demand. This is only true if Iran becomes involved and its territory is attacked. That is a long shot.

The large exporter that is very likely to see political turmoil that will cut its production is Nigeria, which is almost never mentioned in the debate over oil prices. Rebels cut supplies there several times last year. Only last week, a well-know militant was arrested by the government. That act could certainly lead to growing rebel activity to hurt the government. Hitting pipelines is not terribly hard. Defending thousands of miles of them is impossible.

The price of oil? Watch Nigeria.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Will oil prices rise? Watch Nigeria originally appeared on BloggingStocks on Sat, 03 Jan 2009 17:40:00 EST. Please see our terms for use of feeds.

OPEC may end up offering the U.S. a larger bailout that the federal government. Data on what Americans spend on gas show that because of the fall in prices at the pump, U.S. drivers are saving $1 billion a day.

According to The Detroit Free Press, "Americans are paying $1 billion less per day for gasoline now compared with mid-July, when the national average price was more than $4 per gallon."

That makes OPEC and other oil-producing countries better friends to the consumer than the federal government is. The new administration is planning to spend about $700 billion over two years to try to increase jobs and stimulate the U.S. economy. The savings on gas over two years, assuming that prices stay where they are, is almost $730 billion.

The gasoline savings do not take into account what American businesses like airlines and petrochemical companies lay out for oil-related products. Trucks that run on diesel also cost much less to operate.

On the back of an envelope, the benefit of cheaper oil is well over $1 trillion over a 24-month period. Perhaps America should have sent Saudi Arabia, Iran, and Venezuela a Christmas card.

Douglas A. McIntyre is an editor at 247wallst.com.

Saving $1 billion a day on gasoline originally appeared on BloggingStocks on Sun, 28 Dec 2008 13:40:00 EST. Please see our terms for use of feeds.

What is already known is that OPEC will almost certainly cut production at its December meeting. It has several members with faltering economies, particularly Venezuela and Iran. Even countries like Saudi Arabia would like to begin to see the profits that $70 oil were bringing in.

Rumors are that a production cut could hit two million barrels a day. With demand falling in large economies like the US and China, will that be enough? No one knows, but it is a good bet that if this reduction does not do the trick, there will be another one.

Oil may be pushed down by a second important factor. With prices low, the investment in drilling is dropping sharply, which means that, in the near future, supply will take another hit. According to The Wall Street Journal, "As oil and gas prices fall, drilling activity in the U.S. is slowing more than expected, battering shares of drilling companies, hurting economies in energy-producing states and sowing the seeds for supply shortages when the economy recovers."

It would probably be safe to guess that what it happening in the US is also working its way through drilling operations in other large countries. Oil consumers would have to be especially concerned if this is happening in non-OPEC states like Russia, Mexico and Canada where low oil prices are combining with a deep recession to cut capital expenditures on oil exploration.

The price of oil is going up, and if drilling continues to slow, it may stay up for a long time.

Douglas A. McIntyre is an editor at 247wallst.com.

Events may conspire to raise oil prices originally appeared on BloggingStocks on Mon, 15 Dec 2008 04:17:00 EST. Please see our terms for use of feeds.

Will crude go up or down before the end of the year? Since it has dropped from $147 in the summer to just above $40 recently and demand is falling, betting on down makes sense.

Americans are using less gas. There is probably little reason to think that will change. Oil imports by China, a huge consumer, dropped in November to their lowest point this year, according to Xinhua news agency.

But, the drop in consumption is a collateral effect of the recession. It is, by some measures, an "accident."

What is not an accident is the need for oil producers to get prices up. Economies including Russia, Venezuela, and Iran count on crude for a great deal of their income and their ability to keep balanced national budgets. Russia, which is not a member of OPEC, will probably work with the cartel to cut production and raise prices.

The market laughed at OPEC cuts in September and oil continued to fall. But members of the cartel are desperate now and will probably take a much different view of what they need to do at their December meeting. Getting oil prices back toward $60 or $70 will be hard, but it is entirely possible.

OPEC ministers have been discussing a production cut of two million barrels a day. It their economic advisers say that is not enough to get prices up sharply, the figure could rise to three million or more.

Prices are going up. OPEC and Russia control too much crude. They can cut supply until the cows come home.

Douglas A. McIntyre is an editor at 247wallst.com.

A quiet war over oil prices originally appeared on BloggingStocks on Thu, 11 Dec 2008 03:54:00 EST. Please see our terms for use of feeds.

U.S. consumers have another reason to worry about gas prices. Two of the largest oil-producing nations in the world are forming a military alliance, and neither nation likes the U.S.

According to The Wall Street Journal, "Venezuela's President Hugo Chávez signed new energy agreements with Russia on Friday, shortly after obtaining a $1 billion loan to buy more Russian arms."

Chavez has kicked a number of U.S. and EU oil companies out of his country as he has nationalized the industry. It would not be beyond imagination that Russia and the South American nation would use a combination of oil and guns to try to weaken U.S. influence in its own hemisphere and force America into more military spending to patrol the regions to its south.

Chavez has already begun spreading money around to his neighbors in the hope of being viewed favorably. Having a stronger military presence should help him make the case that he can keep the U.S. from using its power to push him out of his role as the most powerful political figure north of Brazil and south of Mexico.

Continue reading Another problem with oil: Russia gives Venezuela cash

Another problem with oil: Russia gives Venezuela cash originally appeared on BloggingStocks on Sat, 27 Sep 2008 15:40:00 EST. Please see our terms for use of feeds.

In the margins of Barron's this week there was a smallish note about the government of Venezuela nationalizing Cemex's (NYSE: CX) operations in that country. For some reason the government of Hugo Chavez thinks that stealing all of the private companies in 'his' country will lead to greater prosperity for 'his' people.

While it is a long journey from Venezuela to Zimbabwe, with its exponential inflation rate and a near-total economic breakdown, every journey begins with a first step. Mr. Chavez will move much closer to this inevitable outcome if he continues on his chosen path.

Motley Fool has a good write-up on the subject in which they detail the sour relations between Chavez and foreign businesses. Chavez recently offered to re-open negotiations with Cemex, but since he has already decided to take the company, that offer is suspect -- you can't negotiate with a gun pointing at you. To date, Chavez has nationalized the telecommunications industry, electricity, and oil. How many steps down the road is that? Why would anyone want to invest in Venezuela?

Continue reading Could Venezuela become Zimbabwe? Ask Cemex

Could Venezuela become Zimbabwe? Ask Cemex originally appeared on BloggingStocks on Tue, 26 Aug 2008 14:15:00 EST. Please see our terms for use of feeds.

Economists think they have most of the data they need to forecast the price of oil: The dollar is rising; consumption in the US is falling; production out of OPEC is steady; the drop in crude has driven many speculators out of the game; unrest is receding in Nigeria and Venezuela; huge deposits have been found off Brazil; the hurricane season in the Gulf of Mexico has not disrupted production.

War is harder to predict, but there it is in Georgia. Russia seems intent on destroying the military of its small neighbor state. The U.S. is pushing to keep Russia from escalating the conflict, which is driving extreme tension between Russia and NATO. Russia is an important supplier of crude, and it could decide to use that as leverage to keep the West out of the dust up.

There is some speculation that the Russian government would like to cripple other countries that share it borders to build a geographic "buffer" to its south. NATO may be forced to step in because some of these countries are close to its members' territories.

War is hard to predict and the oil market does not like the unpredictable. Oil prices are about to rise and could get much higher.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Russia's war plan and the price of oil originally appeared on BloggingStocks on Mon, 11 Aug 2008 08:13:00 EST. Please see our terms for use of feeds.

"Closed-end funds are a terrific way to gain diversified exposure to high-yielding foreign stocks," says global expert Nick Lanyi.

In his High-Yield International, he explains, "My latest closed-end fund pick, First Trust/Aberdeen Emerging Opportunity Fund (NYSE: FEO), gets income any which way it can from the world's fastest-growing economies." Here's his review.

"For U.S. investors looking to broaden their horizons, closed-end funds offer an easy way to gain exposure to a diverse mix of foreign stocks without venturing beyond U.S.-based stock exchanges.

"Not only that, they often provide access to stocks that don't trade in the U.S. -- including companies that only institutional investors (such as a fund manager) can buy.

"But these funds offer a bonus that mutual funds don't: in some cases you can purchase them at a discount to their net asset value (NAV) -- the underlying value of the fund's portfolio.

"That's because closed-end funds trade on the major stock exchanges, just like stocks. Their prices are determined by investor sentiment and supply and demand, in addition to the value of the investments they hold.

"Led by Brett Diment, the management team at Aberdeen Asset Management -- which specializes in emerging markets -- has assembled a portfolio that exposes investors to some of the fastest-growing economies in the world: Brazil, Mexico, China, India, Turkey, Argentina and Venezuela are among the fund's top holdings.

Continue reading FirstTrust/Aberdeen Emerging (FEO): Global growth and income

FirstTrust/Aberdeen Emerging (FEO): Global growth and income originally appeared on BloggingStocks on Wed, 30 Jul 2008 15:20:00 EST. Please see our terms for use of feeds.

Now and then, a media outlet or analyst will talk about $200 crude. Most analysis shows oil peaking at $160 or so and dropping back over the next few months. The commodity may never trade at $60 again, but most of its rise may be over.

Unfortunately, the picture of the energy world seems to be changing. According to The Wall Street Journal, "Oil's historic ascent from $100 to nearly $150 a barrel in just six months is lending weight to a far grimmer prediction: Crude could reach $200 a barrel by the end of the year." The paper adds that this could mean gas would rise to $6 a gallon.

Oil may actually go higher especially if demand in China and India continues to rise and oil producing countries, including Venezuela and Nigeria, stay politically unstable.

What is truly frightening is what $200 oil would do to the U.S. economy. It would almost certainly send companies in the automotive and airline sectors into Chapter 11. Some consumers could see the cost of gas and heating their homes become as high as 20% to 25% of their total cost of living. That would destroy current retail spending habits.

But the economic effect would be more widespread than the airline and car sectors. Every industry that has to ship large amounts of its products, from newspapers to food processors, would be faced with nearly unimaginable additions to their costs of doing business.

All of that would send the US economy into a long and very deep recession. If nothing is done about oil prices soon, the odds of tremendous trouble go way, way up.

Douglas A. McIntyre is an editor at 247wallst.com.

Talk of $200 oil picks up steam originally appeared on BloggingStocks on Mon, 07 Jul 2008 12:24:00 EST. Please see our terms for use of feeds.

It is reasonable to believe that as the cost of crude rises, demand will fall. It is in the Economics 101 textbooks. It has to to be true.

Not so, says The International Energy Agency. According to The New York Times, the think tank says "the small decline in oil demand in the industrialized countries will be more than offset by an estimated increase in demand of 3.7 percent a year from 2008 to 2013 in developing countries, particularly in Asia, the Middle East and Latin America."

The argument has the benefit of making sense. Asia, especially China, cannot keep up its GDP growth without gas to drive its transportation industry. It has cut the amount it provides to underwrite the price of diesel and gas, but it has not eliminated the practice. Driving a car or truck on the mainland is still cheap.

In the Middle East and Latin America, many of the countries are net exporters of crude. Brazil recently claimed that it found one of the largest oil deposits ever discovered. The field are just off its coast in the ocean. Many of the nations with excess oil will keep some of that at home to build their own infrastructures.

Oil prices are staying high whether the US can afford that or not.

Douglas A. McIntyre is an editor at 247wallst.com.

High oil prices may not dent demand originally appeared on BloggingStocks on Wed, 02 Jul 2008 08:45:00 EST. Please see our terms for use of feeds.

Continue reading IMF's Lipsky says repeat of 1970s stagflation unlikely

IMF's Lipsky says repeat of 1970s stagflation unlikely originally appeared on BloggingStocks on Thu, 08 May 2008 12:52:00 EST. Please see our terms for use of feeds.

AP reports that Goldman Sachs Group (NYSE: GS) predicts that the price of a barrel of oil could climb from its current $120 to as high as $200. That's not too much of a stretch because since January 2001, that price has risen 400% from $24. A rise to $200 would be a mere 67% increase from the current price. Meanwhile gasoline is likely to hit $4 a gallon this summer -- and if oil hit $200 a barrel, that could drive the price to $6.67 a gallon -- up 319% from the $1.59 it cost back in January 2001.

Why is the price of oil going up so much? Experts don't seem to know and I'm not an expert. But it looks like simple supply and demand does not explain such a rapid price rise. Some cite rising energy demand -- from China and India -- combined with a reduction in supply -- e.g., production declines in Mexico, an unstable oil industry in Venezuela and possible shrinking production capacity in the Middle East -- as a partial explanation.

But then there are the other factors that seem hard to measure -- the potential decline in the dollar, political instability (such as the U.S. firing warning shots at two Iranian boats in the Persian Gulf this week), and so-called speculators. Of all these factors, the speculators explanation is the most interesting. These could be hedge funds and commodities traders who borrow huge amounts of money to bid up oil prices.

Continue reading What will you do when gasoline hits $6.67 a gallon?

What will you do when gasoline hits $6.67 a gallon? originally appeared on BloggingStocks on Sat, 26 Apr 2008 08:26:00 EST. Please see our terms for use of feeds.

Continue reading Venezuela starts collecting new windfall profits tax on oil companies

Venezuela starts collecting new windfall profits tax on oil companies originally appeared on BloggingStocks on Fri, 18 Apr 2008 14:47:00 EST. Please see our terms for use of feeds.

Oil spiked up to $107 on news that an Iraq pipeline had been blown up, potentially disrupting supply. Oil-consuming nations had watched crude drop to $100 on hopes that a slowing global economy would cut demand.

In all probability, the hunger for oil in areas such as China and India will keep the need for oil high. There is also evidence that older fields in the Middle East and the Arctic are not yielding as much crude as they once did. The supply and demand dynamics may keep oil prices high for a very long time.

Oil disasters like Iraq and Katrina almost always cause a rapid rise in oil prices because of concerns that, at least temporarily, crude will be more scarce.

But, there may be a "two disaster" rule that could spike up oil prices 15% to 20%, at least for a time. Under this set of circumstances oil might be interrupted in Nigeria -- where the government is unstable, and Iraq -- where there may be more attacks on the infrastructure. Or, the head of Venezuela could cut off oil because he hates the US. If this is combined with a pipeline problem in northern Alaska, crude could take a big run.

The "two disaster" rule has not been fully tested, but the chances that it will be in the next year are increasing. The world's political scene is too volatile and the pipe and refineries that supply oil are, in many cases, too old.

Crude is going to $120. It is just a question of when and for how long.

Douglas A. McIntyre is an editor at 247wallst.com.

The 'two disaster' rule on oil pricing originally appeared on BloggingStocks on Fri, 28 Mar 2008 10:47:00 EST. Please see our terms for use of feeds.