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FERTILIZER PRICES GOING BALLISTIC!
I just got off the phone with my largest fertilizer buyer in Nebraska. I have attached their website so you can see who they are:
http://www.cvacoop.com/
Last year they were buying 99 railcar unit trains of MAP (11-52-0) (mono-ammonium phosphate) for the mid$200's/ton delivered from Mosaic. Last week they were quoted $580/ton delivered. He took a few days to get back to them and was told the price this morning is $680/ton delivered "take it or leave it"! He was told product was being exported out of Florida for over $700/ton.
I am buying fertilizer stocks on this pull back. CNBC was slamming the fertilizer group, comparing it to the internet stock's parabolic rise during the bubble. There will be a bubble in fertilizer stocks, but they do have P/E's and those forward P/E's are way lower than anyone can immagine today.
I will try to keep you guys posted. I will be at the Nebraska and Wisconsin Agri Business Trade Shows all week next week and all of the major fertilizer companies are exhibiting. This is getting crazy!
Kipp
The new export from China: inflation
Tue Jan 8, 2008 9:03pm EST
By Wei Gu
HONG KONG (Reuters) - U.S. politicians may soon regret what they have been wishing for.
Having long accused Beijing of manipulating its currency to keep Chinese exports inexpensive, thus gaining an unfair trade advantage, Americans might find a new troublesome export from China: inflation.
Due to the combined gains in the Chinese yuan -- up 3 percent against the U.S. dollar in the last two months -- as well as food, energy and other raw material price rises that have pushed domestic inflation to 11 year highs, China's manufacturing sector can no longer offset rising prices with productivity gains.
Efficiency at China's listed manufacturing companies peaked last year and has already started to deteriorate. On top of that, Beijing is considering letting land and other resource prices rise to market levels, while a more stringent labor law that took affect this week will surely push up labor costs.
The question is, will China be able to pass on higher costs to global consumers?
"China's export prices were rising in the last quarter even though U.S. import prices have slowed," said Paul Cavey, head of China economics at Macquarie Securities. "That does suggest that China does have a bit of pricing power."
What a change from the past five years. During that period China was a deflationary force, helping keep global prices low.
To be sure, Chinese exports to the United States are still slightly cheaper than they were in 2003, according to U.S. government figures. But the trend is clear. Prices have started to climb in the past year, and increases are likely to accelerate in 2008.
This should not come as a big surprise, since China cannot push the productivity envelope forever. Eventually, the law of diminishing returns will prevail. When inflation hits a country that is a global factory, the rest of the world will have to pay more.
"When China starts to export inflation, it will feed through the rest of the world," notes Dong Tao, an economist at Credit Suisse.
UNFORTUNATE TIMING
Hong Kong, which gets most of its grocery and electricity from the mainland, is already feeling the heat. From food to furniture, and wages to rent, almost everything is going up in the city. To add fuel to the fire, Hong Kong has to follow the U.S. Fed to pump more liquidity into the system because its currency is pegged to the U.S. dollar.
As a result, Tao expects Hong Kong inflation to average a surprising 5.1 percent in 2008, while most other analysts sees inflation closer to 3.3 percent.
Western consumers will see prices jump for electronics, clothing and toys, although these gains will be masked slightly since manufactured goods account for a relatively small part of the consumer price index (CPI) baskets in the United States and European Union.
Barring any policy mishaps, China's exported inflation shouldn't rock those economies, although it comes at an inopportune time when the U.S. is battling a slowing economy, $100 oil, and a still-unfolding credit crisis.
In the interest of the West, and arguably for China's own benefit, Beijing seems to be heeding the advice from the West to let its yuan appreciate more rapidly, as reflected in the currency's movements of late. After raising interest rates six times in 2007, China looks to have decided a faster rise in the yuan is the best monetary policy to fend off domestic inflation.
"Beijing appears to be seriously looking at the right policy tool to deal with the rising inflation threat," said Frank Gong, JP Morgan's China economist. "A strong consensus is forming to allow the yuan to appreciate faster rather than simply increasing interest rates."
If the yuan strengthens by 10 percent in real terms, China's consumer inflation will be reduced by 0.8 percent in the near term and 3.2 percent in the long run, calculates Jiming Ha, China International Capital Corp.'s chief economist. Ha expects the yuan to appreciate a full 10 percent in 2008, after rising the same amount in the 2.5 years after the one-off revaluation.
Western politicians should be pleased. After all, they've been demanding a faster rise in the yuan. But let's not forget that this is also the U.S. election year. Presidential hopefuls are all too aware that U.S. consumers, already suffering from a housing meltdown, would be incensed by higher prices on the myriad products from China.
Don't be surprised if U.S. lawmakers and presidential candidates soon start to rail against the inflation threat coming out of China. But unlike the yuan, inflation is not something that can be easily tamed by any government, including Beijing.
The risk is that Beijing might panic and step on the brakes too hard, and that will hinder global growth at a time when central banks elsewhere are easing monetary policy.
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
44 Of Every 1,000 Chinese Owns a Car
750 of Every 1,000 Americans Owns a Car
China auto production, sales likely to hit 10 mln units in 2008
www.chinaview.cn 2008-01-08 17:48:04 Print
BEIJING, Jan. 8 (Xinhua) -- Auto production and sales in China are both likely to hit a record 10 million units this year, an industry executive forecast on Tuesday.
Dong Yang, vice chairman of the China Association of Automobile Manufacturers (CAAM), told Xinhua it was a "foregone conclusion" that both China's auto output and sales would surpass 8.7 million units in 2007.
"They will continue to expand at double-digit rates in 2008," he added.
In 2006, China overtook Japan to become the world's second largest car market, trailing only the United States, with sales of7.2 million units, up 25.13 percent from a year earlier. The country was also the world's third largest vehicle producer, after Japan and the United States.
Currently, vehicle ownership in China was 44 for every 1,000 people. This was compared with the world average of 120. The United States had 750 vehicles for every 1,000 people.
Dong said the domestic car market had huge potential as the country had 57 million motor vehicles by the end of last year. Among them were 21.5 million privately-owned cars, according to latest government figures.
"Motor vehicles will play an extraordinarily-important role in China's consumer spending," he said, as the economy maintained fast growth and the government tried to encourage people to spend money.
Total auto sales in China jumped to 7.95 million units in the first 11 months of 2007, up 23.2 percent from a year ago, according to CAAM data.
Vehicle sales in November alone rose 16.3 percent in comparison to the same period a year earlier to 800,900 units.
China to Rival US Car Sales in Five Years; India Follows Closely Behind As Next Major Growth Market
KPMG's 2008 Global Auto Executive Survey
TORONTO, Jan. 9 /CNW/ - Eighty percent of global auto executives
suggested that Chinese car sales will reach more than 12 million cars per year
by 2011. One-third of respondents said they anticipate that China will be
selling a significant number of their low-cost cars to US consumers within the
next 3 to 5 years, according to Momentum:2008 KPMG's Global Auto Executive
Survey.
Following closely behind the China automotive market is India, as this
year's findings indicate that 73 percent of executives believe that India will
gain significant market share growth in Asia, up 18 percent from last year's
survey results. Moreover, when asked what emerging country outside of China
will have the most consumer demand, the choice of India far exceeded all
others.
"The landscape of the industry has changed significantly over the past
decade, with more than a dozen car makers now circling the global auto
industry's new battleground to make cheap, small cars for the world's big
emerging economies," said Doug Dawdy, Senior VP of KPMG's Corporate Finance
Practice.
"The perception of China as the industry juggernaut in the Asian world is
consistent with our findings in previous years. If credit continues to be made
readily available and the country maintains its current rate of growth, then
these findings are credible," says Dawdy. "India is also a major player in
this race, with some analysts predicting that by 2010 the car market will
double to over two million."
The forecast is 'cautiously' optimistic
---------------------------------------
Although the industry has been hampered by overcapacity issues and some
volatility in the global markets, automotive executives appear more confident
overall that the industry is poised for an upswing. KPMG's survey, which is
based on interviews with 113 senior executives, vehicle manufacturers and
suppliers worldwide, found that 26 percent agree that global profits will rise
in the next 5 years, while only 14 percent anticipate a decline.
"Given the industry has undergone such transition and volatility over the
past few years, we are optimistic that we have seen the bottom of the industry
for global suppliers," said Frank Klemenchuk, Audit Partner with KPMG's
Industrial and Automotive Practice. "In part, some of this optimism is being
fueled by the restructuring that has occurred and the increased opportunity
and competition for market share in the new and emerging markets, for those
who are playing in this sphere."
In Canada, however, the impact of the rising Canadian dollar has had some
negative implications for the manufacturing sector. Companies in the
automotive sector, more specifically car parts manufacturers, have had to find
ways to offset their losses.
"For Canadian parts manufacturers, the weakening US dollar has been a
huge challenge, and many companies have had to come up with creative ways to
mitigate this loss, while still remaining competitive," said Klemenchuk.
With regard to North America, 54 percent of those surveyed anticipate a
decrease in market share for North American brands over the next 5 years, only
22 percent expect an increase. In contrast, this is much more optimistic than
survey findings from last year, where 62 percent anticipated a significant
decrease, and only 14 percent expected an increase.
"Driving some of this optimism is the fact that executives sense a
decrease in overcapacity from last year's findings as 20 percent of executives
felt overcapacity was greater than 20 percent, down from 25 percent last year
and 34 percent the previous year," said Klemenchuk. "That being said, the
survey also indicates that 71 percent of respondents suspect overcapacity will
become a major issue in China over the next 3 to 10 years."
M&A Activity
------------
For the second year in succession, the survey indicates that executives
are anticipating considerable activity on the merger and acquisitions and
alliance front. Forty-seven percent expect an increase in activity with OEMs,
and 72 percent anticipate an increase with Tier 1 suppliers, and 64 percent
with Tier 2 and 3 suppliers.
"Given the expected growth of the Asian market, evidently automotive
executives recognize the importance and significance of gaining access to new
markets and customers, and consolidation is the logical next step," said Doug
Dawdy. "Moreover, the increased competition globally is driving this need for
product synergies and to reduce costs."
"The role of private equity in this sector will not diminish in 2008,"
said Dawdy. Respondents indicated that the most important private equity
criteria were EBITDA (Earnings before Interest Taxes Depreciation and
Amortization), potential operating synergies and potential product synergies."
<<
Other survey highlights include:
--------------------------------
- Among the top 3 issues facing the industry were product quality
(96 percent), reducing costs (86 percent), and new technologies
(83 percent).
- In what they think consumers will be basing their car buying
decisions on executive's ranked quality (86 percent) and fuel
efficiency (83 percent) very high, followed by safety (70 percent),
and affordability (69 percent). Moving up higher on the list was
'ability to use alternative fuel sources', up from 53 percent in 2006
to 65 percent in 2007.
- Future cost savings are likely to come from manufacturing and
technology innovations (67 percent), low cost country sourcing
(65 percent), and product materials innovation (57 percent), though
the biggest increases year to year were from direct labour
(increasing from 32 percent to 46 percent) and health care, benefits,
and pension costs (increasing from 34 percent to 46 percent).
>>
About the Survey
In the survey, Momentum:2008 KPMG's Global Auto Executive Survey, the
executives interviewed represented vehicle manufacturers and suppliers in
Canada, the United States, England, France, Germany, Sweden, India, China,
South Korea, Japan, and Australia. KPMG has released an annual survey of
automotive executives expressing their views on the state of the industry
since 1999.
About KPMG in Canada
KPMG LLP, a Canadian limited liability partnership established under the
laws of Ontario, is the Canadian member firm affiliated with KPMG
International, a global network of professional firms providing Audit, Tax,
and Advisory services. Member firms operate in 145 countries and have more
than 123,000 professionals working around the world.
The independent member firms of the KPMG network are affiliated with KPMG
International, a Swiss cooperative. Each KPMG firm is a legally distinct and
separate entity, and describes itself as such.
Why OIL/METALS are going UP!!!!
TATA sells $2,500 car to millions!
http://biz.yahoo.com/ap/080110/india_ultracheap_car.html
India's Tata Motors Unveils $2,500 Car
Thursday January 10, 6:25 am ET
By Gavin Rabinowitz, Associated Press Writer
India's Tata Motors Unveils Ultracheap $2,500 Car, Bringing Car Ownership Into Millions' Reach
NEW DELHI (AP) -- India's Tata Motors on Thursday unveiled its much anticipated $2,500 car, an ultra-cheap price tag that brings car ownership into the reach of tens of millions of people. But critics worry the car could overwhelm the country's roads and create an environmental nightmare.
Company Chairman Ratan Tata, introducing the Nano during India's main auto show, drove onto a stage in a white version of the tiny four-door subcompact, his head nearly touching the roof.
With a snub nose and a sloping roof, the world's cheapest car can fit five people -- if they squeeze. And the basic version is spare: there's no radio, no passenger-side mirror and only one windshield wiper. If you want air conditioning to cope with India's brutal summers, you need to get the deluxe version.
While the price has created a buzz, critics say the Nano could lead to possibly millions more automobiles hitting already clogged Indian roads, adding to mounting air and noise pollution problems. Others have said Tata will have to sacrifice quality and safety standards to meet the target price.
The chairman, though, insists the car will meet safety standards and pollute even less than motorcycles, passing domestic and European emission standards and averaging about 50 miles per gallon (20 kilometers per liter).
Chief U.N. climate scientist Rajendra Pachauri, who shared last year's Nobel Peace Prize, said last month that "I am having nightmares" about the prospect of the low-cost car.
"Dr. Pachauri need not have nightmares," Ratan Tata said at the unveiling. "For us it's a milestone and I hope we can make a contribution to the country."
The basic model will sell for for 100,000 rupees -- $2,500 -- but analysts estimate that customers could pay 20-30 percent more than that to cover taxes, delivery and other charges.
Tata has long promised that he'd create a 100,000-rupee car, a vow that was much-derided in the global industry but created a frenzy of attention in India. On Thursday, nearly every news station covered the unveiling live.
"A promise is a promise," Tata told the crowd.
The company has said they expect the car to revolutionize the auto industry, and analysts believe the Nano may force other manufacturers to lower their own pricing. French automaker Renault SA and its Japanese partner, Nissan Motor Co., are trying to determine if they can sell a compact car for less than $3,000.
For now, the car will be sold only in India, but Tata has said it eventually hopes to export it. The Nano could become the basis for other similar super-cheap models in developing markets around the world.
As rising middle class incomes drive demand for cars in India, automakers expect the ranks of car owners in the country to expand dramatically in coming years.
But for some, a huge influx of cars is a terrifying prospect of traffic jams at midnight, hours-long commutes and increasing pollution.
"If you're talking about urban environment, it will cause serious problems," said Jamie Leather, a transport specialist with the Asian Development Bank. "It's a major concern."
In 2005, Indian vehicles released 219 million tons of carbon dioxide, the leading greenhouse gas blamed for global warming.
By 2035, that number is projected to increase to 1,467 million tons, due largely to the expanding middle-class and the expected rise of low-cost cars, according to the Asian Development Bank.
"The cheaper and cheaper vehicles become, the quicker those pollution levels will increase," Leather said.
Why OIL/METALS are going UP!!!!
TATA sells $2,500 car to millions!
http://biz.yahoo.com/ap/080110/india_ultracheap_car.html
India's Tata Motors Unveils $2,500 Car
Thursday January 10, 6:25 am ET
By Gavin Rabinowitz, Associated Press Writer
India's Tata Motors Unveils Ultracheap $2,500 Car, Bringing Car Ownership Into Millions' Reach
NEW DELHI (AP) -- India's Tata Motors on Thursday unveiled its much anticipated $2,500 car, an ultra-cheap price tag that brings car ownership into the reach of tens of millions of people. But critics worry the car could overwhelm the country's roads and create an environmental nightmare.
Company Chairman Ratan Tata, introducing the Nano during India's main auto show, drove onto a stage in a white version of the tiny four-door subcompact, his head nearly touching the roof.
With a snub nose and a sloping roof, the world's cheapest car can fit five people -- if they squeeze. And the basic version is spare: there's no radio, no passenger-side mirror and only one windshield wiper. If you want air conditioning to cope with India's brutal summers, you need to get the deluxe version.
While the price has created a buzz, critics say the Nano could lead to possibly millions more automobiles hitting already clogged Indian roads, adding to mounting air and noise pollution problems. Others have said Tata will have to sacrifice quality and safety standards to meet the target price.
The chairman, though, insists the car will meet safety standards and pollute even less than motorcycles, passing domestic and European emission standards and averaging about 50 miles per gallon (20 kilometers per liter).
Chief U.N. climate scientist Rajendra Pachauri, who shared last year's Nobel Peace Prize, said last month that "I am having nightmares" about the prospect of the low-cost car.
"Dr. Pachauri need not have nightmares," Ratan Tata said at the unveiling. "For us it's a milestone and I hope we can make a contribution to the country."
The basic model will sell for for 100,000 rupees -- $2,500 -- but analysts estimate that customers could pay 20-30 percent more than that to cover taxes, delivery and other charges.
Tata has long promised that he'd create a 100,000-rupee car, a vow that was much-derided in the global industry but created a frenzy of attention in India. On Thursday, nearly every news station covered the unveiling live.
"A promise is a promise," Tata told the crowd.
The company has said they expect the car to revolutionize the auto industry, and analysts believe the Nano may force other manufacturers to lower their own pricing. French automaker Renault SA and its Japanese partner, Nissan Motor Co., are trying to determine if they can sell a compact car for less than $3,000.
For now, the car will be sold only in India, but Tata has said it eventually hopes to export it. The Nano could become the basis for other similar super-cheap models in developing markets around the world.
As rising middle class incomes drive demand for cars in India, automakers expect the ranks of car owners in the country to expand dramatically in coming years.
But for some, a huge influx of cars is a terrifying prospect of traffic jams at midnight, hours-long commutes and increasing pollution.
"If you're talking about urban environment, it will cause serious problems," said Jamie Leather, a transport specialist with the Asian Development Bank. "It's a major concern."
In 2005, Indian vehicles released 219 million tons of carbon dioxide, the leading greenhouse gas blamed for global warming.
By 2035, that number is projected to increase to 1,467 million tons, due largely to the expanding middle-class and the expected rise of low-cost cars, according to the Asian Development Bank.
"The cheaper and cheaper vehicles become, the quicker those pollution levels will increase," Leather said.
Why OIL/METALS are going UP!!!!
TATA sells $2,500 car to millions!
http://biz.yahoo.com/ap/080110/india_ultracheap_car.html
India's Tata Motors Unveils $2,500 Car
Thursday January 10, 6:25 am ET
By Gavin Rabinowitz, Associated Press Writer
India's Tata Motors Unveils Ultracheap $2,500 Car, Bringing Car Ownership Into Millions' Reach
NEW DELHI (AP) -- India's Tata Motors on Thursday unveiled its much anticipated $2,500 car, an ultra-cheap price tag that brings car ownership into the reach of tens of millions of people. But critics worry the car could overwhelm the country's roads and create an environmental nightmare.
Company Chairman Ratan Tata, introducing the Nano during India's main auto show, drove onto a stage in a white version of the tiny four-door subcompact, his head nearly touching the roof.
With a snub nose and a sloping roof, the world's cheapest car can fit five people -- if they squeeze. And the basic version is spare: there's no radio, no passenger-side mirror and only one windshield wiper. If you want air conditioning to cope with India's brutal summers, you need to get the deluxe version.
While the price has created a buzz, critics say the Nano could lead to possibly millions more automobiles hitting already clogged Indian roads, adding to mounting air and noise pollution problems. Others have said Tata will have to sacrifice quality and safety standards to meet the target price.
The chairman, though, insists the car will meet safety standards and pollute even less than motorcycles, passing domestic and European emission standards and averaging about 50 miles per gallon (20 kilometers per liter).
Chief U.N. climate scientist Rajendra Pachauri, who shared last year's Nobel Peace Prize, said last month that "I am having nightmares" about the prospect of the low-cost car.
"Dr. Pachauri need not have nightmares," Ratan Tata said at the unveiling. "For us it's a milestone and I hope we can make a contribution to the country."
The basic model will sell for for 100,000 rupees -- $2,500 -- but analysts estimate that customers could pay 20-30 percent more than that to cover taxes, delivery and other charges.
Tata has long promised that he'd create a 100,000-rupee car, a vow that was much-derided in the global industry but created a frenzy of attention in India. On Thursday, nearly every news station covered the unveiling live.
"A promise is a promise," Tata told the crowd.
The company has said they expect the car to revolutionize the auto industry, and analysts believe the Nano may force other manufacturers to lower their own pricing. French automaker Renault SA and its Japanese partner, Nissan Motor Co., are trying to determine if they can sell a compact car for less than $3,000.
For now, the car will be sold only in India, but Tata has said it eventually hopes to export it. The Nano could become the basis for other similar super-cheap models in developing markets around the world.
As rising middle class incomes drive demand for cars in India, automakers expect the ranks of car owners in the country to expand dramatically in coming years.
But for some, a huge influx of cars is a terrifying prospect of traffic jams at midnight, hours-long commutes and increasing pollution.
"If you're talking about urban environment, it will cause serious problems," said Jamie Leather, a transport specialist with the Asian Development Bank. "It's a major concern."
In 2005, Indian vehicles released 219 million tons of carbon dioxide, the leading greenhouse gas blamed for global warming.
By 2035, that number is projected to increase to 1,467 million tons, due largely to the expanding middle-class and the expected rise of low-cost cars, according to the Asian Development Bank.
"The cheaper and cheaper vehicles become, the quicker those pollution levels will increase," Leather said.
TXCO Presentation
http://www.txco.com/pritchard08.pdf
Energize 2008 Confernce
This site lists the companies presenting. I will try to find presentations and post them here.
http://www.pritchardcapital.com/energize/
Credit Derivatives May Lose $250 Billion, Gross Says
(THIS IS THE NEXT SHOE TO DROP. Kipp)
By Caroline Salas
Jan. 8 (Bloomberg) -- Credit-default swaps, used to help protect against the risk a company won't pay its debt, may cause losses of $250 billion this year, helping send the U.S. economy into a recession as corporate defaults rise, Pacific Investment Management Co.'s Bill Gross said.
``Credit-default swaps are perhaps the most egregious offenders'' in today's banking system, Gross wrote on the company's Web site today. ``Our modern shadow banking system craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever.''
The Federal Reserve will probably cut its benchmark interest rate to 3 percent by mid-year from 4.25 percent as losses on credit-default swaps contribute to a slowing U.S. economy, wrote Gross, who manages the world's largest bond fund. The market for outstanding credit-default swap contracts grew to $45.5 trillion during the first half of last year from $632 billion at the end of June 2001, according to the International Swaps and Derivatives Association, an industry group.
Goldman Sachs Group Inc. ``estimates that mortgage related losses of $200-$400 billion alone might lead to a pullback of $2 trillion of aggregate lending,'' Gross said. ``Add to that my $250 billion loss estimate from CDS, as well as prospective losses in commercial real estate and credit cards in 2008 and you have a recipe for a contraction in credit leading to a recession.''
`Goldman Sachs Wins'
Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.
Assuming default rates on corporate bonds reach historical averages of about 1.25 percent, $500 billion of credit-default swap contracts will be triggered, causing losses of $250 billion to sellers of the derivatives after accounting for the recovery value of the securities, Gross said.
``Of course, `buyers of protection' will be on the other `winning' side, but the point is that as capital gains and capital losses slosh from one side of the shadow system's boat to the other, casualties and shipwrecks are the inevitable consequence,'' Gross said. ``Goldman Sachs wins? Fine, but the losers in many cases will not be back for a return match.''
`Held Up Well'
Gross was named fixed-income manager of the year in 2007 by Chicago-based Morningstar Inc. The $112.7 billion Pimco Total Return fund returned 9.07 percent last year, in the 94th percentile, Bloomberg data show.
``Mr. Gross is correct that the market for CDS is large,'' ISDA Chief Executive Officer Robert Pickel said in a statement. ``While adverse price movement undoubtedly pushes bids and offers further apart, as it does in any market, liquidity in, and the mechanics of, the CDS market have held up well in the face of a challenging credit environment.''
The global default rate on high-yield, high-risk bonds will climb more than fivefold by the end of this year to 4.8 percent as the economy weakens, Moody's Investors Service forecast today. High-yield, or junk, bonds are those rated below Baa3 by Moody's and BBB- by Standard & Poor's.
`Shadow Banking'
``The withdrawal of deposits from our new-age shadow banking system has frightening potential consequences,'' Gross said. ``Pyramid schemes and chain letters collapse because there is no more credit to feed them. As the system of modern day levered shadow finance slows to a crawl, or even contracts at the edges, its ability to systematically fertilize economic growth must be called into question.''
Gross has expressed concern in his last four monthly outlooks about the ``shadow banking system,'' which was created by ``the loose regulation and financial innovation of the past 35 years'' and ``where credit is composed on a keyboard as opposed to a printing press,'' he said in his November piece.
Pimco currently has a ``credit-lite'' position and is interested in buying bonds of banks and investment banks that are rated AA or A, and yield about 200 basis points more than similar-maturity Treasuries, Gross wrote in an e-mailed response to questions.
Defaults to Rise
Our position ``assumes that as the year progresses that we re-enter `high-quality corporate markets' at increasingly wider spreads,'' Gross said in the e-mail. ``We will wait to enter lower investment-grade/high-yield markets until recessionary conditions/higher defaults begin to become obvious. We estimate that will be in the second half of the year.''
The extra yield, or spread, investors demand to own the average investment-grade corporate bond instead of Treasuries has more than doubled since 2006 to 211 basis points, according to Merrill Lynch & Co. index data. High-yield spreads have also more than doubled in the same period to 645 basis points, Merrill data show. A basis point is 0.01 percentage point.
U.S. construction companies are ``certainly in danger to a high extent'' as are companies with exposure to the U.S. consumer, Axel Potthof, investment manager at Pimco in Munich, said in an interview today.
Poorer Countries to Offset US Slowdown
Wednesday January 9, 6:29 am ET
By Gillian Wong, Associated Press Writer
(Energy, Food/Fertilizer, Gold/Silver for 2008. Kipp)
World Bank Says Developing Economies Expected to Cushion US Slowdown in 2008
SINGAPORE (AP) -- Continued robust expansion in developing countries will help offset a slowdown in the United States this year amid concerns of a possible recession in the world's largest economy, the World Bank said Wednesday.
The Washington, D.C.-based international bank forecast global growth to moderate to 3.3 percent this year from 3.6 percent in 2007.
"Developing countries, if you add them all up now, are basically the same size as the United States," said Hans Timmer, co-author of the bank's annual "Global Economic Prospects" report.
"But they are growing more than three times as fast, and that means that their contribution to global demand is more than three times as important as the contribution of the United States," he said at the launch of the report in Singapore.
Not only has the resilience of developing economies mitigated the slowdown in the U.S. economy, it has also helped reduce global trade imbalances by sucking up American exports with the help of a cheaper U.S. dollar, he said.
The bank said there were concerns that a faltering U.S. housing market or further financial turmoil could push the U.S. into recession and weaken demand for the products of developing countries.
"We still don't know exactly how many corpses are there still in the financial markets, and how big, ultimately, the losses will be," Timmer said.
The bank believes, however, that the spillover from problems in the U.S. housing market on consumer demand will be limited. It expects the U.S. economy to regain momentum and lead to a pick up in world output, which it predicts will expand by 3.6 percent in 2009.
Gross domestic product growth for developing countries is expected to ease to 7.1 percent in 2008, while high-income countries are predicted to grow by a modest 2.2 percent, the bank said.
Timmer warned, though, that some developing economies were in danger of overheating, which would be exacerbated if interest rates come down sharply as a result of a U.S. economic slowdown, creating excessive liquidity in the global economy.
If capital flows turn away from the United States because of the problems there, the funds will end up "somewhere in the developing world and that mechanism could create new bubbles or expand bubbles already in the making," he said, citing the Shanghai market and stock markets in India as examples.
The Shanghai Composite index soared 97 percent last year, making it the world's best-performing major benchmark index. It also became the second most popular place for initial public offerings behind New York.
"You can argue that that kind of an increase is probably not sustainable," Timmer said.
Further sharp declines in the U.S. dollar were also a potential threat, despite the boost provided to U.S. exports. A less robust greenback provokes increased uncertainty and volatility in financial markets and increased trading costs, resulting in weaker export and investment growth worldwide, the report said.
And while a weaker dollar would benefit developing countries with dollar debt, it would also impose losses on those that hold dollar-denominated assets, the bank noted.
To alleviate poverty, the report urged developing countries to harness better technology, saying that rapid technological progress in developing nations has helped to reduce the proportion of people living in absolute poverty from 29 percent in 1990 to 18 percent in 2004.
"Technological progress increased 40-60 percent faster in developing countries than in rich countries between the early 1990s and early 2000s," said Andrew Burns, lead economist and main author of the report.
"Developing countries have a long way to go, given that the level of technology that they use is only one quarter of that employed in high-income countries."
2007: THE YEAR OF DEBUNKED MYTHS
by Mark B. Rasmussen
January 7, 2008
(This is worth thinking about. Kipp)
The “WEALTH AFFECT” is real and you can borrow yourself into perpetual prosperity.
You can spend yourself rich.
“It is different this time” and not all speculative manias collapse.
Real Estate always goes up.
The subprime problem is contained.
We are at or near a bottom in the Real Estate correction.
February 2004, near a generational low for fixed rate mortgages, was a good time to get an Adjustable Rate Mortgage (ARM) as recommended by Mr. Bubble…..3 months before a 17 rate hike campaign began.
“A strong dollar is in the country’s best interest” Henry Paulson-Secretary of the Treasury.
The “2% Core Rate” of inflation is accurate, reliable and credible. Gold + 31.8%, Oil +59%, Gas +54%, Wheat +77%, Soybeans +79%, Barley 56%, Rice +28%, Cotton +20%, Eggs +69%, CRB +16.5%, Goldman Sachs Commodities Index +40.6% for 2007.
The U.S. economy is fundamentally strong with good job creation. The (BLS) Bureau of Labor statistics has created hypothetical jobs with a computer model X12ARIMA aka the Birth/Death model (probably the same programmers used by Wall Street for mark to model valuations). For 2007, 89% of total non farm jobs reported were created by the BLS computer model and were therefore, hypothetical or not real. An example of this is, during 12/2007 17,000 financial services jobs were created by this model, while financial institutions were declaring massive losses and layoffs. The same phenomenon happened in Q2 of 2007 when 115,000 construction jobs were created while home builders were declaring massive losses and new home starts were plunging…..perhaps builders were paying people to stay home. The BLS does conduct a “Household Survey” of 60,000 households and for 12-2007 found a loss of 486,000 jobs, yet reported +18,000 new jobs for December. George Orwell would be so proud to know that “The Ministry of Truth” is alive and well in the U.S. Do hypothetical people consume and pay bills? “figures don’t lie but liars figure”, “There are three kinds of lies…….lies, damn lies and statistics” Mark Twain.
It is possible to turn financial lead into gold through financial alchemy aka innovation and creativity.
Subprime securitized (RMBS) Residential Mortgage Backed Securities deserve AAA credit ratings, the same as U.S. Treasuries and ONLY 5 American corporations.
The ratings by the bond rating agencies (Moody’s, S & P and Fitch) are credible, trustworthy and reliable. The rating agencies would never be influenced by the companies that Pay them to rate the bonds they issue.
Shorting gold is a top 10 investment for 2008-Goldman Sachs. $863 today, a new all time record close, the first monthly and annual close over $800. GS wouldn’t recommend shorting gold to cover their huge short positions, would they?
Goldman Sachs wouldn’t short the same RMBS’s they made huge fees and commissions on at the same time they sold them….and Henry Paulson knew nothing about such things before becoming the Secretary of the Treasury.
Financial innovation, flexibility and risk disbursement is what makes the American financial system so great. Thank you Mr. Bubble.
Risk disbursement is almost as good as eliminating risk altogether……the interest rate spreads said so! That is, unless you were a small town in northern Norway, Make a Wish Foundation, countless Local Government Investment Pools (like Florida), money market funds, Asset Backed Commercial Paper, Insurance Companies, Pension Funds and the entire global financial system. We created a financial plague that has infected every corner of the globe with the blessing and encouragement of Mr. Bubble.
Mark to Model/Myth (no sales or market inputs) is a very accurate, credible and reliable method to establish the value of $100’s of billions of over the counter securities that have No Real Market.
Bond insurance companies (Monolines) with less than 1% equity to risk exposure are definitely deserving of AAA ratings (did ACA really get reduced 12 credit levels to junk in a day? And if they don’t raise $1.5 billion in capital by 01/16/2007 $69 billion of their insured bonds will also be rated junk) as they and their insured bonds are as risk free as U.S. Treasuries and only 5 U.S. corporations…….in process.
SIV’s (Special Investment Vehicles) ($100’s of billions) are kept off of bank balance sheets and are much different than Enron’s SPE’s (Special Purpose Entities).
1.5% capitalization rates for commercial property (1/3 of treasury yields) are a very good value……remember Real Estate only goes up…….in process.
The Federal Reserve is omnipotent and can fix any financial problem. After 1% in rate cuts, fixed rate mortgages are the same as last year, the LIBOR rate has hardly moved, the dollar has declined dramatically, inflation is up, they cannot force lenders to lend, they cannot force borrowers to borrow and they can’t dictate where the oceans of liquidity they create go……in process.
Liquidity is the solution for insolvency…….in process.
Subprime is the “Only Cockroach” in the financial pantry. Look at the accelerating Alt-A, Prime, HELOC (Home Equity Lines Of Credit), Commercial Mortgage Backed Securities (CMBS), credit cards and auto loans default rates. S & P is expecting a 4 fold increase in corporate defaults over the next year. Private Equity and M&A loans with Covenant lite and PIK (Payment In Kind) provisions ($7.5 Trillion over the past 2 years) were issued with the same stringent standards as subprime……in process.
Legislation to prevent foreclosure on U.S. homes is not to prevent many and large losses by lenders……it is really to allow U.S. homeowners to pay considerably more than their home is worth for a long time.
Central banks are inflation fighters with 18 of the 20 largest growing money supply over 10% per year.......between 2-10 times real economic growth. Clearly, they never read or heard Milton Friedman “Inflation is always and everywhere a monetary phenomenon”.
“Peak Oil Theory” is false and oil is going down to $30 - $40 per barrel. The world owes the U.S. unlimited, discrete, secure and inexpensive oil. We don’t need no stinkin oil wells off of the Florida and California coasts or ANWAR. We also don’t need no stinkin refineries or nuclear power plants. We can run our national trucking fleet on wind, our cars on photovoltaic panels and our ships and trains on geothermal.
Black Swans, Rogue Waves and Fat Tails are fairy tales.
You can believe and trust the Government, the Federal Reserve (private banking cartel) and Wall Street spokespeople.
My Investment Strategy For 2008
Agriculture, Gold/Silver, and Energy are the only three areas I will concentrate on in 2008. I am buying stocks that will demonstrate higher top and bottom line growth quarter, after quarter, after quarter. I will also say that I usually hold stocks for several quarters and sometimes make it to take long term cap gains. The longest I ever held a stock since I started trading in 2000 was Miramar Mining Corp. (MNG), held for 2.5 years and just sold after Newmont buyout. I also hold 12-15 stocks max so I can really concentrate on them.
Reasons for the Agriculture, Gold/Silver, and Energy areas are:
- The US Dollar will decline more.
- Grain inventories are at 30 year lows, grain prices are at record highs AND FOR THE FIRST TIME EVER, these high prices can be contracted for several years into the future.
- The B.R.I.C. growth will continue to consume massive amounts of food and energy.
- Inflation will accelerate due to the massive global money creation currently underway.
- Real Estate is toast as any kind of an investment for many many years. Money will not go into real estate and money coming out of real estate will find ag, metals, and energy.
- The financial sector is in serious trouble and will not recover in 2008. "The Broke and the Broken".
- Gold and Silver will be reserve currencies in the future.
My stock picks will be public in PSL8 and Hank's contest.
The VMC Boards are at the core of my investing strategy and I am grateful to be part of this group.
Good luck to all of you in 2008!
Kipp
Len,
I am a little confused on the stocks that qualify.
5. A miminum of 25 cents is required for any pick. Earnings as per the VMC rule is required ONLY if a stock is below $1.00.
8. No options, warrants, etfs, cash or shorts. Long stock positions only.
As I read the rules, a canadian mining stock that has only a claim and no mine, nor any earnings will qualify IF the stock trades over $1.00 on the 11th and meets the volume requirements?
Kipp
SSK - A couple more miners for consideration:
TCM.TO - Moly - http://www.stockhouse.ca/comp_info.asp?symbol=TCM&table=LIST
LMC - Base Metals - http://www.stockhouse.ca/comp_info.asp?symbol=LMC&table=NYSE
Kipp440 is leaving the VMC boards
for a week in Cabo! 2 feet of snow on the ground and 1 below zero this morning. I am taking the family down to Cabo on our 4th annual New Years trip. These trips have been made possible due to my success in the markets, and that success is due in large part to the VMC network.
It is my hope for 2008 that we can help each other beat what promises to be a tough market. Our group is bar none the best on the internet. When I came here I didn't know much about the market and felt guilty that I was taking more than I was giving. Over the last couple years I have found my feet, worked really hard, and maybe even helped a few folks here make a little money.
The Meet & Greet in Las Vegas was a great time and we need to get together again in 2008.
I will try to read the boards between fishing trips!
HAPPY NEW YEAR!
Kipp
POT Upgrade Will Only Help
NEW YORK - Shares of Potash Corp. jumped on Thursday, after a Goldman Sachs analyst upgraded the fertilizer company's stock on higher potash prices.
The stock advanced $6.59, or 4.6 percent, to $150 in early morning trading and set an all-time high of $150.26 earlier in the session.
Goldman Sachs (nyse: GS - news - people ) analyst Edlain Rodriguez upgraded the stock to "Buy" from "Neutral" and said Potash will be able to raise prices because of strong demand and tight supply.
Rodriguez noted that Potash shares have risen sharply recently, but still thinks they have further to climb.
"Despite the strong run-up in the stock, we believe there is further upside potential, based on the constant upward earnings revisions that will likely continue in the near-term because of Potash's ability to raise prices due to strong demand and tight supply," Rodriguez wrote in a client note.
Rodriguez's new price target is $180, from $122 previously, which implies upside of 25.5 percent to Wednesday's $143.41 closing price.
Potash is a form of potassium used mostly in agriculture to fertilize crops and other plants.
About Intrepid Potash
http://www.intrepidpotash.com/
Intrepid Mining LLC has become the largest producer of potash (potassium chloride) in the United States. In addition, it produces three valuable byproducts: Solar Salt, Magnesium Chloride brine and Sulfate of Potash Magnesia, trade named Magna K. Potash is a critical fertilizer, providing one of eight essential nutrients and is vital to the creation of protein. It is necessary and widely used to grow corn, wheat, soybeans, potatoes, hay and numerous other crops. The United States currently imports almost 85% of its potash needs. Headquartered in Denver, Colorado, Intrepid Mining LLC has two production facilities in Utah and three in New Mexico. These subsidiaries are named: Intrepid Potash Moab, Intrepid Potash Wendover, and Intrepid Potash New Mexico. These companies collectively employ approximately 650 people, have gross revenues of approximately $250 million and pay significant royalties to the BLM and both the States of New Mexico and Utah. Intrepid Mining LLC is on the leading...
Intrepid Potash Executives
Jamie Whyte [Intrepid Vice President]
Jeffrey Boone [Doctor for Ute Denver Broncos Alumni, Jim Whyte, Vice President of Intrepid Potash]
Intrepid Potash Files IPO!
Here is a U.S. potash producer named Intrepid filing an IPO.
http://www.bizjournals.com/albuquerque/stories/2007/12/24/daily13.html?t=printable
Thursday, December 27, 2007 - 11:12 AM MST
Potash company files for IPONew Mexico Business Weekly
Intrepid Potash Inc., whose parent company owns three potash production facilities in Carlsbad, N.M., has filed a registration statement for an initial public offering.
The company, based in Denver, filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for an IPO of its common stock.
Intrepid Mining LLC, the parent company of Intrepid Potash, is the largest producer of potash in the U.S. It also owns two facilities in Utah.
Morgan Stanley & Co. Inc. is acting as sole book-running manager for the IPO. The offering will be made only by means of a prospectus, which can be obtained by calling (866) 718-1649 or emailing prospectus@morganstanley.com.
Farm Economics For Our IL Farm
I own a third interest of a 240 acre family farm in Livingston County IL. I wanted to share the economics with you guys so you can get an idea of what the cost/profit picture looks like. I have compared these numbers to our budget and they are very close.
http://www.farmdoc.uiuc.edu/manage/crop_budgets.pdf
Big profits are back in farming and will support high fertilizer costs. Lots of $400 potash will be sold!
Kipp
Here is my DD on KCL
I have been in ISX/KCL since late summer, here is DD I did after the P.P. to introduce it to my buddies on 12-22-07:
KCL.V - Potash One
I loaded up more KCL as the price dipped after the P.P. This stock is going to take off due to the strength of fertilizer stocks. The big story of 2008 is going to be FOOD. The combination of 30 year low grain inventories, added B.R.I.C. demand for higher protein diets, biofuels, and high grain prices will drive fertilizer prices through the roof! Look at Mosaic and Potash Corp of Sask. market caps, both approx $40 BILLION. KCL has a market cap of $75 MILLION.
Private Placement (P.P.) - http://www.isxresources.com/s/NewsReleases.asp?ReportID=278169&_Type=News-Releases&_Title=Potash-One-Announces-Equity-Financing
The 43-101 reserve of 360 million tons at $400/ton is $144,000,000,000???? Is that right? $144 Billion??? I read that there was an estimated 10,000 recoverable tons per acre on the 97,000 acre concession. That figure would be 970,000,000 tons, yes 970 MILLION TONS. The company is using part of the $10 million raised in the P.P. to drill the property and prove the numbers in the report.
Here is a link to the 108 page 43-101 report –
http://www.isxresources.com/i/pdf/TechnicalReport20070208.pdf
These numbers are just too big for me to figure so let's just use the Mosaic Belle Plain Mine that is located directly south, adjacent to the KCL property. Here is the map
http://www.isxresources.com/s/LegacyProject.asp
Belle Plain produces 2.8 million tons of potash per year through a "solution" mining process. The revenue at $400/ton is $1,120,000,000. *They are currently expanding Belle Plain to increase production by an additional 400k tons per year. The same mineralization being mined by Mosaic extends north to KCL's property.
My feeling is that one of these scenarios plays out:
1. Mosaic buys KCL to prevent them from competing with them AND increasing their proven reserves.
2 KCL gets bought out by a large fertilizer company using their recently inflated stock as currency to do a stock deal.
3. A Sovereign Fund from China or some other country buys KCL.
4. KCL raises the funds to build a mine.
The word of KCL is getting out, look at this recommendation from last week:
http://www.dailybuyselladviser.com/news/blank/249-1.html?type=pf
“Mad about potash
Mr. Paquette tells us that as he was writing the latest issue of his advisory, three spirits appeared to him. Well, in a manner of speaking.
Business channel CNBC flickered in the background as he wrote. On came commentator Dennis Gartman. He was asked about his favourite thing right now — “and the first two words out of his mouth were ‘fertilizer’ and ‘potash’.”
Next, it was the turn of Mad Money’s Jim Cramer who, in his inimitable way, came on screen with a pile of dirt, potatoes and corn cobs, hoe in hand, and declared that he was keen on the “AG’s” — agricultural stocks. The first firm that sprung to his lips was U.S. fertilizer giant Mosaic Company (NYSE-MOS), which has a market cap of $35 billion and a big property in Esterhazy, Saskatchewan.
As a rule, says the editor, this kind of consensus comes before a market top, but fundamentals for an agricultural bull market remain in place. Wheat carryovers are holding at low levels and demand still outweighs supply.
Then, as if to seal the deal, up popped well-known Canadian adviser Donald Coxe, and he was singing the praises of potash as well.
The Russian sinkhole and a new name in potash
This sent the Vancouver editor to his charts. “The technicals for the intermediate and longer term potash chart are extremely positive.” Although prices have more than doubled in four years, that doesn’t necessarily mean that a bull market in potash has run its course.
“Meantime, in an already tight market, prices are being goosed by reports of a large sinkhole at a Russian mine that could threaten 10% of the world’s supplies.” Major producers are raising prices.
Which brings Mr. Paquette to a stock that may be ready to ride that trend. You would not have found PotashOne (TSX/V-KCL) listed as recently as the beginning of this month. It was called ISX Resources. Emerging Growth Stocks had already recommended it in October 2006 and seen its price grow from $0.25 to $1.00 by August of this year.
On November 26, the company held its annual general meeting, changed its name and appointed a new President and CEO, Mr. Paul Matesyk, the co-founder of Energy Metals Corp., which was recently bought out by Uranium One. On December 6, PotashOne began trading under its new name, “just in time to catch the wave of investor interest in the ‘AG’ stocks.”
No ceiling on the price
Now it can move forward in a big way. “Given the amount of interest in this sector and the fact they already have a resource of hundreds of millions of tons of the stuff as opposed to looking for it, I don’t think we can put a ceiling on the price until we can estimate what kind of cash flow it could generate and how many shares it might take to get production,” says Mr. Paquette.
There’s a tempting bit of geography surrounding this stock, too. “Mad” Jim Cramer’s fertilizer pick, Mosaic, has its big Saskatchewan property right next door to PotashOne’s. That could spell takeover.
“The ultimate route they take will depend on what the shares do,” explains the editor. “If interest in Potash stays white hot and the stock price continues rising, they could become a threat to other producers and get taken out. Give me more time to come up with a target price,” he asks his readers. The stock closed yesterday at $2.85.”
KCL.V - Potash One "Lotto Ticket" RE-POST
(I posted this 12-22, stock was $2.85 now $4.07. Potash is hot and this stock is still under the radar.)
I loaded up as the price dipped after the P.P. This stock is going to take off due to the strength of fertilizer stocks. The big story of 2008 is going to be FOOD. The combination of 30 year low grain inventories, added B.R.I.C. demand for higher protein diets, biofuels, and high grain prices will drive fertilizer prices through the roof! Look at Mosaic and Potash Corp of Sask. market caps, both approx $40 BILLION. KCL has a market cap of $75 MILLION.
The 43-101 reserve of 360 million tons at $400/ton is $144,000,000,000???? Is that right? $144 Billion??? I read that there was an estimated 10,000 recoverable tons per acre on the 97,000 acre concession. That figure would be 970,000,000 tons, yes 970 MILLION TONS. The company is using part of the $10 million raised in the P.P. to drill the property and prove the numbers in the report.
Here is a link to the 108 page 43-101 report - http://www.isxresources.com/i/pdf/TechnicalReport20070208.pdf
These numbers are just too big for me to figure so let's just use the Mosaic Belle Plain Mine that is located directly south, adjacent to the KCL property. Here is the map http://www.isxresources.com/s/LegacyProject.asp
Belle Plain produces 2.8 million tons of potash per year through a "solution" mining process. The revenue at $400/ton is $1,120,000,000. *They are currently expanding Belle Plain to increase production by an additional 400k tons per year. The same mineralization being mined by Mosaic extends north to KCL's property.
My feeling is that one of these scenarios plays out:
1. Mosaic buys KCL to prevent them from competing with them AND increasing their proven reserves.
2 KCL gets bought out by a large fertilizer company using their recently inflated stock as currency to do a stock deal.
3. A Sovereign Fund from China or some other country buys KCL.
4. KCL raises the funds to build a mine.
The word of KCL is getting out, look at this recommendation from last week:
http://www.dailybuyselladviser.com/news/blank/249-1.html?type=pf
Mad about potash
Mr. Paquette tells us that as he was writing the latest issue of his advisory, three spirits appeared to him. Well, in a manner of speaking.
Business channel CNBC flickered in the background as he wrote. On came commentator Dennis Gartman. He was asked about his favourite thing right now — “and the first two words out of his mouth were ‘fertilizer’ and ‘potash’.”
Next, it was the turn of Mad Money’s Jim Cramer who, in his inimitable way, came on screen with a pile of dirt, potatoes and corn cobs, hoe in hand, and declared that he was keen on the “AG’s” — agricultural stocks. The first firm that sprung to his lips was U.S. fertilizer giant Mosaic Company (NYSE-MOS), which has a market cap of $35 billion and a big property in Esterhazy, Saskatchewan.
As a rule, says the editor, this kind of consensus comes before a market top, but fundamentals for an agricultural bull market remain in place. Wheat carryovers are holding at low levels and demand still outweighs supply.
Then, as if to seal the deal, up popped well-known Canadian adviser Donald Coxe, and he was singing the praises of potash as well.
The Russian sinkhole and a new name in potash
This sent the Vancouver editor to his charts. “The technicals for the intermediate and longer term potash chart are extremely positive.” Although prices have more than doubled in four years, that doesn’t necessarily mean that a bull market in potash has run its course.
“Meantime, in an already tight market, prices are being goosed by reports of a large sinkhole at a Russian mine that could threaten 10% of the world’s supplies.” Major producers are raising prices.
Which brings Mr. Paquette to a stock that may be ready to ride that trend. You would not have found PotashOne (TSX/V-KCL) listed as recently as the beginning of this month. It was called ISX Resources. Emerging Growth Stocks had already recommended it in October 2006 and seen its price grow from $0.25 to $1.00 by August of this year.
On November 26, the company held its annual general meeting, changed its name and appointed a new President and CEO, Mr. Paul Matesyk, the co-founder of Energy Metals Corp., which was recently bought out by Uranium One. On December 6, PotashOne began trading under its new name, “just in time to catch the wave of investor interest in the ‘AG’ stocks.”
No ceiling on the price
Now it can move forward in a big way. “Given the amount of interest in this sector and the fact they already have a resource of hundreds of millions of tons of the stuff as opposed to looking for it, I don’t think we can put a ceiling on the price until we can estimate what kind of cash flow it could generate and how many shares it might take to get production,” says Mr. Paquette.
There’s a tempting bit of geography surrounding this stock, too. “Mad” Jim Cramer’s fertilizer pick, Mosaic, has its big Saskatchewan property right next door to PotashOne’s. That could spell takeover.
“The ultimate route they take will depend on what the shares do,” explains the editor. “If interest in Potash stays white hot and the stock price continues rising, they could become a threat to other producers and get taken out. Give me more time to come up with a target price,” he asks his readers. The stock closed yesterday at $2.85.
Worthy - KCL permits
I do not know the answer to your question at the moment. I am sure it is a process to get the permits. I think the company will have the money to get to the permitting stage and they are drilling core samples to confirm 43-101. It should help to have infrastructre and an operating mine right next door, instead of needing permits in some pristine wilderness area. The company should report something soon.
Kipp
GRAIN PRICES TO THE MOON!
http://www.cbot.com/cbot/pub/page/0,3181,949,00.html
Don Coxe ROCKS!
KCL should break out soon.
Kipp
GRAIN PRICES TO THE MOON!
http://www.cbot.com/cbot/pub/page/0,3181,949,00.html
Don Coxe ROCKS!
We have a good fertilizer play in potash on the F & A board.
Kipp
CXPO - And why not super demand with $.63/shr earnings annualized at $2.52 given P/E of 10 projecting $25.20/shr giving zero growth in sequential Q's through 2008.
Here is the operational update from 11/5 leading me to think they will post a bang up 4th Q:
Crimson Exploration Inc. Provides Operational Update
HOUSTON--(BUSINESS WIRE)--Nov. 5, 2007--Crimson Exploration Inc. (OTCBB:CXPO) today announced results of recent production and drilling activity.
Highlights
-- Company record average production of approximately 50,320
Mcfe/day of natural gas equivalents for the third quarter of
2007, compared to an average daily rate of 7,552 Mcfe/day in
the third quarter of 2006.
-- Commencement of production from the Fuhlberg #1 well in the
Madisonville-Rodessa formation.
-- Commencement of processing by expanded plant in the
Madisonville field in late October, 2007.
-- Successful drilling of 4 out of 5 South Texas Lobo exploratory
wells, in which the Company has between 15 and 30%
non-operated working interest ownership.
-- Successful drilling of 4 of 4 Fort Worth Barnett Shale wells
in Johnson County, Texas, in which the Company owns a 12.5%
non-operated working interest
-- Successful completion of 2 out of 3 Felicia-area development
and exploration wells (7.8 to 20% WI) in Liberty County,
Texas.
-- Successful completion and testing of the West Cameron 432 #1
exploratory well in the shallow state waters offshore
Louisiana, in which the Company owns a 15% non-operated
working interest.
-- Successful completion of the Sabine Lake #1 exploratory test
in Calcasieu Parish, LA, in which the Company owns a 15%
non-operated working interest
Production Update
Production
Crimson produced approximately 4,629,441 Mcfe of natural gas equivalents, or 50,320 Mcfe per day, during the third quarter 2007 compared to approximately 694,793 Mcfe, or 7,552 Mcfe per day, during the third quarter 2006. For the first nine months of 2007, Crimson produced approximately 8,462,800 Mcfe of natural gas equivalents, or 30,999 Mcfe per day compared to approximately 1,924,443 Mcfe, or 7,049 Mcfe per day, in the first nine months of 2006. The dramatic increase in production for the quarter, and year to date, is attributable to the South Texas and Gulf Coast producing assets acquired from EXCO Resources, Inc. in May 2007. The operating results from those assets have been reflected in Crimson's operating results from the May 8, 2007 closing date of the acquisition forward.
Also contributing to the increase in production for 2007, was the previously-announced commencement of production from our Madisonville Rodessa project in late June 2007.
Drilling Activity
Madisonville Area (approximate 78% WI)
In September we sidetracked the Johnston #2 well due to a mechanical problem in the original wellbore. We will frac this well in November with production expected to commence in early December. Also, the operator of the capacity-constrained sour gas processing plant in the field notified us that the construction had been completed and that full processing capacity had commenced in late-October. During the third quarter, production from our Fuhlberg #1 well averaged a gross curtailed rate of 3,000 Mcfe/day.
Fort Worth Barnett Shale, Johnson and Tarrant Counties, Texas
During the third quarter 2007, the operator of our 12.5% working interest in the prolific Fort Worth Barnett Shale play in Johnson and Tarrant Counties commenced the drilling of wells on existing acreage and continued to build on our acreage position. We have acquired approximately 4,400 gross acres to date and will continue to accumulate additional acreage in the area. The operator of this project successfully drilled 4 of 4 wells in Johnson County during the third quarter, and has one currently in progress. The successful wells were drilled to depths between 10,000 and 11,400 feet. One well tested at 1,100 Mcfe per day, and was awaiting hookup, while the other three were being completed and fraced. All four of these wells should be placed on production by the end of November. Three more wells are scheduled to be drilled before the end of the year, with another 10-12 wells planned for 2008.
South Texas
We participated in five non-operated wells within the Lobo/Perdido Trend of South Texas in the third quarter of 2007, all in Zapata County, three of which were successful, one was determined to be uneconomical and one is still in process. The Gonzales #1 (CXP 15% WI) was determined to be uneconomical in the Lobo and plugging operations are underway. The Ramirez #1 (CXP 30% WI) was successfully drilled to a total depth of 9,800 feet, and 100' of probable net gas was found in multiple zones. This well was put on production in early October at a rate of approximately 1,400 Mcf/d with additional zones to be added. The Garcia #1 (CXP 25% WI) was successfully drilled to a depth of 9,662 feet, and 60' of probable net gas was found in multiple zones. Production from the Garcia commenced on 9/26/07 at an initial rate of approximately 1,900 Mcfe per day. The Vielmann-Ramirez #1 (CXP 20% WI) was drilled to a total depth of 11,100 feet and began flowing to sales on 10/16/07 at a rate of approximately 2,900 Mcf/d with additional zones to be added. The Fernando Cuellar #A-1 (CXP 20% WI) was drilled to a total depth of 9,450 feet and began flowing to sales on 10/22/07 at a rate of approximately 1,200 Mcf/d with additional zones to be added. The Guevara A-1 (CXP 20% WI) was spud on October 8th and was drilled to a total depth of 8,700 feet. We expect to participate in three to four additional wells in this program in 2007.
We also have a 75% working interest in the Cabernet and Merlot prospects in nearby Matagorda County, Texas. We own approximately 900 gross acres covering both prospects.
West Cameron 432
We participated for a 15% non-operated WI in a new field discovery with the drilling of the West Cameron 432 #1. The well was drilled to a total depth of 9,360 feet, encountered 200' of apparent net gas in multiple zones, was completed and fraced, and is awaiting hookup. We expect that offshore facilities and a pipeline will be installed with initial production to commence in early Q1'08 at a gross rate of approximately 10,000 Mcf/d.
Sabine Lake
We participated for a 15% non-operated WI in a new field discovery with the drilling of the SL 19095 #1 in Cameron Parish, Louisiana. The well was perforated in several zones between 12,850 and 13,376 feet and tested at combined gross rates of 10,000 Mcf/d and 425 barrels of condensate per day. That well is expected to commence production in early Q1'08.
Liberty County, Texas
Crimson participated in the drilling of four non-operated wells in the Felicia area of Liberty County, Texas in the third quarter, as a result of the acquisition of the STGC Properties. The KMG #3 (CXP 9.7% WI) was drilled and completed in the Cook Mountain formation and commenced production in July at an approximate rate of 3,400 mcfpd and 1,000 Bopd. The Cimarex Kate Dishman #7 (CXP 7.8% WI) was drilled and completed in the EY-1 sand and is awaiting production facilities. The Edge Barrett #2 (CXP 20%WI) was drilled to the Wilcox 12,700' sand where Crimson elected not to participate in a completion attempt. The Cimarex Willis Estate #5 well (CXP 28% WI) was drilled to 11,500 feet.
Other
During the third quarter, the Company also participated in a 3.55% WI in the Chesapeake Olivarez #2 well in Hidalgo County, Texas. The well was completed in the Mid Vicksburg and tested at an initial rate of 8,200 mcf and 155 bbls per day.
The Company is also participating for a 42.5% non-operated WI in the Tri-C operated Jackson Williams #3 well in Jackson County, Texas. It is currently drilling below 13,250 feet toward a 14,000 foot objective.
Mississippi Coal Bed Methane Project
During the third quarter of 2007, we completed desorption analysis on the core samples taken from our acreage during the first and second quarters of this year. While complete analysis and evaluation has not been finalized, the preliminary results of this analysis indicate that the primary targeted coals may not contain sufficient quantities of gas to make this project profitable. We have an option on 125,000 gross acres in this area through 2007 in which to further develop a strategy to proceed, if any.
This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission ("SEC"). Such statements include those concerning Crimson's strategic plans, expectations and objectives for future operations. All statements included in this press release that address activities, events or developments that Crimson expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions Crimson made based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Crimson's control. Statements regarding future production, revenue and cash flow are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, commodity price changes, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes and the potential lack of capital resources. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Please refer to our filings with the SEC, including our Form 10-K for the year ended December 31, 2006 for a further discussion of these risks.
CONTACT: Crimson Exploration Inc., Houston
E. Joseph Grady, 713-236-7400
SOURCE: Crimson Exploration Inc.
POE.V - Reason for buy and hold.
I have posted eye crossing volumes of D.D. and guestimations on POE. Here is the simple reason I am holding for 2008.
Here are the results from the last 5 wells drilled since November:
L44H-D1 - 3940bopd (**Largest onshore well ever drilled in Thailand. Choked down due to inability to haul it!)
N52-D1 - 1921bopd
N58-D1 - 1480bopd
L44-H - 1265bopd
N56-D1A - 615bopd (They stated this one would be lower)
The average is 1844bopd.
They are drilling 28 wells in 2008. If 24 are successful, and come in at the 1844 average, that gives you 44,256bopd. POE releases the drilling reports during the quarter, so we can see how they are doing before the earnings.
At $80/bbl 44,265 barrels of oil is worth $3,540,480 each and every day. POE gets 60%. It costs $800,000 to drill a well. The total market cap of the company is $575 million.
http://www.stockhouse.ca/comp_info.asp?symbol=POE&table=list
I am holding for long term multi-bagger, just like ARD.
Kipp
I Also Recommend Jim Puplava's Saturday Morning Webcast. If you take the time to listen to the current broadcast recap of 2007 you will see what good advice he was giving a year ago.
http://www.financialsense.com/fsn/main.html
This Saturday he will be giving 2008 predictions. You can bet I will be listening.
We are all here to help eachother. Listening to Don Coxe and Jim Paplava have helped me tune out the CNBC crowd and profit from Macro trends. I don't know what I would do without the VMC boards. This has been a very profitable one two punch for me.
Punch one combo Coxe/Puplava PLUS punch two VMC equals KNOCK OUT BLOW!
Kipp
Getting a Grip on Macro Helps With Micros!
I use Don Coxe as my guiding light for the Macro Economic Picture. I then use VMC boards to help identify undiscovered micros in those areas. Right now I am focused on Agriculture, Energy, and Precius Metals emphasizing Silver. Most of my stocks are Canadian listed with a couple Oslo listings.
Here is what Coxe is saying:
Basic Points Recommendations
INVESTMENT RECOMMENDATIONS
1. Remain heavily underweight banks, particularly investment banks that
have displayed monumental stupidity. Do not assume that a change at the
top will automatically convert them into temples of wisdom, (unless it is
accompanied by demands for the departing to repay bonuses based on bets
that turned out disastrously). Better to assume that, like subprime-based
CDOs, there are layers of rot that can make the entire product dangerous
to your financial health.
2. Remain overweight Emerging Markets, emphasizing those that are oil, gas,
and/or food exporters.
3. Soaring food costs threaten stability for some Third World economies. We
have been ardently endorsing India since we returned from our leave of
absence a year ago. We are now more cautious, because a weak monsoon
could be politically and economically destabilizing at a time of $4 corn
and $10 wheat.
4. Remain heavily overweight gold—both stocks and the ETF. Gold is almost
as good a protection against banking problems as SKF—the UltraShort
Financials ETF—a security which may not be a suitable investment in
some portfolios.
5. We continue to believe that the Agricultural stocks are the pre-eminent
investment class of our time. Farm incomes are rising rapidly, and, in the
US, farms and farm land are the real estate assets that are rising in value
and are virtually immune to foreclosures. That means the leading Ag
companies have great pricing power and minimal credit problems. We
now hear suggestions that because food inflation has finally made it to
the cover of The Economist, it is time to start moving toward the exits. Not
so: We think that fine cover story could be the atonement—At Last!—for
the magazine’s famous 1999 cover: $5 Oil.
6. Remain overweight oil and gas producers, including the Alberta oil sands
producing companies. As disappointed as we are with the new royalty
schemes in that province, Alberta certainly remains more attractive than
Nigeria or Angola—and much more attractive than Russia, Kazakhstan,
or Venezuela.
7. We think it is time to begin accumulating the refiners that are equipped
to handle heavy high-sulfur crude. The collapse of the crack spread has
savaged refiners’ earnings, but that will eventually rebound. The Saudis
have virtually turned out the Light, and less and less of the oil that the
Gulf states will be lifting will be of the most desirable grades.
8. Retain the base metals stocks that have long-life unhedged reserves in
secure areas. Even if there is a global recession caused by global collapses
of subprime paper and LBO loans, it will not be deep enough to drive
base metal prices back to 2004 levels—but would be worrisome enough
to push further mine development even farther into the future.
9. When borrowing, borrow where possible in dollars. When investing, invest
where possible in other currencies.
10. Stagflation is a bad backdrop for bonds—and for non-commodity stocks.
The central bankers could have headed it off had Wall Street behaved
with a modicum of morality, but the Fed and its brethren are forced into
sustained reflation because of the global solvency crisis. Corporate earnings
for most sectors will not meet current optimistic Street forecasts, and rising
inflation will reduce the market’s P/E.
Sskillz - Please define you definition of "long-term".
Skills - Depends on what your definition of "long term" is.
My own definition of a long term hold depends on the stock and the trend. I hold stocks through strong macro growth trends and as long as the company's story and growth stay intact. CXPO has put 4 quarters of steady growth and increased earnings on the books. Odds are quite good with 5 days left in the 4th quarter that they will post another great set of numbers. Oil was at all time highs and gas prices were as good as Q3. So for me, my long term hold will be at least another quarter. When the story changes, I will sell CXPO and probably have long term multi-bagger gains.
What is your reason for selling CXPO?
I think you were defining long term as "buy and forget". "Buy and forget" is not hazardous to an investors health, it is most likely fatal.
Kipp
10 Bagger - Your board on FPSO's is something to behold. I have added Sevan and will be getting new money after January 2nd. I have some long term cap gains and if I wait til Jan. to sell I won't have to pay taxes for 15 months! You need to wait until noon on Jan. 2nd to pump FPSO's so I can get in some of the others!
I don't mean to rub any salt in any wounds. I am just trying to make a point that steady top and bottom line growers will appreciate even in the toughest of markets. I have sat through many a beating on stocks that demonstrate growth. Go look at the TXCO chart. I kept adding on the dips and now I have a big holding at an average around $9.50. They are another driller that will continue to gain steady ground over time. I think POE.V falls into the same mold, it is my largest holding now and I have pounded it here.
I wish everyone well and hope we can all help eachother make $$$ in 2008!
Kipp
CXPO - I am in around $10 and don't plan to sell until it reaches full value, which may be north of $30 in a couple more quarters, I may hold it for years??? Have you guys looked at the top and bottom line growth? Look at this summary of the financials:
http://finance.yahoo.com/q/is?s=cxpo.ob
Read the 10K's and 10Q's on CXPO too. Look at ARD if you want to see what a driller that shows steady top and bottom line growth:
http://stockcharts.com/charts/gallery.html?ARD
Telling people to sell a potential multi-bagger to try to capture short term blips on a chart could be hazardous to their health. How about telling them to buy the dips and keep a long term position?
Just an observation.
Buying and molding with Bobwins on CXPO.
Kipp
Golden Phoenix Announces Major Expansion of Mineral Rights at Ashdown Molybdenum Mine
Wednesday December 26, 5:00 am ET
SPARKS, Nev., Dec. 26 /PRNewswire-FirstCall/ -- Golden Phoenix Minerals, Inc. (OTC Bulletin Board: GPXM - News) is pleased to announce the completion of a staking program that has added 193 claims to the Ashdown Molybdenum Mine in northwestern Nevada. This represents a 191% increase in unpatented load claims under the control of Golden Phoenix and its partner, Win-Eldrich Mines, Ltd., bringing the total land package of the Ashdown Project LLC to 294 claims covering 5,880 acres along trend.
The claims were staked during the past three months and have been recorded in Humboldt County and filed with the Bureau of Land Management. One block of claims extends to the west, and links the mine, which is located on Federal lands, with the mill and tailings facilities built on private property under long-term lease to the Project. A second block of claims adjoins the southern boundary of the mine, following quartz outcroppings and moly shows on-trend along the Pine Forest Range.
David A. Caldwell, CEO of Golden Phoenix, commented on the acquisition of additional mineral rights, "When you have an ore body of such extraordinary grade, it is simply good mining practice to consolidate your holdings in order to protect your future. By nearly tripling our Ashdown claim area to over nine square miles, we have built a land bridge between the mine and mill while locking up exploration sites showing significant promise to the south. This gives our mine planners greater flexibility to develop the asset and offers the shareholders of both partners potential for future value to be uncovered."
Please visit the Golden Phoenix website at http://www.Golden-Phoenix.com/
Golden Phoenix Minerals, Inc. is a Nevada-based mining company committed to deliver value to its shareholders by acquiring, developing and mining superior precious and strategic metal deposits in North America using competitive business practices balanced by principles of ethical stewardship. Golden Phoenix owns the Mineral Ridge gold and silver property near Silver Peak, Nevada, the Northern Champion molybdenum mine in Ontario, Canada, and is majority owner of the Ashdown Project LLC gold and molybdenum property held jointly by Golden Phoenix Minerals, Inc. and Win-Eldrich Mines, Ltd. of Toronto, Canada through its US subsidiary, Win-Eldrich Gold, Inc.
China - BHP-Rio Tinto bid battle
AFX UK Focus) 2007-12-23 14:55 GMT:
LONDON (Thomson Financial) - China has begun concerted action to protect its position as one of the world's leading consumers of iron ore and other raw materials by launching a two-pronged initiative to gatecrash the 67 bln stg bid battle being fought between BHP Billiton PLC and rival mining group Rio Tinto PLC, The Sunday Telegraph reported citing City sources.
The Chinese have approached Lehman Brothers, the investment bank, and are scouring the globe for other advisers in their efforts to affect the outcome of BHP's unsolicited takeover bid for Rio, the newspaper added. No formal confirmation of Lehman's involvement has yet been made, it said.
The newspaper said Chinese embassies in the UK and Australia have sounded out banking and legal advisers in London and Sydney over the past 10 days. Officials are drawing up detailed analysis of the BHP-Rio situation to assess all of China's political options, it added.
At the same time three Chinese companies -- Chinalco, Baosteel and China Development Bank, which already owns a 1 pct stake in Rio Tinto -- have taken the lead in examining ways of using the markets to scupper BHP's approach for Rio. These include talks with a wider circle of Chinese state-owned metals businesses, according to City sources. tf.TFN-Europe_newsdesk@thomson.com ml/ak
COPYRIGHT
Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
cl001 - Bobwins KCL ?
I have a question about this sentence at the bottom of the press release:
"The Company also reports that it has co-participated with several institutions in a private placement of a recently established private junior potash exploration company by subscribing for 1 million units at $0.50 per unit."
What the heck are they talking about?
December 19, 2007
Potash One Announces Equity Financing
--------------------------------------------------------------------------------
Vancouver, B.C., December 19, 2007 -- Potash One Inc. ( the "Company" or "Potash One") is pleased to announce a non-brokered equity private placement of up to 4.15 million units at a price of $2.65 per unit for gross proceeds of $10,997,500. Each unit shall consist of one common share and one-half common share purchase warrant. Each whole warrant shall be exercisable for one common share at a price of $3.25 per share for a period of 15 months following closing. In the event that the common shares close at $4.00 or greater for 10 trading days, subsequent to the expiry of the 4 month hold period, the expiry date may be accelerated by the Company to a period of 30 days (the "Placement"). Potash One shall pay a finder's fee of 5.0% of the gross proceeds of the Placement.
The net proceeds of the Placement will be used to expedite further exploration and development of Potash One's previously explored Legacy potash project in Saskatchewan, and for general corporate purposes. The Placement is subject to certain conditions including, but not limited to the receipt of all necessary regulatory approvals.
The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.
The Company controls over 97,000 acres of previously explored potash-bearing property which is directly adjacent to a large producing potash mine to the south of the Company's property.
Potash One's Legacy project in Saskatchewan was previously explored by Imperial Oil Ltd. (now Exxon) and Lumsden Potash Corporation.
The Company also reports that it has co-participated with several institutions in a private placement of a recently established private junior potash exploration company by subscribing for 1 million units at $0.50 per unit.
ON BEHALF OF THE BOARD OF DIRECTORS,
Paul F. Matysek, M.Sc., P.Geo.
President and Chief Executive Officer
Telephone: (604) 331-4431
Fax: (604) 608-4979
info@potash1.com
About Potash One Inc.
Potash One Inc. is a Canadian potash company engaged in the identification, acquisition, exploration and development of advanced resource properties. The Company has a solid balance sheet and experienced technical and corporate management to advance its current project to the next level. The primary interests of the Company include an option to acquire 100% interest in a 97,240 acre Potash Subsurface Exploration permit in Saskatchewan, Canada.
KCL
(I posted this on the VMC Food and Agriculture board http://investorshub.advfn.com/boards/board.asp?board_id=9423 . Potash is fertilizer but it is also mined so it fits on both boards. You may want to bookmark the VMC F&A board too)Kipp
I think one of the major fertilizer companies will buy KCL out. I think the fertilizer stocks can easily double in a year. If Mosaic or PCS hit market caps north of $80 BILLION, and KCL does the drilling and proves the reserves, one of them will buy them out. It could also be an Agrium or a foreign producer like Yara, who knows?
One thing I know from being in the fertilizer business for 20 years is that most of us in the business missed the moves of the past 2 years because we didn't think crop prices were sustainable. We had seen spikes before, only to see a big crop harvested and prices come crashing down. Now if you look at the cbot you can contract high grain prices for several years! This has never happened before.
An example I can give you is MFA (Missouri Farmers Assoc.) had millions of shares of CF industries at pre IPO prices. Look at this cahrt - When they hit a 100% gain they sold ALL of the stock. They missed a 1000% gain.
http://stockcharts.com/charts/gallery.html?CF
Someone is going to value the KCL 100+ BILLION worth of potash at more than the current $75 MILLION. I just don't know who, how, when, where, what........but I know it WILL happen.
Kipp
cl001 - KCL
Chen, I think one of the major fertilizer companies will buy KCL out. I think the fertilizer stocks can easily double in a year. If Mosaic or PCS hit market caps north of $80 BILLION, and KCL does the drilling and proves the reserves, one of them will buy them out. It could also be an Agrium or a foreign producer like Yara, who knows?
One thing I know from being in the fertilizer business for 20 years is that most of us in the business missed the moves of the past 2 years because we didn't think crop prices were sustainable. We had seen spikes before, only to see a big crop harvested and prices come crashing down. Now if you look at the cbot you can contract high grain prices for several years! This has never happened before.
An example I can give you is MFA (Missouri Farmers Assoc.) had millions of shares of CF industries at pre IPO prices. Look at this cahrt - When they hit a 100% gain they sold ALL of the stock. They missed a 1000% gain.
http://stockcharts.com/charts/gallery.html?CF
Someone is going to value the KCL 100+ BILLION worth of potash at more than the current $75 MILLION. I just don't know who, how, when, where, what........but I know it WILL happen.
Thanks for helping dig up the info on KCL.
Kipp
KCL.V - Potash One "Lotto Ticket"
I loaded up as the price dipped after the P.P. This stock is going to take off due to the strength of fertilizer stocks. The big story of 2008 is going to be FOOD. The combination of 30 year low grain inventories, added B.R.I.C. demand for higher protein diets, biofuels, and high grain prices will drive fertilizer prices through the roof! Look at Mosaic and Potash Corp of Sask. market caps, both approx $40 BILLION. KCL has a market cap of $75 MILLION.
The 43-101 reserve of 360 million tons at $400/ton is $144,000,000,000???? Is that right? $144 Billion??? I read that there was an estimated 10,000 recoverable tons per acre on the 97,000 acre concession. That figure would be 970,000,000 tons, yes 970 MILLION TONS. The company is using part of the $10 million raised in the P.P. to drill the property and prove the numbers in the report.
Here is a link to the 108 page 43-101 report - http://www.isxresources.com/i/pdf/TechnicalReport20070208.pdf
These numbers are just too big for me to figure so let's just use the Mosaic Belle Plain Mine that is located directly south, adjacent to the KCL property. Here is the map http://www.isxresources.com/s/LegacyProject.asp
Belle Plain produces 2.8 million tons of potash per year through a "solution" mining process. The revenue at $400/ton is $1,120,000,000. *They are currently expanding Belle Plain to increase production by an additional 400k tons per year. The same mineralization being mined by Mosaic extends north to KCL's property.
My feeling is that one of these scenarios plays out:
1. Mosaic buys KCL to prevent them from competing with them AND increasing their proven reserves.
2 KCL gets bought out by a large fertilizer company using their recently inflated stock as currency to do a stock deal.
3. A Sovereign Fund from China or some other country buys KCL.
4. KCL raises the funds to build a mine.
The word of KCL is getting out, look at this recommendation from last week:
http://www.dailybuyselladviser.com/news/blank/249-1.html?type=pf
Mad about potash
Mr. Paquette tells us that as he was writing the latest issue of his advisory, three spirits appeared to him. Well, in a manner of speaking.
Business channel CNBC flickered in the background as he wrote. On came commentator Dennis Gartman. He was asked about his favourite thing right now — “and the first two words out of his mouth were ‘fertilizer’ and ‘potash’.”
Next, it was the turn of Mad Money’s Jim Cramer who, in his inimitable way, came on screen with a pile of dirt, potatoes and corn cobs, hoe in hand, and declared that he was keen on the “AG’s” — agricultural stocks. The first firm that sprung to his lips was U.S. fertilizer giant Mosaic Company (NYSE-MOS), which has a market cap of $35 billion and a big property in Esterhazy, Saskatchewan.
As a rule, says the editor, this kind of consensus comes before a market top, but fundamentals for an agricultural bull market remain in place. Wheat carryovers are holding at low levels and demand still outweighs supply.
Then, as if to seal the deal, up popped well-known Canadian adviser Donald Coxe, and he was singing the praises of potash as well.
The Russian sinkhole and a new name in potash
This sent the Vancouver editor to his charts. “The technicals for the intermediate and longer term potash chart are extremely positive.” Although prices have more than doubled in four years, that doesn’t necessarily mean that a bull market in potash has run its course.
“Meantime, in an already tight market, prices are being goosed by reports of a large sinkhole at a Russian mine that could threaten 10% of the world’s supplies.” Major producers are raising prices.
Which brings Mr. Paquette to a stock that may be ready to ride that trend. You would not have found PotashOne (TSX/V-KCL) listed as recently as the beginning of this month. It was called ISX Resources. Emerging Growth Stocks had already recommended it in October 2006 and seen its price grow from $0.25 to $1.00 by August of this year.
On November 26, the company held its annual general meeting, changed its name and appointed a new President and CEO, Mr. Paul Matesyk, the co-founder of Energy Metals Corp., which was recently bought out by Uranium One. On December 6, PotashOne began trading under its new name, “just in time to catch the wave of investor interest in the ‘AG’ stocks.”
No ceiling on the price
Now it can move forward in a big way. “Given the amount of interest in this sector and the fact they already have a resource of hundreds of millions of tons of the stuff as opposed to looking for it, I don’t think we can put a ceiling on the price until we can estimate what kind of cash flow it could generate and how many shares it might take to get production,” says Mr. Paquette.
There’s a tempting bit of geography surrounding this stock, too. “Mad” Jim Cramer’s fertilizer pick, Mosaic, has its big Saskatchewan property right next door to PotashOne’s. That could spell takeover.
“The ultimate route they take will depend on what the shares do,” explains the editor. “If interest in Potash stays white hot and the stock price continues rising, they could become a threat to other producers and get taken out. Give me more time to come up with a target price,” he asks his readers. The stock closed yesterday at $2.85.