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F/A..... a little interesting historical "tidbit" about the killer of Beatle John Lennon and the shooter of President Ronald Reagan just after he was elected to office....
http://mackwhite.com/lennon.html
Unf*ckinbelievable what these people have been involved in!!....
And we're ready to hand over all of our "freedoms and liberties" to the "spooks" and Nazi's at the CIA to keep us safe???
What a joke!
Rogue
HWEB...I think I understand what you're saying. I think HWEB has earning's/trading driven mentality of shorter term ......that is not "my game" but I'm sure he excells at it because it seems his specialty.
I personally like holding for years if I can latch onto a great "idea with legs". Trading the position is fun but I've hurt myself a bit over the years getting "too cute".
Rogue
kozuh....I agree 100% that reserves are important. I gladly like "exchanging" my "spurious" US dollars for "real money" reserves!
My only queston....why weren't you "pounding the table' on HAO.v at .08 cents???
Or were you??
Rogue
I agree 10-bagger.....I say "NO" too.
I was tempted to say "YES" because there are good possible energy picks without current earnings ....but we have VMC Zip-Code changers board anyway for them!
You're right about "legs".....energy/natural resources is an investment "Mega-Trend" right now and as far out as I can see.
Rogue
Bush-Bin Laden connections....
....the Bush dynasty has closer links to the bin Ladens than Saddam Hussein did.
http://www.oilempire.us/bushbinladen.html
"The war on terrorism is an integral part of Bush’s National Security Doctrine . It is being used as a pretext for waging war on Iraq. Many antiwar activists are unaware that successive US administrations have over the last 20 years supported Islamic terrorism including Al Qaeda . The latter is a creation of the CIA. It is a key instrument of US foreign policy".....
The Bush Dynasty
http://www.oilempire.us/bush.html
Senator Prescott Bush (funder of Hitler), CIA Director / President George Herbert Walker Bush ("Poppy"), "President" George Walker Bush - and his brothers Jeb (stole Florida for his brother), Neil (looter of Savings and Loans) and Marvin (whose company did security for the World Trade Center and airports used in 9/11)......
Rogue
Hinckley Can Go Home
January 5, 2004
http://www.davidcogswell.com/MediaRoulette/BushHinckley.html
****Rogue comment.....I'm a personal friend of The Beatles original manager/promoter from the early 1960's, Sam Leach. To this day he believes the CIA was involved in the murder of John Lennon. I do too,it's just too plain "wierd" these CIA "connections"......
http://mackwhite.com/lennon.html
http://www.amazon.com/gp/product/1901442306/qid=1135933672/sr=8-10/ref=sr_8_xs_ap_i10_xgl14/103-7543....
Now that John Hinckley, the man convicted of attempting to assassinate Ronald Reagan, is being granted unsupervised visits with his family (see DC Indymedia), it lends support to John Judge’s theory that he was the errant son of the Hinckley family, set up to do a job. Because it happened in DC where the insanity plea could be used, he would do some time, but never really be harmed. It was like sending him to boot camp.
There is a great deal of fascinating information on the Web about the Bush-Hinckley family connection, but you don’t have to go to any fringey sources. What you can find in the mainstream media is enough to blow your mind, and to make you wonder why the obvious questions were never pursued.
Several of the mainstream articles about the subject from 1980 are posted on the FreeRepublic website. Of course the Freepers are fiercely partisan, consider themselves right wing and are big supporters of the war in Iraq, at least they were well represented among the very few who came out demonstrating for the war when hundreds of thousands demonstrated against it. But I don’t care whether they are right wing, left wing, no wing, triple wing. The point is whether a given point is true or not. For only posting mainstream articles about facts that have never even been denied by the Bush family, they generated responses like, "Un F***ing believable! You guys are getting so desperate, your starting to look like candidates for the looney bin."
These are responses from the conspiracy phobists, whose minds snap shut whenever they hear what they conceive of as "conspiracy theory." I’ve never figured out exactly what qualifies. It appears that anything that implies nefarious behavior is "conspiracy theory." Apparently illegal or dishonest behavior is not possible in the world view of these people – at least not among prominent politicians. They cling desperately to the "Leave It To Beaver" vision of American life.
In any case, here is a summary of the basic facts via mainstream reports.
On March 31, 1980, the day after John Hinckley had attempted to assassinate President Ronald Reagan, The Houston Post ran an article headlined, "Bush’s son was to dine with suspect’s brother."
The article began “Scott Hinckley, the brother of John Hinckley Jr., who is charged with shooting President Reagan and three others, was to have been a dinner guest Tuesday night at the home of Neil Bush, son of Vice President George Bush, the Houston Post has learned.”
NBC’s John Chancellor also reported the “bizarre coincidence.”
On that day the Post said Neil Bush admitted to being personally acquainted with Scott Hinckley, having met him on one occasion in the recent past. He also said he knew the family and was aware of its large contributions to the Bush campaign for president in 1980. Both were oil men based in Denver. Scott Hinckley was vice president of Vanderbilt Energy of Vanderbilt Energy Corporation and Neil Bush worked for Standard Oil of Indiana. John Hinckley Jr., the shooter, lived off and on with his parents in Evergreen, Colorado, near Denver.
Neil Bush told the Post he didn’t know if he knew John Jr. or not. His wife Sharon said, “From what I know and have heard, [the Hinckleys] are a very nice family ... and have given a lot of money to the Bush campaign. I understand he [John Jr.] was just the renegade brother in the family. They must feel awful.”
In response to a question about the incident, Vice President Bush’s press secretary said, “I don’t know a damn thing about it. I was talking to someone earlier tonight and I couldn’t even remember [Hinckley Jr.]’s name. All I know is what you’re telling me.” The vice president, he said, had “made no mention of it whatsoever” and didn’t indicate that he knew the name.
On March 31, Neil Bush refused to take calls from the media, but then held a press conference on April 1, saying he would meet with the media once and “leave it at that.”
The Rocky Mountain News reported that Neil Bush had confirmed that if the shooting had not taken place, Scott Hinckley was going to be at a dinner party at Bush’s house that night. He said Hinckley was “a good an decent man” and he had “no regrets whatsoever in saying that Scott Hinckley can be considered a friend of mine.”
He said he did not know the shooter or his father John Hinckley Sr., who was president of Vanderbilt Energy Corp. Bush said his wife’s assertion that there had been large contributions from Hinckley Sr. to the Bush presidential campaign were not true.
On April 1, the Houston Post reported “Vice president confirms his son was to have hosted Hinckley brother.” Bush spokeswoman Shirley Green described the connection as “a bizzare happenstance, a weird occurrence.”
Later that day Bush spokesman Peter Teeley denied any campaign donations from the Hinckleys.
The Associated Press reported on March 31 that “Neil Bush served as campaign manager for his brother, George W. Bush, the Vice President’s eldest son, who made an unsuccessful bid for Congress. Neil lived in Lubbock, Texas, throughout most of 1978, where John Hinckley lived from 1974 through 1980."
There is no record of any of the Bush’s being questioned by the FBI about the contacts. There was no investigation at all. According to the memoirs of Donald Regan, Reagan’s aide, treasury secretary and chief of staff at different times, the whole idea of anyone but the “lone assassin” being involved in the shooting was dismissed shortly after Bush convened a meeting in the Situation Room less than five hours after Reagan was shot. Regan said, “the Vice President arrived with Ed Meese, who had met him when he landed to fill him in on the details. George asked for a condition report: 1) on the President; 2) on the other wounded; 3; on the assailant; 4) on the international scene...” Then, “After the reports were given and it was determined that there were no international complications and no domestic conspiracy, it was decided that the US government would carry on business as usual.”
John Hinckley Sr. was president of World Vision, a right wing evangelical association which describes itself as the largest “international Christian relief and development agency” active in the third world, beginning in 1976. He was president of the organization when Mark David Chapman was working for it, one of its lost boys. The organization has deep ties to the intelligence community and has assisted the CIA in many of its projects. Its largest contributor is the U.S. State Department Agency for International Development.
Judge says, “World Vision is a far-right evangelical missionary operation that does missionary and "good work" operations in countries where there is a political purpose for it to be there. From it's inception, it was rabidly anti-Communist and it focused on refugee populations of people running from countries that had been taken over by Communism. This was from the fifties on.
World Vision had a hand in the movement of the Cubans into the United States and other refugees of revolutionary regimes. When you're a refugee you're cut loose, basically, and pretty much fair game to be manipulated by whoever is willing to give you a hand because you don't have a home or any place to stay and somebody has got to accept you.
World Vision was able to recruit out of these mercenary populations, people who could be politically turned to their intelligence purposes. World Vision served as a penetration force -- not as visible as the military actually going in or the CIA going in -- going in as missionaries and working among the people. This link between missionary and intelligence for capitalistic infiltration operations goes way back. It was part of the internationalism with the Rockefellers. It's talked about in a book called Thy Will Be Done[4] about Rockefeller, Venezuela, and Latin American Oil, the Summer Linguistic Institute, World Vision and others. But they operated in this way for a long time.
They were paid by the CIA for a long time during the Vietnam war and went into SE Asia -- Cambodia and Laos. Throughout Vietnam they were given U.S. military equipment to use. They still maintain a budget under USAID (Agency for International Development), which was just a pass-over in order to give the CIA more cover. They ran operations through USAID. The current cover replacing that is the NED (National Endowment for Democracy), which is supposed to be how we're exporting democracy around the world.”
Here are some great links on the Bush-Hinckley connection and the World Vision connection to Mark David Chapman.
"The Afternoon of March 30." is a fictional treatment of the questions by Nathaniel Blumberg. Too bad fiction is the only place this kind of information can appear in the US mainstream, which is almost all fiction.
North Star Zone on the Shadow Government. Offers a good basic wrap-up of the strange facts.
Mack White has a brilliant page on the assassination of John Lennon with a comicbook narrative and a great list of links.
"Reagan, Hinckley and the ‘Bushy Knoll’ Conspiracy" by ParaScope Editor Charles Overbeck.
Rogue
It's An Excellent Relationship": NYPD on Police - CIA Links
Democracy Now | December 28, 2005
RELATED:
NYPD & CIA to Build Soviet Style Commissariat
***Rogue comment.....doesn't this give everyone a "warm fuzzy feeling of safety"??? The agency over-run by Skull and Bones fascist Nazi's that killed JFK is going to keep us safe??? LOL!!!!!
Hiel Hitler!
New York's Finest Intelligence Agency
http://www.infowars.com/articles/ps/nypd_cia_excellent_relationship.htm
New York Police Department Deputy Commissioner for Public Information, Paul Browne, described the ties between the NYPD and the the CIA as "an excellent relationship" on today's edition of Democracy Now! [includes rush transcript] In light of the NYPD's recent surveillance activity, Democracy Now! asked Deputy Commissioner Paul Browne about the connections between the New York Police Department and the CIA.
In January 2002, David Cohen was appointed to be the NYPD’s first Deputy Commissioner of Intelligence. Cohen came to New York after a 35-year career with the CIA. From 1995 to 1997, Cohen served as the CIA's Directorate of Operations, where he oversaw the agency's worldwide operations, managed the CIA's global network of offices and personnel, and maintained agency relationships with foreign intelligence and security services.
At the time of his appointment Police Commissioner Raymond Kelly said “David has a strong reputation for forging ties and working effectively with other government agencies, foreign governments, and the private sector, and his drawing upon those strengths and contacts will greatly benefit the City as he directs the Police Department's intelligence efforts."
* Paul J. Browne, New York City Police Department's Deputy Commissioner of Public Information
AMY GOODMAN: Let me just ask you, before we get to the end of the program, I wanted to ask you about the relationship between the New York Police Department, F.B.I, and C.I.A. In January 2002, David Cohen was appointed to be the NYPD's first Deputy Commissioner of Intelligence. He came to New York after a 35-year career with the C.I.A. From 1995 to 1997, Cohen served as the Directorate of Operations, where he oversaw the agency's worldwide operations, managed the C.I.A.’s global network of offices and personnel and maintained agency relationships with foreign intelligence and security services. At the time of his appointment, Police Commissioner Raymond Kelly said of David Cohen, quote, “David has a strong reputation for forging ties and working effectively with other government agencies, foreign governments and the private sector, and his drawing upon those strengths and contacts will greatly benefit the city as he directs the Police Department's intelligence efforts.” Your response, Commissioner Browne?
PAUL J. BROWNE: Well, what's the question?
AMY GOODMAN: The relationship between the New York Police Department and the C.I.A., where David Cohen comes from and now heads intelligence for the New York Police Department?
PAUL J. BROWNE: Well, it’s an excellent relationship, one that I don't think -- we certainly had some relationship, but not to the extent now, where I think part of the reason we're so successful in placing officers overseas in key capitals and inside some of their counterterrorism organizations is a result of the relationships that Commissioner Cohen has forged and had already established from his experience in the C.I.A. But we now have people in Tel Aviv, Amman, Jordan, the U.K., Interpol, and Toronto and Montreal, focusing on their counterterrorism activities and asking the New York question, essentially, ‘Have you seen anything you're seeing, say, in Amman, Jordan, connected to New York, in terms of terrorism?’ And to be able to do that and do it relatively quickly, I think, is one example.
AMY GOODMAN: Norman Siegel, your response to C.I.A./police relationship?
NORMAN SIEGEL: I think that what New York is doing, and we're finding out because of Jim and Eileen's work, is very similar to what's going on on the national level. And I think New Yorkers and Americans have to be asking the question, “How much power do we want to give to our law enforcement people post-9/11, taking into account that, with regard to spying and First Amendment activity? Recently on East 79th Street, a group of seniors were involved in a housing demonstration and TARU showed up and started videoing these people -- the police -- and it was across the street from Mayor Bloomberg's house. There was no illegal activity. There was an agreement with the Police Department. This is the beginning of very serious substantial questions about how much power we want to give to the NYPD with regard to First Amendment activity.
AMY GOODMAN: We have to leave it there. Norman Siegel, civil rights attorney; Paul Browne, Deputy Commissioner of New York Police Department; Jim Dwyer of the New York Times; and Eileen Clancy of I-Witness Video.
INFOWARS: BECAUSE THERE'S A WAR ON FOR YOUR MIND
otc.....still don't want to "take a shot" at disproving the Neo-con Adolph Hitler historical connections???
It's all documentented fact....I won't let you "just sweep it under the rug" to defend your fascist AGENDA.
C'mon.....you're "cheap shots" are pretty lame. You can do better than that.
Just wait till we take a look at the Neo-con connections and business dealings with Osama Bin Laden!!!
Keep "believing" otc.....
Hiel Hitler!
Rogue
Rats deserting a sinking ship
Richard Daughty
...the angriest guy in economics
The Mogambo Guru
Archives
December 28, 2005
http://www.321gold.com/editorials/daughty/daughty122805.html
I was surprised to see the surprisingly bullish article "Golden Opportunity" in this week's Barron's magazine, and if you want to know all about investing in gold, then I suggest that you get a copy. I will not review it for you, but I will say that the author, Robin Goldwyn Blumenthal, did a good job of spelling out the enormously bullish case for gold without actually screaming, like the Mogambo does, "Buy gold, or it will prove that you are an idiot!"
I liked the way that James Turk, founder of GoldMoney.com, is quoted as being "worth listening to" because he correctly forecast last autumn how gold would break $500 an ounce in 2005. So what does Mr. Turk, a guy who is thus certifiably "worth listening to", think about the price of gold in 2006? "Over $850 an ounce," he says! Hahahha! A 70% gain, in one year, on the metal alone! I love this investing stuff! It's so easy!
And I really liked the little inset box entitled "The Bottom Line", which is, I suppose, the condensed Executive Summary for busy guys like you and me, poor proletariat working trash slobs upon whose shoulders the weight of the whole world is borne, and we are far too busy screaming at teenage children and hostile neighbors to read an entire article. So, handily, we are able to quickly learn the salient points, namely "Gold could exceed $800 next year, say some savvy pros." And revealed in this marvelous "bottom line" inset is the "easiest way to participate" in the coming gold bonanza, which is, according to the author, to use GLD, the popular gold ETF.
And as an aside, I was mightily impressed with the performance of the Central Fund of Canada, which, according to the article "holds gold and silver, but has no operations and no management fees. It was up 16% in the last year" which actually beats the performance of actual bullion itself, which was only up 15% in the same year, according to the article! Wow! Holding metal, but doing better than metal? Nice going, CEF!
Anyway, if you have read this far, then you are already aware that gold and silver (and commodities of all kinds) are "the" place to be, according to me, The Mogambo, and also according to Marc Faber, whom I call "brilliant", and Mr. Faber, in return, collegially gave me the nickname "stupid pig person." And the similarities don't end there! He also thinks, as I do, that taking physical possession of at least some physical gold and silver is a good idea, as he explains by saying "I don't want to be right on gold and wrong on having done some speculative transactions that can't be settled in the end." Well, not specifically YOU doing speculative transactions, but the guy who sold you your "paper gold" WAS speculative, and now that guy can't be found, and while we wait for extradition papers to wend their way through my friends on the courts of whatever luxurious garden spot I escaped to, we'll both grow old together while I'll squander the whole wad.
But this is not about how I am an untrustworthy little thieving lunatic weasel scumbag, but about WHO is reading this Barron's article and starting to get lots of ideas? Who is getting greedy ideas, desperate ideas, panicked ideas about the dismal prospects of growing older and soon retired, and is looking for an investment that is going to make a lot of money quickly? And who is also wondering how in the hell he or she is going to make up for all this lost time and money since the stock market bust of 2000? And who is so desperate that they have finally gambled in the housing market a little bit, and now it looks like the housing market (which was supposed to "catch us up") is starting to go down in flames, too, and now they are completely up to their eyeballs in property deals that they bought at the peak of the boom? Who indeed? I'll tell you the answer; desperate people. And desperate people will go to extremes, as they have nothing to lose.
This is why I confidently predict, with every ounce of dead-bang serious Mogambo sincerity (DBMS) that I can muster, that there will be a massive bubble in gold and silver, as there IS no other place to be in the late stages of a fiat currency regime, as history has shown over and over again, country after country, era after era, on page after page of history, until I can't stand the ennui of the utter predictability of it all anymore, whereupon I leap to my feet, and with a cry in my voice shout "Stop! I have heard it all too many times! Buy gold and prosper, or suffer if you don't!"
And gold will increase in price (audience shouts "How much increase in price, Mogambo?") not only enough to revert to the historical, inflation-adjusted mean, but waaayyyy past the mean. Thus, people who own gold and gold mines will be wealthy as hell and the rest of the idiots out there that had laughably placed their faith and fortunes in ridiculous fiat currencies in manipulated markets, despite the overwhelming historical evidence to the contrary, will pay the big ugly price (TBUP) for their unforgivable stupidity.
But the government is not going down without a fight! For example, last week's jumps in Total Fed Credit ($5.6 billion) and currency in circulation ($4.5 billion) would normally send me scurrying, like the little weasel I am, to the famed Mogambo Bunker, where I would whimper in fear and lash out in mindless panic, using up a lot of expensive ammo in the process. But being the last week before Christmas, if I was the Federal Reserve, I suppose I would do the exact same thing. I mean, this is only the same kind of suicidal monetary idiocy that they have been doing since 1997, and in only a lesser degree since the '60s, for crying out loud. So they are going to suddenly stop the week before Christmas? Hahaha!
Interestingly, at the same time, John Snow, our Treasury Secretary, was saying "As Treasury and the Office of Management and Budget reported in October in our 2005 fiscal-year-end budget report, the growing economy brought 2005 revenues to a level of $2.2 trillion. This increase of almost $275 billion over 2004 revenues was nearly a 15 percent increase and was also the largest year-over-year percentage increase in receipts in over 20 years."
Well, I will give him the benefit of the doubt and stipulate that, okay, maybe tax revenues were $2.2 trillion on the nose, and that the $275 billion more tax revenue money was, likewise, a 15% increase over 2004. Whoopee. Even more magnanimously, I will also agree that this was (and notice the way my voice cracks in fear) the biggest freaking tax haul "in over 20 years." Your homework assignment for tonight is to explain WHY there is no economic book, anywhere, in any dimension of space and time, that contains the sentence "The economy was invigorated by increasing tax revenues."
But when he said that "the growing economy" created that money, man, oh man, I came unglued! A few trillion dollars, TRILLIONS, in new money and debt was created by the Federal Reserve in the last year, and all the government got was a lousy $275 billion? Out of all the money and debt created, the government's tax income was a measly $275 billion increase out of all that money multiplied by the velocity of money as it went from transaction to transaction through the economy? My God! What kind of stupid economic management is THAT? Hell, I don't know where YOU work, but around here you are expected to show a return on investment from the instant you sign the loan papers, and if you don't, then one day you come to work and find that your parking spot has been given to the "Apprentice Custodian's Helper", whoever in the hell THAT is, and it turns out it is YOU!
But Mr. Snow is not interested in my horrible new job, but goes on to say "These increased revenues resulted in a much lower-than-expected 2005 budget deficit. While deficits are never welcome, the 2005 deficit of $319 billion, when expressed as a percent of Gross Domestic Product, was lower than the deficits in 16 of the last 25 years." Hahaha! There is something really funny in there, because just the extra debt that was incurred by the Treasury as the Congress and spent and spent and spent was over $700 billion this year! And yet, somehow, through the magic of government accounting, the budget deficit was only $319 billion? Hahaha!
This level of stupidity is perhaps explained by an article in the Washington Post entitled "College graduates' literacy drops." Apparently, a new study by the American Library Association showed that "only 31% of American college graduates" are proficient in the ability "to read labels." Hahaha! They administered a test that "measures how well adults comprehend basic instructions and tasks through reading -- such as computing costs per ounce of food items, comparing viewpoints on two editorials and reading prescription labels." Hahaha! A lousy third of college graduates!
- If you want another reason to buy silver, and you shouldn't, as the facts are so stark and compelling that I look at you with pity and contempt because you are not out buying MORE gold and silver right now, then listen to Barnaby Feder, who wrote an interesting article in the NY Times entitled "Scientists resurrecting use of silver as antiseptic" He reports that a company called AcryMed, "has invented a process to deposit silver particles averaging about 10 nanometers - less than a thousandth the diameter of a human hair - on medical devices." The reason that this is exciting news is that silver has the amazing property that it kills bacteria and viruses virtually on contact, reducing the chances of infection. Now, to see how this benefits you, imagine that you are a doctor. Now imagine that there is this cute young intern at the hospital, and you are glad that you are a big shot doctor with power to extort compliance over sweet young things like that, and you are daydreaming about this VERY interesting scenario, and after awhile you think to yourself "Hey! This would make a good porno movie!"
But now imagine that your reverie was disturbed because you just got the premium notice for your liability insurance, and you are getting hit with another big whopping increase in your insurance bill. And if your stupid patient gets an infection because you did NOT use a silver-coated infusion device, what is he going to do? He's going to sue the hell out of you! And THEN think of the liability insurance problems I'll have when it further gets out that The Mogambo has no medical training at all, except for helping deliver some puppies one time.
But this is not about how I love the money and the bennies of being a doctor, and that is why I pretend to be a doctor a lot, or even how I can legally do this because laws do not apply to me anymore as I think there is an emergency that allows me to override existing laws and regulations at my sole discretion. I pattern this interesting and handy "laws do not apply to me" rationale after the way George Bush feels justified in willfully violating the Constitution and Bill of Rights because it makes things easier for law enforcement! Hahaha! No wonder that a reported 85% of Americans want this megalomaniac fascist religion-addled idiot impeached. But then Cheney would be President! The manly shoulders of The Mogambo (MSOTM) shudder at the concept.
Fortunately, it is pointed out that I have digressed. So, veering sharply (insert sound of tires squealing) back to the point, I continue that the use of silver-coated devices is going to increase because of the sheer pressure of liability insurance. And while that alone is enough to make silver usage is going to increase, and it doesn't get better when he goes on to say "Nano-scale silver could also eventually make its way onto permanently implanted devices like silicone breasts, artificial hips and knees and pacemakers."
Now, I am no scientist, but I am a consumer of medical services, and judging by the reclusive, sedentary and hate-filled way I am living my dissolute and wasted life, this means that I will have a need for a lot MORE medical services and devices in my future. And if something goes wrong, infection-wise, then you can bet that the old Mogambo Lawsuit Machine (MLM) will spring into action, and then the NEXT time I am getting some medical services from some quack "surgeon" with whom I just faced off in the courtroom earlier that morning, I will either get the silver-coated stuff or die on the operating table. But either way, no more damned infections!
For the technophiles amongst us, he goes on to elucidate by informing us that the way nano-silver works is that "The nanoscale particles have so much surface area to react with the microbes, in relation to their volume, that small concentrations are effective antiseptics." Supposedly, a teaspoonful would be enough for an Olympic-sized pool.
But it is the medical thing that has me mesmerized. Previous attempts at medical colloidal silver were crude, bungling attempts, but "This time around, they are armed with nanotechnology, a fast-developing collection of products and skills that helps researchers deploy silver compounds in ways that maximize the availability of silver ions - the element's most potent form."
- Daan Joubert, who has written a lot of really interesting articles over the years, writes that he was so bored last week that he accidentally read my stupid Mogambo Guru garbage, and feels soiled from the experience. His critique was thankfully brief, covering the points that I am a big stupid moron, but also that while the debt-to-GDP in 1929 was 260%, like I said, the ratio was actually worse, Mr. Joubert says, and bottomed somewhere around 350% in 1933, as the debt did not deflate, but everything else did. So, extrapolating, he calculates that "If the US now stands at a ratio of 350% and should the GDP fall by say a relatively mild 20% , given the parameters you rant about (here I pause the interview to make a note to myself; "Give this guy a punch in the old bazoo for that 'rant' crack. And pick up some cookies on the way home. Chocolate ones."). Restarting the tape, we listen as he goes on to say "compared to almost 30% from 1929 to 1933, the ratio of debt to GDP would push up to 420% - that could then be compared with the 260% of 1933. Really much, much worse."
He could probably see that I was shaken by the revelation that the debt-to-GDP ratio could explode to 420%, but he takes no notice of me and breezily goes on to say "Since we know from history what damage the 260% did, speculating about 420% makes your bunker sound like a good idea!"
Of course it's a good idea! To depend on the goodness of your neighbors and government would be stupid. And Alex S. sends notice that John Wayne, all-American hero, famously said "Life is tough. It's even tougher if you're stupid." Hahaha! Man, I heard THAT! And if John Wayne was alive today, I am sure that he would return the compliment by saying "The Mogambo says that life is tough when you're stupid, and MUCH tougher when your government and central bank act stupid!"
And if you want more proof than just me running my loud mouth, then listen to how Doug Noland tells us that Charles E. Persons, in an excerpt from "Credit Expansion, 1920 to 1929, and its Lessons," which was published in November 1930, wrote "Credit expansion results in business activity, in full employment, in optimistic outlook and in a flood of gratulatory literature proclaiming us wiser than our predecessors." Wiser than our ancestors? Hahaha! There has been nothing new under the economic sun for thousands of years, as there have always been just the basics of taxes, government spending, investing, borrowing, leveraging, owing, paying back, or not paying back but instead taking it on the lam with the company payroll and never being heard from again.
But now (and pay no attention to the scornful smirk on the otherwise serene face of the Mogambo (SFOTM)), after all these centuries of trying and failing, we can finally create real prosperity out of debt and paper money being spent by a large, inter-connected system of layer upon layer of governments? We can now do this when all other attempts at such stupidity ended, predictably, with bankruptcy, mass suffering, war and misery of change-the-course-of-history proportions? Hahahaha!
But this Persons guy is apparently too prissy and delicate to talk about this ugly stuff, and says only "When the process of expanding credit ceases and we return to a normal basis of spending each year no more than we earn that year, there must ensue a painful adjustment period." There it is! "Painful adjustment period!" Painful!
Finally, he ends with "The check to expansion is sharp and is intensified by the excesses inevitably associated with periods of over-rapid expansion." Now, I suspect that he is saying, in that stilted, archaic way that they wrote back in the 20's, that the bigger the boom, the bigger the bust. The Roaring 20's was a nice boom, and the resultant Great Depression was hellacious. This proves that if you think that the Great Depression was bad, then whatever horrible fate overtaking us will be considered to be, in retrospect by historians in the future, far, far worse. Exactly what Mr. Joubert said, too!
- Rick Ackerman of Rick's Picks mirrors my feeling exactly when he says "Bernanke considers himself to be an expert on the Great Depression and the 1929 Crash, and he evidently has Wall Street convinced that under his watch the Fed will not repeat the monetary mistakes that supposedly triggered the deflationary collapse of the 1930s. I would argue that merely by harboring the belief that the Fed will be able to manage a global debt bubble amounting to hundreds of trillions of dollars, Bernanke has disqualified himself for the job." Hahaha! Good one!
But hundreds of trillions? I interrupt to say "An impressive number, Mr. Ackerman!" Hearing me, I can see a vein pop out on Mr. Ackerman's neck. But instead of having a couple of his goons throw me out like he threatened to do if I opened my big fat yap one more time when he was speaking, he explains "the total value of the world's goods and services economy amounts to no more than $40 trillion. However, the financial economy has a notional value more than six times that size, resting as it does on leveraged financial instruments with a face value estimated by the BIS at $250 trillion." I have also read of a $350 trillion estimate, for the record, if you believe the memory of The Mogambo (MOTM), and you are a fool if you do.
But, getting back to the subject, the total notional size of existing financial instruments is six times the size of all the actual buying and selling of goods and service in the whole freaking world? Yow yow yow! But even THAT is insignificant, as he argues when he says "Again, the focus is wrongly on the relatively puny goods-and-services economy. But it is the $250 trillion financial economy that we should be concerned about, since it rests entirely on collateral that has been artificially inflated via credit stimulus."
All I can do is stare off into space, my mouth hanging open in stunned stupefaction at the enormity of it all. $250 trillion! Trance-like, in my mind's eye I see gold. Glittering, shining gold, all yellow and golden, saying "I will save you, Mogambo! And even better, you will be rich for having accumulated gold and silver at these bargain prices, and you can easily finance the long-awaited Mogambo Reign of Terror against all your enemies, both real AND imagined, which is, by this time, probably damned near everybody alive or dead."
Seeing that I am going off on another tangent of rhapsodizing about delicious revenge, Martin Weiss of Money Report tries to calm me down and says that "2008 we will see gold at over $1,000 an ounce." Well, I admit that his clever ploy worked. As a guy who has both 1) a wife with a gold crown on her tooth and 2) a pair of pliers in the garage, I LOVE hearing about how gold is going to $1,000 and ounce! I sit down, enthralled.
Jason Hommel of SilverStockReport.com sees how easy it is to get me to shut the hell up, and says that he predicts $40,000 an ounce! I scoot over towards Mr. Hommel and away from that piker Weiss and his lousy $1,000. With me fawning at his feet, I am entranced when he says "And yet, this prediction of $40,000/oz. gold is conservative. It is important to note that these are not really true growth rates. They are actually decay rates. They show the dollar decaying. Gold's value cannot grow to infinity, but a dollar's value can decay away to nothing. So, I'm not saying that gold will have infinite value. I'm saying dollars will become worthless."
Well, I didn't once date a math major in college for nothing, and I am telling you that dividing gold by the zero worth of the dollar is, indeed, infinity on the old dollars-per-ounce scale. Or damned close to it!
And for this week's installment of "Don't forget about silver!", he says "Silver will rise to about $8000/oz. You should start investing as early as possible, and you should not really care whether silver is $7/oz., or $9/oz. or even $25/oz."
So who is buying all this gold? It ain't me, since I have no money and have no prospects of getting any because I am lazy and hate working, and I have a wife who won't take a second job and gets real testy when I bring it up all the time. Well, it turns out that lots of people are not like me, and they are buying with enthusiasm, as Martin Weiss says "The buyers are more aggressive right now because they know that the world is on an inflationary path. They also know that most central banks will do everything in their power to keep their economies tilted toward inflation. The alternative - deflation - is a nightmare to all governments."
But deflation might be terrific for you! How does a nice waterfront home in Florida for $12,000 suit you? How about a ten-cent cheeseburger? It suits you fine, I'll bet! But we are not talking about Florida real estate or luscious cheeseburgers (even though it is almost lunchtime, and now that we are talking about cheeseburgers, why don't we all knock off early and take a long lunch?), but about gold. He goes on to say "Historically, when you hear about central banks selling gold, also keep the following in mind: In the late 1970s, the U.S. Treasury sold tons of gold. Traders and savvy investors bought every ounce at every auction, and more. So despite the Treasury sales, gold prices went up, up, and away!"
And keep in mind, too, that in the 30's, during the Great Depression, Homestake Mining supposedly went up 500% while everything else went, like my life, my dreams and ambitions have gone today, into the crapper.
Weiss also reports that a milestone was set recently, so that the "Chinese are now consuming more natural resources than any other civilization in history." The upshot of this news is "That's putting huge upside pressure on prices, which, in turn, is raising general inflation levels around the world." And on top of that we have central banks creating more money and credit, which ALSO puts upward pressure on prices! And what is the one thing, the one sure bet, the only thing that will protect you against the debasing of your currency/rising prices? Gold!
- Perhaps he is sick of hearing me whine about inflation this and inflation that, but Rick Ackerman says that I should "Think of deflation in precisely the way it will come knocking on your door: i.e., as an increase in the real burden of debt. Which is to say, having to pay real rates of 9 or 10 percent to service a mortgage on a home worth less than you paid for it. Or having the rate on your $15,000 of credit card debt boosted from 4% to 12% overnight."
But we are both on the same page when he asks the timeless question, "Can anyone still believe Keynesian quackery works, or that the key to reviving prosperity is to get consumers to spend yet more borrowed money?"
Well, Congress does, and the Federal Reserve does, and from SafeHaven.com we learn that there may be more than meets the eye to this decision by the Federal Reserve to no longer report M3, the most inclusive estimate of the money supply. They write, "The date when M-3 will start being hidden also happens to be the exact month that Iran will declare economic war against the U.S. Dollar by trading its oil in Petro-Euros on its new bourse." Hmmmm! But before I can take the time to think about this, he says "But there is more. The Federal Reserve currently has three vacancies within the 19 top Regional Bank and Board of Governor spots. Why? Part of ongoing wholesale resignations. Over the past few years no less than six Federal Reserve Regional Bank Presidents have resigned. This is highly unusual. Two positions for the Board of Governors (there are 7) have been open for quite a while. Plus six of the 12 Regional Head spots have turned over during the past few years."
Notice that he is such a classy guy that not once did he use the phrase "rats deserting a sinking ship." But The Mogambo is not nearly so constrained by civility and breeding, and I say that they, and the whole rest of the Federal Reserve System, are a bunch of filthy, stinking, lying, stupid rats that have made a diseased, pus-filled canker sore of the economy of the United States
What is even more interesting is when they write "The recent rise in gold catalogued 74 points over about a month, a 16 percent rally from precisely the day the Fed announced it would hide M-3 from taxpayers and citizens of this great nation. That is no coincidence, gold sees hyperinflation, monetization of debt, and intervention into free markets. Gold is telling us it expects Ben Bernanke to be an inflationist."
All of this over M3? So how big is the M3 money supply? For this we turn to Doug Noland, who says "Broad money supply (M3) surged $27.3 billion (week of December 12) to a record $10.148 Trillion. Over the past 30 weeks, M3 has inflated $523 billion, or 9.4% annualized. Year-to-date, M3 has expanded at a 7.3% rate, with M3-less Money Funds expanding at an 8.2% pace."
And we can rely on Doug Noland not only for pertinent data, but to give his unbiased opinion about Ben Bernanke, too, as when he says "We have a full-fledged monetary quack about to take the helm at the Federal Reserve."
- Len C. reports that there is plenty of inflation and deflation in prices out where he is, and that "Farmers in Oregon are plowing up their Berry fields [Blackberry, Loganberry, Boysenberry] and cutting down their apple orchards [red delicious] as the activity just doesn't pay anymore. Property taxes are going straight up on the farms, and corporations that buy the fruit to process pay virtually nothing for it."
Ugh.
***Mogambo sez: This is the end of the year. Things will be weird as we approach that fateful December 31 end-of-year cutoff when tax liabilities are fixed. Buy silver and gold regardless.
Dec 27, 2005
Richard Daughty
email: scgcjs@gte.net
Daughty Archives
The Daily Reckoning
Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise the better to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.
Rogue
otc.....I hope you liked my post detailing the connections between the current fascist neo-cons and Adolph Hitler.
http://www.investorshub.com/boards/read_msg.asp?message_id=9014347
There is more to learn......such as the connections and business dealings this group has with Osama Bin Laden and AlQueda....or do you say AlCIAda???
I hope it is becoming more apparent that there is an AGENDA going on.....and it isn't to preserve "freedom and liberty" or our form of Constitutional Government.
Hiel Hitler....
Rogue
ksauve.....I don't profess to be an expert on US militias, but my rudimentary knowledge of them is that THEY ARE defenders of the Bill of Rights and our US Constitution!! They are NOT trying to overthrow our government......but to PRESERVE it from the occult "vipers of death" lying in the den!
Everything I see from the Skull and Bones Fascist Cartel is in direct opposition to feedom and liberty. Look at Bush's comments recently...."stop throwing that damned piece of paper in my face(Our US Constitution)".
Look at what CIA Director William Colby said in my post.........amazing in't it?? He sees the same "AGENDA" that I do and he paid a stiff price for standing up for "freedom and liberty and truth"! His Life!
I'm suprised I got no responce to my post detailing the allegience to Adolph Hitler and the Nazi's by certain "elements" invloved in our Government....
http://www.investorshub.com/boards/read_msg.asp?message_id=9014347
I'm not a Communist...so if you are ksauve you won't get my full support there. I am compassionite and understanding though and believe in the rights of the individual.
I believe in the Bill of Rights and our form of government.....not the one that the Fascist Nazi neo-cons are stuffung down our throat with their "campaign of terror" against "freedom and liberty"!!
Shall we now explore the fascist Nazi's connections with Osama Bin Laden?????
Rogue
My favorite shot at the bar is "Goldschlager".....it has tiny paper thin flakes of real gold in it!
Has anyone else ever tried it?
Rogue
The CBOT mini/gold is a good little contract. So is the mini-silver future. They are easier to "average in or out" of a position due to their smaller size for the smaller speculater.
I use Interactive Brokers(very,very reasonable trading fees)....they also have good mini futures contracts in T-Bonds, Oil and Natural Gas.
I was a member and floor trader at the CBOT from 1989 to 1997. Learned alot in the heated frenzy of the floor trading pits.
Rogue
Gold/Silver.....I believe we are now in the "B" wave of an "ABC" correction in a bull market.
When we get the "C" wave to complete this move down(I believe it's coming)..... It will probably breach the $489.90 recent low and bring enough "fear and doubt" by the longs to put in a decent intermediate term bottom. I have some Fibonacci retracement targets that I expect may get hit.
I'm watching closely for a good "long" low risk entry point again on the futures.
Rogue
PETROQUEST ENERGY (PQ).....NYSE listed small-cap gasser. I nibbled on some today.
http://stockcharts.com/def/servlet/SC.web?c=pq,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh14,....
Anyone else own this or like this??
Rogue
Anyone remember the other bogus "terrorist" attack besides 9/11???
Remember the federal buiding in Oklahoma City back in 1995?
That heroic former CIA Director Willaim Colby was a vocal proponent of "Freedom and Liberty" against the evil and fascist Nazi conspirators hard at work to undermine our great country just before they killed him after Oklahoma City.
Here's a little article to hopefully pique the interest of those who may be starting to "see" how this fascist AGENDA is evil and "anti freedom and liberty"......
THE MILITIA "CONNECTION"
http://www.patshannan.com/warden.html
By Pat Shannan and Carl Worden
Contrary to widespread propaganda, the militia is not a 1990s idea dreamt up by a few right-wing wackos bent on destroying the government. The unorganized militia is older in American law than the constitution, and its lawful foundation can be located in Title 10 of the United States Code. The purpose of the Second Amendment was two-fold: to arm citizens against individual criminals as well as to insure protection for all the people against an out-of-control government. The militia became the citizen's army in a time of the latter necessity. (10 USC 311)
Because there had been no need for a citizen's militia for several generations in a peaceful America, its lawful purpose faded into obscurity. But with the "legalized murders" carried out by the federal government in Ruby Ridge, Waco, and Oklahoma City, the people saw the need to protect themselves and each other again. Citizen's militia groups began springing up in most of the American states -- not for the purpose of an "offensive" attack but purely out of a defensive fear for their own well-being. Americans were frightened.
Meanwhile, through the power of legal tender - the unconstitutional credit paper referred to as "money" - the public schools and controlled news media had programmed the people to believe many government deceptions, and its latest project became militia bashing. The American people were led to believe that any militia member was out to stalk and kill any federal agent anywhere at any time. While no such crimes had been reported, several stories since about criminal "pleads" in federal court have included the innuendo that these people had "militia ties." Ignoring the Jewish and African-American members, the portrayal depicted the militia groups to be made up of "racists, anti-semites, white separatists, NRA members, and conspiracy nuts." This typified the news reports about anything or any one who did not hanker to government control.
Carl Worden, 49, helped found the Southern Oregon Militia in 1993. He has been a financial consultant for 25 years and had been married to the same woman for more than twenty. He attests that all members must qualify for concealed weapons permits, which keeps them "squeaky clean." Not only do they not tolerate any criminal behavior by any militia member but not any marital infidelity, either. They claim over 800 members spread over Jackson, Josephine, and Curry Counties.
Mr. Worden's following account was widely reported in 1995 by talk shows, the Internet, and the alternative press - but not the mass media. It is one more incident which must not be forgotten.
Former CIA Director William Colby worked for Strategic Investment before his highly suspicious death. The March 19, 1995 issue of Strategic Investment carried an alert that federal agents were set to raid all known Militia members in the early morning hours of March 25, 1995. The alert further stated that heavy (illegal) weapons were to be planted on the property of certain Militia members and that the media were prepared to issue negative press releases immediately after the raids were completed. As an Intelligence Officer with the Southern Oregon Militia, it is my job to prove such information to be false, but failing that, I must pass the information on to higher levels. I had heard rumors of these raids prior to the SI story, but when SI published the alert I immediately knew the information to be true. Financial publications survive only on their credibility and accuracy.
I suspected that Bill Colby was the source of the information, having maintained his intelligence contacts after he left the CIA under President Johnson. It was Bill Colby who blew the whistle that the CIA was spying on student demonstrators during the Vietnam War within the United States, in violation of its charter. Bill Colby would have recognized the blatant civil rights violation being planned by Janet Reno against the Militias and would have given the alert.
The Militias immediately went on red alert. Militia leaders were told not to sleep at home the evening of March 24, 1995. My wife and I stayed at a hotel that evening, and I have the receipt to prove it. The alert was sent to every radio talk show and was being bandied about nationally - but again, not in the mainstream media. Our long-haul truck drivers were set to report any unusual government or military convoys or traffic to regional centers and our air traffic controllers were set to report any unusual military or government air traffic. In the night and early morning hours of March 24th and 25th, respectively, we were fully prepared to repel those raids with force of arms. Just six hours before the raids were set to begin, Janet Reno canceled them. The element of surprise had clearly been lost. It was a subterranean drama that was never published in the mainstream media.
Less than one month later, the bomb went off in Oklahoma City. With no evidence whatsoever to back them, the government issued statements that the Militias were suspected in that bombing. Prior to April 19, 1995, there was no general mention of the Militia Movement in the mainstream media. Following the bombing we were front-page news, and none of it positive.
The Southern Poverty Law Center and the Anti-Defamation League trotted out so-called Militia "experts" who had supposedly been studying the Militia Movement for quite some time. They reported that the Militias were made up of racists, anti-Semitics, and any other negative connotation they could imagine. The press happily joined them, at one point suggesting that a street gang involved in a drive-by shooting was a Militia group! They further vilified the movement to suggest all white supremacist and neo-nazi groups were Militias. The government did its job very well.
Not long afterward, Bill Colby's canoe was found overturned in the river near his home. The oar and life preserver he always wore never turned up. Colby's body was discovered in the river a few days later. An autopsy report oddly suggested he either had a heart attack or stroke that caused him to fall overboard and drown -- as if an autopsy could not differentiate which cause of death did him in. You might want to contact Strategic Investment and ask how they feel about the death of Bill Colby, a true American hero.
It is well known that the American Militias were implicated by the government in the Oklahoma City incident. To anyone paying attention, it is also well known by now
that the government had no evidence then or now that the Militia had anything to do with that incident. The American Militia movement began when federal agents murdered American citizens in Waco and Ruby Ridge and then covered it up. It is patently preposterous to assume the Militias would retaliate by killing even more innocent American citizens, but that was the party line given in the mainstream media at the time.
It is believed the explosives used to destroy the Murrah Building were set with pressure detonators to go off in conjunction with the ANFO detonation of McVeigh's bomb parked outside in a Ryder truck. All the evidence and expert opinion points to a conspiracy that extends far beyond the involvement of McVeigh and Nichols; involvement that strongly suggests overt or covert actions on the part of federal agents without the knowledge of either McVeigh or Nichols.
Carl F. Worden
Liaison & Intelligence Officer
Southern Oregon Militia
Rogue
Good DD site on understanding the truth about 9/11....
http://www.911truestory.com/
Lot's of good audio and video clips of the tragedy and also full length documentary's to view to help freedom loving Americans understand the TRUTH.....and stop the Fascist AGENDA!!!!
Rogue
The Fed's Turn to Fail
Steven Lachance
December 24, 2005
http://www.321gold.com/editorials/lachance/lachance122405.html
While a student at New York University, Alan Greenspan belonged to a discussion group some now call the Ayn Rand cult, in which his nickname, appropriately enough, was the undertaker. In describing her adoring pupil, the Russian emigre was once quoted as saying "Alan is so brilliant, but such a social climber." Personal ambition was his guiding light and once Federal Reserve Board chairman, his only objective was to retain the position. Not surprisingly then, he bent easily to the will of Congress, presidents, Wall Street, and, eventually, an emboldened mob of global speculators. His designated successor, Ben S. Bernanke, is cut from the same cloth: the chairman's seat is his lifelong goal and he will give his political and financial constituencies what they want to keep it. Above all, this implies preventing a collapse of the epic US debt bubble by any means possible. Only one obstacle stands between him and success, the $40 trillion bond market and the $100 trillion of interest rate derivatives pyramided upon it. Faced off against this leviathan, the Fed, with its puny $1 trillion balance sheet, will fail.
Unintended euthanasia
After decades of exponential debt growth, the Fed now faces an impossible task: keep debt growth above interest charges or risk liquidation by the marginal debtor setting off cascading cross-defaults. Annual interest charges on outstanding debt of $40 trillion currently total around $2 trillion. With interest rates in a cyclical uptrend since the benchmark 10-year Treasury bottomed at 3.09% on 16 June 2003, interest charges are accelerating. Meanwhile, annual debt growth remains robust at $3 trillion, but the rate of increase is subsiding. Given that about half of this debt growth stems from mortgage financing, the nascent slowdown in the US housing market suggests debt growth is poised to slow substantially. A crossover of interest charges and debt growth appears likely during the next 24 months.
Those projecting a replay of the 1970s in US financial markets should bear in mind that today's bond market is not only many times larger than it was then, there are now more than $100 trillion in contracts that derive their value from it. This is a vast and skittish crowd that will not sit idly by should Dr Bernanke begin to debase the value of their holdings through willy-nilly debt monetization. They will sell, driving interest rates higher and causing interest charges to outrun debt growth. Marginal debtors, unable to service their debt, will be forced to liquidate. Without a liquidity buffer in the form of savings or a current account surplus, the transition to cascading cross-defaults would be seamless. As a result of the reaction of bondholders, Dr Bernanke's prescribed medicine for preventing a collapse of history's most extreme debt bubble is tantamount to monetary system euthanasia.
Leaving the Fed to wither
Federal Reserve Notes (FRNs) cannot survive cascading cross-defaults. In the Fed's balance sheet, these notes are backed by Treasury debt. The value of FRNs, therefore, rests on the ability of the US Treasury to service its debt, or, in other words, the capacity of the US government to tax and borrow. In the wake of cascading cross-defaults, taxation capacity would be decimated. The Treasury would need to borrow more to continue servicing its $8 trillion debt.
Dr Bernanke stands ready to facilitate this new borrowing. He is eager to create new dollar entries in the Fed's balance sheet and swap these for new Treasury debt, in what would amount to a transfer of purchasing power away from existing bondholders. The effect is akin to the dilution suffered by existing shareholders when a company carries out a new stock offering to raise capital. Foreigners, who own half of all outstanding Treasuries, could not be coerced into accepting the uncompensated losses that such a scheme implies. Their exit from the Treasury market would make borrowing prohibitively expensive, putting the government in a position where it can neither tax nor borrow effectively. At this point, the Fed's usefulness would be in serious doubt and confidence in the notes backed by its balance sheet in tatters.
Alan Greenspan and others with an appreciation of monetary tradition might assume that falling confidence in FRNs would be arrested at some point by the Fed's 9,000 ton gold holding. Wishful thinking. Not only is it uncertain how much gold remains since it has not been audited for some 40 years, it is actually owned by the Treasury, not the Fed. With the Fed unable to adequately finance the Treasury, the government may rescind the Fed's authority over the US gold reserve, thereby removing the final prop supporting confidence in its notes. A discredited Fed, with Dr Bernanke at its head, would provide the required receptacle to place the blame for the failure of the monetary system and clear the way for the issuance of a new currency. While those with unquestioned faith in modern central banking may find this outrageous, history reminds us that it is an all too familiar story, even in the US, where the Fed itself was preceded by two failed central banks, both called the Bank of the United States. If we learn anything from history, it is that we do not learn from history.
Steven Lachance
Tokyo, Japan
email: nywxc182@yahoo.co.jp
321gold Inc
Rogue
The Fed's Turn to Fail
Steven Lachance
December 24, 2005
While a student at New York University, Alan Greenspan belonged to a discussion group some now call the Ayn Rand cult, in which his nickname, appropriately enough, was the undertaker. In describing her adoring pupil, the Russian emigre was once quoted as saying "Alan is so brilliant, but such a social climber." Personal ambition was his guiding light and once Federal Reserve Board chairman, his only objective was to retain the position. Not surprisingly then, he bent easily to the will of Congress, presidents, Wall Street, and, eventually, an emboldened mob of global speculators. His designated successor, Ben S. Bernanke, is cut from the same cloth: the chairman's seat is his lifelong goal and he will give his political and financial constituencies what they want to keep it. Above all, this implies preventing a collapse of the epic US debt bubble by any means possible. Only one obstacle stands between him and success, the $40 trillion bond market and the $100 trillion of interest rate derivatives pyramided upon it. Faced off against this leviathan, the Fed, with its puny $1 trillion balance sheet, will fail.
Unintended euthanasia
After decades of exponential debt growth, the Fed now faces an impossible task: keep debt growth above interest charges or risk liquidation by the marginal debtor setting off cascading cross-defaults. Annual interest charges on outstanding debt of $40 trillion currently total around $2 trillion. With interest rates in a cyclical uptrend since the benchmark 10-year Treasury bottomed at 3.09% on 16 June 2003, interest charges are accelerating. Meanwhile, annual debt growth remains robust at $3 trillion, but the rate of increase is subsiding. Given that about half of this debt growth stems from mortgage financing, the nascent slowdown in the US housing market suggests debt growth is poised to slow substantially. A crossover of interest charges and debt growth appears likely during the next 24 months.
Those projecting a replay of the 1970s in US financial markets should bear in mind that today's bond market is not only many times larger than it was then, there are now more than $100 trillion in contracts that derive their value from it. This is a vast and skittish crowd that will not sit idly by should Dr Bernanke begin to debase the value of their holdings through willy-nilly debt monetization. They will sell, driving interest rates higher and causing interest charges to outrun debt growth. Marginal debtors, unable to service their debt, will be forced to liquidate. Without a liquidity buffer in the form of savings or a current account surplus, the transition to cascading cross-defaults would be seamless. As a result of the reaction of bondholders, Dr Bernanke's prescribed medicine for preventing a collapse of history's most extreme debt bubble is tantamount to monetary system euthanasia.
Leaving the Fed to wither
Federal Reserve Notes (FRNs) cannot survive cascading cross-defaults. In the Fed's balance sheet, these notes are backed by Treasury debt. The value of FRNs, therefore, rests on the ability of the US Treasury to service its debt, or, in other words, the capacity of the US government to tax and borrow. In the wake of cascading cross-defaults, taxation capacity would be decimated. The Treasury would need to borrow more to continue servicing its $8 trillion debt.
Dr Bernanke stands ready to facilitate this new borrowing. He is eager to create new dollar entries in the Fed's balance sheet and swap these for new Treasury debt, in what would amount to a transfer of purchasing power away from existing bondholders. The effect is akin to the dilution suffered by existing shareholders when a company carries out a new stock offering to raise capital. Foreigners, who own half of all outstanding Treasuries, could not be coerced into accepting the uncompensated losses that such a scheme implies. Their exit from the Treasury market would make borrowing prohibitively expensive, putting the government in a position where it can neither tax nor borrow effectively. At this point, the Fed's usefulness would be in serious doubt and confidence in the notes backed by its balance sheet in tatters.
Alan Greenspan and others with an appreciation of monetary tradition might assume that falling confidence in FRNs would be arrested at some point by the Fed's 9,000 ton gold holding. Wishful thinking. Not only is it uncertain how much gold remains since it has not been audited for some 40 years, it is actually owned by the Treasury, not the Fed. With the Fed unable to adequately finance the Treasury, the government may rescind the Fed's authority over the US gold reserve, thereby removing the final prop supporting confidence in its notes. A discredited Fed, with Dr Bernanke at its head, would provide the required receptacle to place the blame for the failure of the monetary system and clear the way for the issuance of a new currency. While those with unquestioned faith in modern central banking may find this outrageous, history reminds us that it is an all too familiar story, even in the US, where the Fed itself was preceded by two failed central banks, both called the Bank of the United States. If we learn anything from history, it is that we do not learn from history.
Steven Lachance
Tokyo, Japan
email: nywxc182@yahoo.co.jp
321gold Inc
Rogue
echos/ksauve.....I agree that we're heading down a dangerous path. It's called Fascism.....and it's not what this county stands for "in my book" or as granted by the US Constitution.
I was hoping to get some comments on a previous post of mine......
http://www.investorshub.com/boards/read_msg.asp?message_id=9014347
I was "hoping" that someone could prove that the information in my post was "untrue". I'm afraid it may be historically accurate and may "explain" alot of recent history......especially since the murder of JFK and Martin Luther King etc.
This may help "explain" my belief in an "AGENDA"....and I was hoping to get some feedback from the board one way or the other.
Rogue
CVX......Chevron Texaco. Hoping to see a "waterfall type liquidation" in the final trading days of 2005.
http://stockcharts.com/def/servlet/SC.web?c=cvx,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh14...
Could offer some good value going forward......any comments?
How about playing some long dated leap options if we get oversold enough here???
Rogue
HEC....I owned it earlier this year at .39 cents. Sold WAY too early.
It's showing signs of bottoming here.... but don't own it again yet.
http://stockcharts.com/def/servlet/SC.web?c=hec,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh14...
Are there fundamental reasons you like HEC or is this purely "technical"???
Rogue
AWRCF....I still own some and it's sitting around my cost basis after having nice gains on it last year.
Heartland Advisors up in Milwaukee Wiscosin were big holders of AWRCF( about 10% of outstanding I believe) last time I checked. They are known as good "deep value" fund players.
I've personally called and spoken to some of their portfolio managers over the years about their holdings. You can give them a call if you like....they may be helpful on AWRCF since they are such a large holder of the company's outstanding.
Morningstar.com may have helpful info on Heartland Advisors.
Rogue
otc....BDGR Black Dragon Resources. I do know that they have some "connections" that I have to say raise red flags with me at least. They(BDGR) acquired assets I believe from PTLD....who has a director named Lanza that is known as a "shady" character and is involved in a lawsuit with OMOG for swindling some assets from OMOG.
http://stockcharts.com/def/servlet/SC.web?c=bdgr,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh1....
I like OMOG amongst all of the above mentioned speculative plays.
That's my brief synopsis.....I'd love to hear other thoughts from the board members.
Rogue
HITLER AND THE BROTHERHOOD OF DEATH
In 1922, Averell Harriman, an alumni of Skull and Bones (Class of 1913), made a pilgrimage to Germany. But Hamburg wasn’t the lure. It was Berlin—the ancestral home of Skull and Bones, the Brotherhood of Death. Indeed, various members of The Order of Skull and Bones had been making pilgrimages to Germany and the University of Berlin since the inception of the American chapter of the Brotherhood of Death (17). Harriman was a dedicated “Bonesman.”
According to his third wife, Pamela, Averell “Harriman regularly went back to the tomb (the Bone’s Temple) on High Street, once even lamenting that his duties as chief negotiator at the Paris Peace Talks prevented him from attending a reunion” (25).
While in Berlin he made contact with Fritz Thyssen, also, allegedly, a member of a Germany-based secret society; though which one, of course, is a secret.
A number of German secret societies were in existence at the time, such as the Illuminnati of Bavaria and the Thule Society. These secret societies counted rich industrialists, mystics, aristocrats, bankers and high ranking military men among their members (26).
In the early 1920s, when Harriman paid his visit to Germany, the membership of the Thule Society included Dietrich Eckart, Rudolf Hess, and Heinrich Himmler (27) all of whom were directly associated with Adolf Hitler, and all of whom became Nazi leaders (3,5). The secret society that had anointed Hitler as its leader, would later become known to the world as the SS —The Brotherhood of Death (6).
Although it cannot be proved, there is evidence to suggest that Himmler’s SS, and its American counterpart, Skull and Bones, were one and the same and directly linked with the Thule Society or the Illuminnati. In fact (and as will be detailed later in this chapter), some of the occult rituals that were said to be part of the initiation into the Thule Society and the SS (27), are similar to those that are said to be practiced by initiates into the American chapter of the Brotherhood of Death, that is, Skull and Bones (17,28).
For example, both employ initiation ceremonies in which the initiate “dies to the world and be born again into the Order...”(29).
In October of 1988 then Vice-President George H.W. Bush was asked by a reporter if he were “a Christian.” At first Bush seemed confused by the question, but then said, “if you mean born again, then, yes, I am a Christian.”
In his book, Mein Kamph (7) and in some of his speeches, Hitler also refers to being born again, that is “born anew.” Likewise, George Bush jr., refers to himself as “born again” and freely admits he was “honored” to be chosen to be a member of Skull and Bones. As reported in the August 7, 2000 issue of Time magazine, Bush was asked: “Did you have any qualms, say, about joining an elite secret club like Bones?” Bush replied, “No qualms at all. I was honored.”
The motto of Hitler’s SS begins as follows: “It is an honor to be an SS man. It is an honor...” (6). The leaders of the Thule Society also believed it to be an honor to have inducted Hitler into the mysteries of its secret order (27). In 1919, Dietrich Eckart, a leading member of the Thule Society, met Adolf Hitler for the first time. Eckhart believed that Hitler was the German “Messiah... the long-awaited savior” who would lead Germany to her destiny. Eckhart took Hitler under his wing and initiated Hitler into the mysteries of the secret order: “Follow Hitler; he will dance, but it is I who have called the tune. I have initiated him into the Secret Doctrine, opened his centers of vision, and given him the means to communicate with the powers” (27).
Hitler, in turn, referred to Eckhart as the “spiritual founder of” the Nazi party (7). In Table Talk (7) Hitler says of the man: “We’ve all taken a step forward on the road of existence, and we could no longer picture to ourselves exactly what Dietrich Eckart was for us. He shone in our eyes like the polar star.” In the final paragraphs of Mein Kampf (7), Hitler says of Eckart, “he was one of the best, who devoted his life to the awakening...”
Prominent members of Thule also included Rudolf Hess. Fritz Thyssen, who Harriman visited in 1922, reports that it was Hess who introduced him to Adolf Hitler. Thyssen too, thought Hitler would be the savior of Germany (30). Like the Bonesmen, Thyssen believed that the New World Order would be ruled by the kings of banking and commerce.
THE BANKING BROTHERHOOD
Thyssen and Harriman agreed to establish a banking association, and two years later, in 1924 the W.A. Harriman Co., established an international investment firm, “Union Banking Corporation,” which was in business with the Thyssens (31). Bert Walker’s son, George Herbert Walker, was made president (24).
As detailed by Webster G. Tarpley & Anton Chaitkin in their superbly documented book, George Bush: The Unauthorized Biography, “ by personal agreement between Averell Harriman and Fritz Thyssen in 1922... the Union Banking Corporation has since its inception handled funds chiefly supplied to it through the Dutch bank by the Thyssen interests for American investment.... transferring funds back and forth between New York and the Thyssen interests.”
The Union Banking Corporation and the Thyssen bank also acted as Nazi fronts and served to launder funds for Thyssen and the Nazis—money and funds that could be used to buy guns, arms, favorable publicity, and dozens of U.S. senators, congressman, and newspaper editors (12).
“Prescott Bush became vice president of W.A. Harriman & Co. in 1926. That same year, a friend of Harriman and Bush set up a giant new organization for their client Fritz Thyssen, prime sponsor of politician Adolf Hitler. The new German Steel Trust, Germany’s largest industrial corporation, was organized in 1926 by Wall Street banker Clarence Dillon. Dillon was an old comrade of Prescott Bush’s father Sam Bush” (24).
Thyssen went into business with Harriman for the same reasons he went into business with Hitler, to increase his wealth and power. It is unlikely that Thyssen did not inform Harriman of his intention of helping Hitler come to power. Indeed, Fritz Thyssen was Adolf Hitler’s primary financial backer and had been providing considerable financial support to Hitler and the Nazis, since 1923 (30). At their first meeting, Thyssen gave the new “German Messiah,” $25,000. At the same time, Thyssen and Harriman were also making big plans, some of which were dependent on Hitler coming to power.
As Thyssen explained (30): “We were at the worst time of the inflation. In Berlin the government was in distress. It was ruined financially. Authority was crumbling. In Saxony a communist government had been formed and the Red terror, organized by Max Hoelz, reigned through the countryside. The German Reich ... was now about to crumble.”
Thyssen states that it was General Erich Ludendorff who first told him of Hitler and that Hess made the introductions. In 1923, General Erich Ludendorff was also the chief patron of Hitler’s SA— which, because it had been outlawed by the German government, had been renamed “Frontbann” (6). The SA (“Frontbann”) was a terrorist organization, which counted among its members, Heinrich Himmler.
Thyssen admits that he was mesmerized by Hitler (30). “I realized his orator gifts and his ability to lead the masses. What impressed me most however was the order that reigned over his meetings, the almost military discipline of his followers.”
In 1924, after his meetings with Hitler, Fritz Thyssen sent Hendrick J. Kouwenhoven, the managing director of his bank, to meet with the Harriman-Walker clique. It was after that meeting that the Union Banking Corporation was established.
In 1926 George Walker made his son-in-law Prescott Bush, vice-president of Harriman & Co. and president of Union Banking (24). The Thyssen banking relationship was expanded to include partnerships in the new German Steel Trust, Germany’s largest industrial corporation, which was also headed by Fritz Thyssen, Adolf Hitler’s primary financial backer.
According to the United States Government, Prescott Bush’s Union Banking Corporation (which he directed) was working as a front for the “Thyssen family” of “Germany... nationals ... of a designated enemy country” (31).
As summed up by John Loftus, former U.S. Department of Justice Nazi War Crimes prosecutor, and the President of the Florida Holocaust Museum: “Thyssen (and the Nazi Party) obtained” his “early financing from Brown Brothers Harriman, and its affiliate, the Union Banking Corporation. Union Bank, in turn, was the Bush family’s holding company for a number of other entities, including the Holland American Trading Company. The Bush’s Union Bank bought the same corporate stock that the Thyssens were selling as part of their Nazi money laundering.”
These Nazi-front companies, “Brown Brothers, Harriman” and “Union Banking Corporation,” were controlled almost entirely by men who belonged to the American chapter of “Skull and Bones” (32). Prescott Bush and associates, and Standard Oil, also provided loans, executive expertise, and petroleum-related products to IG Farben (12). IG Farben used that expertise to develop poison gas and petroleum to drive the Nazi war machine, and to run its slave labor and death-camps, the most notorious of which was Auschwitz where 83,000 people worked as slaves.
It is estimated that in the concentration camps alone, Himmler’s SS, worked to death and killed over 10 million men and women (6). A favored method of killing was using a special gas developed by IG Farben.
As detailed in chapter 2, Prescott Bush and Harriman were also in business with several other leading Nazis, such as Friedrich Flick who later became Hitler’s minister of the Interior, as well as IG. Farben, the company that developed the poison gas to kill Russians, gypsies, and Jews. Like Harriman and Bush, Flick was a member of The Order (6). The Flick-Harriman partnership was managed by Prescott Bush (see chapter 2).
According to a U.S. government brief presented in 1946 at the Nuremberg war crimes tribunal, industrialist Friedrich Flick, was “a leading financial contributor to the Nazi Party from 1932 on and a member of the Circle of Friends of Himmler who contributed large sums to the Nazi SS.”
The “Circle of Friends” is also known as the “Friends of the Reichsfuhrer SS.” The Hamburg-Amerika line, which was directed by Prescott Bush, was also counted among the Friends of the Reichsfuhrer SS (6)—also known as “The Order” and the “Brotherhood of Death.”
Frick joined this most secretive and powerful of societies in 1932. By contrast, Prescott Bush and the Harriman brothers (W.A. and E.R) joined the American chapter of The Order, in 1917, 1913, and 1917, respectively, long before Hitler had taken the first steps on his long road to power. They were all part of the same brotherhood, however. Indeed, be it the Thule Society, the SS, or the American version of “The Order,” all sprouted from the same German roots.
THE BROTHERHOOD OF DEATH
The evil, diabolic symbolism of Skull and Bones is designed to stir feelings of terror and to warn of death which is why it appears on bottles of poison and has been the symbol of choice for pirates and death squads. It is precisely because it is designed to induce terror that the symbol of the death head became the talisman worn on the black uniforms of Adolf Hitler’s Nazi elite: The Order—the dreaded SS, the Brotherhood of Death.
The Bonesman of Yale shared not just the symbolism of the Skull and Bones with the SS Nazi elite, but practiced many of the same exact initiation rituals and recruited their elite members from the same strata of society.
Like the Bonesmen of Yale, the Nazi SS recruited its members from the upper echelons of society, i.e. the blue bloods, bankers, and aristocrats. As detailed by Heinz Hohns (6), “the first arrivals were from the aristocracy. Even before the Nazi seizure of power certain great names had been added to the SS list” including Grand Dukes, Counts, and Princes. However, “in spring 1933 came a further infusion of blue blood. Many of the senior SS posts were occupied by the nobility... and the ruling class elite. The primary requirements in the SS, were money and officer material, and they could come only from one source—the old-established ruling class elite—the nobility, the world of commerce and the financiers... German’s captains of industry.”
There were, however, different ranks within the SS. Those who were to belong to the highest ranks underwent an initiation ceremony similar to that of the Order of Skull and Bones at Yale. As detailed in Heinz Hohn’s, The Order of the Death’s Head (6), initiates into the SS underwent an occult-like quasi-religious midnight ceremony involving oath-taking, question and answer confessions, and prayer-like sessions, all of which were designed to impress upon the initiate that he was able to become a “knight” and a member of a secret brotherhood.
The ceremony took place at midnight, in a castle, beneath the dining hall where there lay “a stone crypt” and “the realm of the dead” (6). “A flight of steps in the middle of the crypt led down into a well-like cavity; in the centre of the cavity were twelve stone pedestals.” Bones and relics, including the skull and skeleton of noble men and kings were also kept within the “holy of holies” including the bones of “King Heinrich.”
Initiates would thus commune with the spirits of the dead, who might appear and even speak. The initiate into the SS, by undergoing this spiritual journey, would also be reborn, as a knight, and a member of the secret order (6).
Likewise, we are informed that initiates into Yale’s 'The Order', were required to undergo an array of “exotic and occult” “bonding rituals” including a quasi-religious midnight ceremony which involved question and answer confessions that took place while the initiate lay in a coffin (17,29).
The ceremony took place in castle, at midnight, in “the tomb.” As explained by Ron Rosenbaum (29) while lying in the “coffin” the initiates goes “off on a symbolic journey through the underworld to rebirth, which takes place in Room Number 322. There, the Order clothes the newborn knight in its own special garments, implying that, henceforth, he will tailor himself to the Order’s mission” (p. 89, 148).
The Castle walls of Himmler’s SS headquarters, were heavily decorated with Nazi symbols and regalia.
Likewise, based on several independent reports by those who visited the Skull and Bones’ Yale Castle—what Bones initiates call “the Tomb”—some of the walls and rooms are covered with Nazi symbols and regalia, including swastikas, and “SS macho Nazi iconography.” One visitor described a room with “a little Nazi shrine inside” (17,18).
In yet another room of the Order of Skull and Bones, one visitor observed “mantelpieces decorated with loads of skulls.” She and others have been told “that in order to prove their mettle and perhaps to bond them in mutual guilt over participation in an illicit act, each class of 15 new initiates to Skull and Bones are required to dig up the skull of a famous person and bring it to the Tomb to be enshrined in its skull collection” (17,18).
Like the SS, The Order of Skull and Bones is also known as the Brotherhood of Death. And we are told, initiates into the SS and The Order of Skull and Bones, are required to say the words: “It is an honor...”
When George W. Bush was asked, “Did you have any qualms, say, about joining an elite secret club like Bones?” Bush replied, “I was honored” (33).
The identical symbolism and use of similar language is not just coincidence. In fact, Prescott Bush and several of his fellow Bonesmen, felt such an affinity with Nazi terrorist ideals, that they helped arm Hitler’s SS and the Nazi terrorist war machine. However, Bush and his partners in banking and oil, did not link up with Hitler and his SS just because of shared ideology but because of money, oil, and an unquenchable thirst for power.
THE OIL BROTHERHOOD I
As the 1932 presidential elections began, Hitler and the Nazi party were almost broke. They were desperate for funds. And then, after meeting with the captains of industry, Hitler was suddenly flush with cash.
According to Hitler’s vice-Chancellor, Franz von Papen (34), “the most documented account of the National Socialists’ sudden acquisition of funds was contained in a book published in Holland in 1933.” It was published “by the old established Amsterdam publishing house of Van Holkema & Warendorf, called De Geldbronnen van Het Nationaal-Socialisme (Drie Gesprekken Met Hitler) under the name “Sidney Warburg.”
In that book, “The Financial Sources of National Socialism” it is claimed that Hitler’s rise to power was aided directly by Wall Street bankers, industrialists, and oil companies, including Standard Oil, and John D. Rockefeller, who contributed $32,000,000 between the years 1929 to 1932.
In the opening paragraphs, the author, who calls himself “Sydney Warburg” states that: “There are moments when I want to turn away from a world of such intrigue, trickery, swindling and tampering with the stock exchange .... Do you know what I can never understand? How it is possible that people of good and honest character — for which I have ample proof — participate in swindling and fraud, knowing full well that it will affect thousands.” The New York Times (11/24/1933), was quick to dismiss the book, but in so doing, revealed its own Nazi sympathies: “Hoax on Nazis Feared.”
Feared? The New York Times, “feared” that not only the Nazis, but the publishers were “victims of a hoax.”
The New York Times was apparently a fan of Hitler, for prior to 1933, and during the same time Rockefeller and Standard Oil were contributing millions of dollars, it ran several quite positive stories about Adolf Hitler in 1929, 1930, and 1931 (35) as did the Hearst publishing empire (15).
The author of this “feared hoax” was “Sydney Warburg.” However, after the book’s publication, not only the New York Times but the Warburg family, which included Max Warburg, a director of IG Farben in Germany, and Paul Warburg a director of American IG. Farben, denounced the book. Of course, we also know that IG. Farben was a major financial supporter of Hitler, and we know the Standard Oil and the Bush-Harriman clique were in business with IG Farben (36). So, the Warburg denunciation cannot be taken completely seriously.
Nevertheless, James Warburg demanded that the book be destroyed because it contains “a mass of libelous material against various members of my family and against a number of prominent banking houses and individuals in New York.” However, Warburg then goes on to say, “I have never to this day seen a copy of the book” (37).
Within days of the book's publication, and although those who denounced it have never seen a copy it disappeared from circulation and almost all copies were quickly destroyed (36).
As detailed in Antony C. Sutton’s well documented book, Wall Street and the Rise of Hitler (36), the first section of the book explains that in 1929, American banks and investors were concerned that the demands by France on German war reparations, were eating into their own profits. Thus, these American business men called a meeting in June 1929 to discuss the problem and what might be done. Those in attendance included “members of the Federal Reserve Bank and leading American bankers” including the “directors of Guaranty Trust Company, the Presidents of the Federal Reserve Banks, in addition to five independent bankers, young Rockefeller, and Glean from Royal Dutch Shell. Rockefeller” and “Carter” of Guaranty Trust Company, “dominated the proceedings. The others listened and nodded their heads.”
Antony Sutton, then goes on to report that according to Warburg’s book,
“The general consensus at the bankers’ meeting was that the only way to free Germany from French financial clutches was by revolution, either Communist or German Nationalist.” Rockefeller argued that the money should go to Hitler. After some negotiation, 10 million dollars was transferred to the Nazis. During subsequent meetings, it was explained that Hitler’s storm troopers and SS, were insufficiently equipped and badly needed machine guns, revolvers, and carbines. Hitler explained that he had two plans for takeover in Germany: (a) revolution (b) legal takeover plan. Hitler is quoted as saying, “revolution costs five hundred million marks. Legal takeover costs two hundred million marks — what will your bankers decide?”
A legal takeover thus offered the best deal. Warburg passed these demands to Rockefeller and Guaranty Trust and received the following answer in reply:
“Suggested amounts are out of the question. We don’t want to and cannot. Explain to man that such a transfer to Europe will shatter financial market. Absolutely unknown on international territory. Expect long report, before decision is made. Stay there. Continue investigation. Persuade man of impossible demands. Don’t forget to include in report own opinion of possibilities for future of man.”
After further negotiations, Rockefeller and the American banking and oil interests offered an additional $15 million which would help finance the legal takeover. Revolution would be too expensive and destructive.
In the months after Hitler took power, in 1933, Warburg delivered yet another payment from Rockefeller and Carter and their associates in banking, industry, and oil, i.e. 7 million dollars (37). Although the New York Times, and the directors of IG Farben—a company that assisted in the murder of millions of men, women, and children—have decried this cruel “hoax” which puts the Nazis, Rockefeller, Standard Oil, and the bankers at Guaranty in such a bad light, we do know that these men and these companies were in business with the Nazis (13). And we know that Emil Helfferich, chairman of the Bush-Harriman company, Hamburg-
Amerika, was also chairman of Standard Oil’s German subsidiaries. Emil Helfferich frequently wrote out checks to Heinrich Himmler payable on a special Standard Oil account. According to U.S. intelligence documents reviewed by author Anthony Sutton (36), Helfferich was still making these payments to the S.S. in 1944 —the same S.S. which was rounding up, enslaving, and supervising the mass murder of Russians, Jews, Gypsies, Poles, etc., at IG Farben’s death camps.
THE STANDARD OIL NAZIS
“In two years Germany will be manufacturing oil and gas enough out of soft coal for a long war. The Standard Oil of New York is furnishing millions of dollars to help.” -Commercial Attaché, U.S. Embassy in Berlin, Germany, January 1933.
Standard Oil also provided expertise to IG. Farben including the know how to make leaded gasoline. As detailed in an IG Farben memo: “Since the beginning of the war we have been in a position to produce lead tetraethyl solely because, a short time before the outbreak of the war, the Americans had established plants for us ready for production and supplied us with all available experience. In this manner we did not need to perform the difficult work of development because we could start production right away on the basis of all the experience that the Americans had for years.”
In another IG Farben memo Standard Oil’s assistance in procuring $20 million worth of aviation fuel and lubricants is acknowledged: “As a further remarkable example of advantageous effect for us of the contract between IG and Standard Oil, the following should be mentioned: in the years 1934 / 1935 our government had the greatest interest in gathering from abroad a stock of especially valuable mineral oil products (in particular, aviation gasoline and aviation lubricating oil), and holding it in reserve to an amount approximately equal to 20 million dollars at market value. The German Government asked IG if it were not possible, on the basis o fits friendly relations with Standard Oil, to buy this amount in Farben’s name; actually, however, as trustee of the German Government. The fact that we actually succeeded by means of the most difficult negotiations in buying the quantity desired by our government from the American Standard Oil Company and the Dutch — English Royal — Dutch — Shell group and in transporting it to Germany, was made possible only through the aid of the Standard Oil Co.”
Standard oil, Rockefeller, and the Bush-Harriman clique, not only provided financial and technological assistance to Hitler, but assisted his war effort and terror campaign to the detriment of the United States (13,36,38).
It is because of this collaboration, that the Bush-Harriman- Walker properties were seized by the U.S. government for violation of the Trading with the Enemy Act (31).
Charges of “criminal conspiracy with the enemy” were also filed against Standard Oil. However, when evidence of collusion was presented by Thurman Arnold, chief of the Antitrust Division of the U.S. government, it was pointed out by Standard that it was also selling oil and fuel to the U.S. Army, Navy, and Air Force. If Standard Oil were punished, America might lose a major share of its oil supply, and might lose the war.
Standard Oil not only threatened the government of the United States, but it had already orchestrated a major oil and gasoline shortage during the Summer of 1941. These artificial shortages were also investigated by the United States Congress.
As summarized by the U.S. National Archives, a “Special Committee to Investigate Gasoline and Fuel-Oil Shortages” commenced hearings on August 28, 1941. “18.89 Fear of impending gasoline scarcity along the Atlantic seaboard gripped the American public during the summer of 1941. Members of Congress were deluged with letters and telegrams from concerned constituents. In August... authorities... sought to quiet public concern. These statements failed to stop the hoarding of gasoline and the deterioration of public confidence.”
“18.90 In response to the confusing situation, the Senate established the Special Committee to Investigate Gasoline and Fuel- Oil Shortages (78A-F31) on August 28, 1941. The committee, chaired by Francis T. Maloney of Connecticut, was to investigate the shortage of fuel in the various States, the methods of delivery, and the means to ensure an adequate supply for national defense without undue hardship to the private sector.... A major focus of the committee was the petroleum distribution system.”
Recalling the terrible gas shortages which were due to a problem in the “petroleum distribution system” the government backed down and Rockefeller and Standard oil escaped punishment. The charges of “criminal conspiracy with the enemy” were dropped. However, Standard Oil did not get off the hook completely.
Standard oil agreed to release its patents and pay a modest fine. Thurman Arnold did not let the matter drop, however. He, along with Secretary of the Interior Harold Ickes, provided the documents detailing the collusion between Standard Oil and IG Farben, to Senator Harry Truman, chairman of the Senate Special Committee Investigating the National Defense Program. There followed a series of hearings in March 1942, “In order to disclose the truth about Standard” (13, 39).
After the hearing, the committee chairman, Harry S. Truman, characterized the arrangements between Standard Oil and IG Farben as “treasonable.” Again, however, the entire matter was dropped. Standard Oil again threatened to disrupt the U.S. war effort.
According to Mark Aarons and John Loftus (The Secret War Against the Jews), “There was a reason for Rockefeller’s escape: blackmail. According to the former intelligence officers we interviewed on this point, the blackmail was simple and powerful: The Dulles brothers (John Foster, later Secretary of State, and Allen, later director of the CIA) had one of their clients threaten to interrupt the U.S. oil supply during wartime. Standard executives made it clear that the entire U.S. war effort was fueled by their oil and it could be stopped. . . . The American government had no choice but to go along if it wanted to win the war” (39).
In May of 1942, another aspect of the treasonable relationship maintained between Standard Oil and IG Farben was brought up during testimony before a Patents Committee hearings, chaired by Senator Homer T. Bone. Even after Hitler declared war on the United States, Rockefeller and thus Standard Oil was collaborating with Nazi Germany and seeking to prevent the U.S. from manufacturing explosives and synthetic rubber (40,41,42).
Following the conclusion of the war, Standard Oil’s treasonable behavior was again brought to light by the United States Congress. During congressional hearings conducted before the Truman, Bone, and Kilgore Committees, it was concluded that “Standard Oil” had “seriously imperiled the war preparations of the United States” and that Standard Oil had colluded with IG Farben, to prevent the United States from gaining access to war-related technologies such as the creation of “synthetic rubber.”
As noted, although the most serious charges against Standard Oil were dropped, the U.S. government did seize a number of its patents, under the Trading with the Enemy Act.
However, in July of 1944, Standard Oil, filed a lawsuit against the U.S. government, contesting the seizure of its patents. In November of 1945, Judge Charles E. Wyzanski ruled that the government had been entitled to seize the patents.
Standard Oil appealed. On September 22, 1947, Judge Charles Clark rejected the appeal, concluding that “Standard Oil can be considered an enemy national in view of its relationships with IG. Farben after the United States and Germany had become active enemies” (40).
Rockefeller, of course, was a member of the Brotherhood. Rockefeller was also in business with other Nazi collaborators, including Prescott Bush and the Harrimans.
THE OIL BROTHERHOOD II
From 1927 to 1941, the future director of the CIA, Allen Dulles worked as lawyer and international finance specialist for Sullivan & Cromwell, a Wall Street law firm in New York. Dulles performed work for Bush, Harriman, and Rockefeller in setting up business relationships with the Nazis and with top Nazi industrialists, and served as legal counsel for Standard Oil and the Nazi’s IG Farben, who had partnered with the Rockefellers (43).
Allen Dulles played a pivotal role in promoting U.S.-Nazi corporate relations. The Nazis considered Allen Dulles to be “the most influential White House man in Europe” and Dulles had numerous meetings with top ranking members of the SS (6).
In fact both Dulles brothers (John Foster, later Secretary of State, and Allen, later director of the CIA) represented the interests of Bush, Harriman, Rockefeller, and other Nazi collaborators prior to, during and after the ending of the second world war. Whereas Allen served as a spymaster, lawyer and deal maker who brought over a thousand high ranking Nazis into the CIA and found jobs for them in the Republican party and corporate America (43,44), John Foster Dulles was on the board of IG Farben who had partnered with Standard Oil (43).
As was the case with Guaranty Trust, which provided loans to the Nazis and to the Soviet Union, Rockefeller’s Standard Oil was also in business with Hitler’s nemesis: the Soviet Union. By doing business with both fascist regimes, this guaranteed that regardless of who won the war, Standard Oil would profit. The Dulles brothers are said to have played a major role in ironing out the Soviet deal.
In 1938, oil was discovered in Saudi Arabia. The king of Saudi Arabia, Ibn Saud, was a supporter of Adolf Hitler. Dulles, acting as a representative of Standard Oil (as well as IG Farben) also played a major role in negotiating and gaining major concessions from Ibn Saud.
As Saudi Prince Bandar explained to PBS Frontline (45):
“America has never been a colonizing power as far as we were concerned. Our relationship with America... started in the 1930s. And when the Americans came to Saudi Arabia, they didn’t come as an invader. They came actually as a private sector, trying to help us find oil. They found the oil for us, and they’ve been our friends ever since.”
The result of these discoveries and negotiations was a joint venture between Standard Oil, Texaco, and Mobil, and the formation of the Arabian-American Oil Company (ARAMCO). King Ibn Saud and his family were promised millions in return, whereas the Arabian people received basically nothing (46).
By 1944, Standard Oil had twice artificially created oil shortages as a means of gaining leverage over the U.S. government. Based on the discoveries made in Saudi Arabia, the Standard oilled cartel successfully lobbied the U.S. Senate, which in turn proposed that the U.S. government should finance the construction of oil pipelines and oil refineries so as to meet future energy needs. With the assistance of the Dulles brothers, this proposal soon became a program to assist Standard oil and ARAMCO in the Persian Gulf.
In February and March of 1944, the “Special Committee Investigating Petroleum Resources” began hammering out the details.
As summarized by the United States National Archives: “18.94 In February 1944, the Petroleum Administrator for War, Secretary of Interior Harold Ickes, announced that the Arabian-American Oil Co. would construct a refinery to produce petroleum war products for the Allied Nations, and that the U.S. Government would construct a petroleum pipeline from the Persian Gulf area to the eastern shore of the Mediterranean and would obtain a crude oil petroleum reserve of one billion barrels in the Gulf area.” Because of interests pertaining to “national welfare and security” this Special Committee also agreed to “the disposal of Government-owned pipelines and refineries as surplus properties, tidelands oil, and other issues related to petroleum supplies.”
In other words, after twice being held hostage by Standard Oil, the U.S. government agreed to give “Government-owned pipelines and refineries” to this Standard oil-led cartel, and to fund the creation of new pipelines and refineries in Saudi Arabia.
The U.S. government and the oil cartel headed by Standard Oil, were now in business with the “royal family” of Ibn Saud. Saud and his family began receiving millions of dollars in payments as their reward for selling out so cheaply (46).
Roosevelt, it is said, had been considering bringing charges of treason against Dulles, Bush, and Rockefeller following the conclusion of the second world war. However, Roosevelt’s death put a stop to that. Not only did these traitors get off scott free, but the Dulles brothers also received handsome rewards, Allen becoming the first director the CIA, and John, the Secretary of State.
Nevertheless, although faded by time, and despite the purposeful destruction of incriminating records, the facts remain the same: Prescott Bush, the Harrimans, Rockefellers, the Dulles brothers, and Ibn Saud, had partnered with a terrorist Nazi regime at war with the United States. The Saudi royal family, the Bush family, the Harrimans, Rockefellers, American banks, American Oil, and America’s political elite, went into business with Nazi terrorists who murdered tens of millions of innocent, men, women, and children, including tens of thousands of Americans. They partnered with a terrorist regime that was at war with America for three interrelated reasons: money, oil, and power.
Decades later, after Bush was elected vice-president and then President, he, the Saudi royal family, and the CIA, would provide tens of millions of dollars in support of yet another terrorist organization that would declare war with the United States, this one ostensibly headed by Saudi multi-millionaire, Osama bin Laden. As we shall see, doing business with gangsters, thugs, and terrorists who preach death to America, and who kill Americans, is a Bush family tradition (4,47).
******to be continued!!!!!!!!.....
Rogue
Natural gas buyers in bidding war
EU, Asia willing to pay premium for supplies, placing chill on U.S. imports
http://www.baltimoresun.com/news/nationworld/bal-gas1226,1,539239.story?track=rss&ctrack=1&c...
By Russell Gold
The Wall Street Journal
Originally published December 26, 2005
Even with natural-gas prices surging to new highs and heating bills soaring across the United States, much of the nation's import capacity remains idle.
The nation has four on-shore terminals for receiving and processing imported gas, and they are importing only about half the volume they can handle. The reason: U.S. buyers are being aggressively outbid by Europeans and Asians for the limited number of cargoes available.
The supply crunch means imports won't cool the U.S. market and natural-gas prices could stay high -- and sensitive to weather changes -- for years to come, even as the U.S. builds more terminals to handle overseas gas.
"There will be continued competition for supply, certainly through the end of the decade," says Martin Houston, president of North American operations for BG Group PLC, the largest importer of liquefied natural gas into the U.S.
In the U.S., natural-gas prices are up fivefold since the beginning of the decade, and near records in both nominal and inflation-adjusted terms.
About 57 percent of the nation's 110 million households use natural gas for heat, according to the Census Bureau. The Energy Department forecasts that the average U.S. household that heats primarily with natural gas will spend 38 percent more this year, compared with a projected 21 percent increase for users of home heating oil.
Natural gas also is used for such purposes as generating electricity and producing plastics and fertilizer. Demand has grown amid a strengthening economy and interest in cleaner-burning fuel.
High prices are one reason big producers are looking to boost North American gas production. Last week, ConocoPhillips said it would pay $35.6 billion to acquire Burlington Resources Inc. in the largest energy acquisition in years. Eighty percent of Burlington's assets are North American gas.
But imports also are key. While the majority of natural gas consumed in the U.S. comes from North American wells, many fields are aging and the industry has found it difficult to boost production. With domestic production leveled off, the energy industry expected to compensate with imports from the Middle East and Africa, where excess supplies of the fuel are sometimes flared off and never brought to market.
Still, shipping natural gas is a tricky process. The gas is shipped in cold liquefied form, which dramatically boosts volume and must be reheated and returned to a gaseous form at terminals when received.
The current import conundrum dates to the beginning of this decade, when prices spiked -- at a time when production was flat -- and government and industry officials began pushing to increase natural-gas supply.
In 2001, the industry began the process of reopening mothballed liquefied natural-gas terminals and proposed building dozens of new ones. The Bush administration backed the effort, and the federal government streamlined the regulatory process. Companies campaigned to persuade communities to allow them to build terminals, often in the face of local opposition. After facing federal reviews, the lengthy process of building new terminals has begun.
The theory was that if the U.S., the world's largest gas consumer, opened for imports, there would be tankers lining up to discharge their cargo. There was "a self-indulgent, myopic belief that if the U.S. builds a terminal, everyone wants to supply us. And that is what has been wrong," says James Jensen, an industry consultant in Weston, Mass.
Instead, a pressing global shortage has developed, in part because of overseas competition. As the price of liquefying natural gas fell, a global building boom began. While supply increased and the number of cargoes available for purchase on the spot market grew, so too did the number of new import terminals in other countries.
Global production capacity for natural gas, in liquefied form, is about 20 billion cubic feet a day, but there are now enough terminals around the globe to eat up twice that volume, according to the Federal Energy Regulatory Commission.
As a result, a global shortage has developed in recent months, amid supply glitches, cold weather in the United Kingdom and a drought in Spain, which has been turning to liquefied natural gas to make up for a shortfall in hydroelectric power.
In an extreme example of the situation, a tanker carrying liquefied natural gas last month arrived from Nigeria and idled in the Gulf of Mexico for a week -- during which prices soared in Europe - before sailing to Spain to unload its cargo. Recently, the Spanish have been willing to pay $2 to $3 per million BTUs above Gulf Coast spot prices, according to PIRA Energy Group, a New York consultant. South Koreans, meanwhile, are paying a premium of about $2 and the British a premium of $2 to $6.
The yawning gap underscores the differences between the oil and gas markets. Oil can be easily loaded onto a tanker and sold into a well-developed global market that has been fine-tuned over decades. Natural gas, by contrast, is difficult to transport except by pipeline, and LNG shipments are still a relatively small portion of the overall market. That means the price can vary widely by region, depending on factors such as weather and the availability of alternative fuels.
The international spot-market trade in liquefied natural gas is relatively new. Until recently, consumers got natural gas through a collection of regional pipeline hubs, which created geographically isolated markets. Gas-short nations such as Japan and South Korea bought natural gas under iron-clad long-term contracts.
Geography puts the U.S. at a disadvantage. Most supplies of liquefied natural gas for Europe and the U.S. come from West Africa, the Mediterranean and the Middle East. Europe is closer, which makes delivery less expensive. The only supplier close to the U.S. is in Trinidad.
Moreover, European buyers currently are willing to pay such a high price that a tanker from Trinidad arrived in the U.K. Tuesday, according to Waterbourne LNG, a weekly publication of Houston energy consulting firm Commercial Services Co. The voyage marked one of the first times liquefied natural gas from the Caribbean had crossed the Atlantic in pursuit of higher prices.
The U.S. also faces the problem of being the newest entrant in the market and still a small purchaser. "The larger buyers, the ones with a long history of being in the business and making consistent purchases, are now in the position where they need more," says Rick Grant, president and chief executive at Suez LNG, a subsidiary of French utility company Suez SA that operates an LNG terminal near Boston. "And because of the relationships, they can compete very aggressively in the market for the cargoes that become available."
U.S. officials believe new terminals will attract significantly more imports starting in 2008, when gas from new projects is expected to hit the market. The increased supplies are likely to allow for long-term supply contracts, reducing dependence on the volatile spot market.
"We are 25 percent of the natural-gas market world-wide," says J. Mark Robinson, director of FERC's Office of Energy Projects. "We are the big market. On an individual cargo, you might get outbid by Spain, but if you want a long-term monetization of your reserves, I think the U.S. is the place to do that."
Rogue
CDH.V.....Corridor Resources. There's been some "explosive" buying pressure the past month. Stock was a $1.90 Canadian last month....now $4.00 last trade.
http://stockcharts.com/def/servlet/SC.web?c=CDH.V,uu[w,a]daolyyay[dd][pb50!b200!f][vc60][iUc20!Lh14,...
Anyone like the numbers or potential in this one? Or has the "move" been made already???
Rogue
Silver looks like it's settnig up for low risk entry on the long side....I'm going to try to probe the long side here on the futures soon.
Rogue
ksuave.....I DO agree with your statement...
"sad thing is that the overall vision of a small group of ruthless (there’s no other word) fascists have taken control of so much of America is true, and they have so twisted and manipulated the discourse that most Americans, well-meaning as they may be, think and act against their own best interests."
http://www.government-propaganda.com/skull-n-bones.html
That is true.....but not everyone is as dumb as "Pavlov's dog", as I feel compelled to tell the truth as I see it. And if it ever comes down to it.....what's the saying???..."Give me Libery or give me Death!
Don't take away our Bill of Rights and torture me to keep me "SAFE" from the bogus bogeyman!!!
You make "light" of George H.W. Bush and the "poisoned ice pellet" visit to Hoover......BUT, I did get a big kick out of the footage of Senator Barry Goldwater holding and examining that very same CIA weapon during the Senate JFK Assassination hearings just prior to the Watergate "scandal/coverup?".
And knowing that Hoover was the ONE man that could possibly have had the power to bring Kennnedy's killers to justice......that piece of documentation showing the visit by George Bush FROM Dallas to Washington on assassination day to "brief with Hoover' is "Lethal Evidence" against the man in my opinion.
Remember.....Hoover was the man responsible for getting Prescott Bush in trouble for financing the Hitler Nazi war machine buildup. I think Prescott's son George may have had some interesting thing's to say to Hoover that day after they just "wacked" Kennedy. They'd kill the President.... does anyone think that Hoover would be able to "tand in the way"of the AGENDA??
If former CIA Director William Colby could speak from the grave what would he tell us??? The man was a "prime interest" to me after seeing the "JFK" Oliver Stone movie in 1992 and doing a little research of my own in subsequent years. He seemed to be the one credible man that could heroically "peg" the killers of Kennedy.
Colby's very untimely and very suspicious death(widely believed to be an asssassination itself) following the Oklahoma City bombing was to me a sign that the group would do anything to "cover their tracks" and conceal the truth...........the AGENDA would roll on.
I still want to know why George H.W. Bush was named CIA Director in 1975 to replace William Colby????
He never worked for the CIA a day in his life according to the "official" story. After seeing the documentary......we all KNOW WHY!!!
The documentary does go "way out on a limb" on gross speculation about JFK's son John John....I'll grant you that. But I'm a betting man with 21 years market speculating experience, and I'd "BET THE HOUSE" that John Jr.'s plane WAS BOMBED in the sky. Yes.....he was murderd too. WHY????
Was it because he told his co-worker's the week before his death that the magazine he owned called "George" was being sold and he was going to run for the US Senate seat in New York state??? Maybe it was better to be "safe" than sorry for the "powers that be".
The documentary in my opinion has some VERY VERY hard hitting and DISTURBING facts that should have any American concerned about maintaining our "Freedom and Liberty" concerned.
View the documentary on this link: http://www.government-propaganda.com/skull-n-bones.html
Rogue
Bullish and Fully Fueled
Interview with Kurt Wulff, Founder, McDep Associates (slightly edited to make it shorter]
IT MAY NOT SPORT the catchiest name, but Needham, MA-based McDep Associates and its founder, Wulff, have built a big following among investment banks and individuals for in-depth, independent research on the energy industry. That's partly because he makes his research available on the World Wide Web, at www.mcdep.com1. But partly, too, because he is an enormously insightful and creative thinker. McDep is named for a ratio Wulff devised in the 1980s, while he was a top-ranked oil analyst at the former DLJ, to better appraise the value of energy companies: McDep = market cap and debt (McDe) to present value of energy (p). Last year in these pages ("Drilling for Value2," December 2004), Wulff forecast a value of BR stock of $86 a share on $50 oil, and fantasized about a COP takeover of BR. Now he makes the case that natural gas isn't expensive at current levels, and that it one day could be worth more than oil.
Barron's: Have the prospects for energy changed since we spoke a year ago?
Wulff: It has been a great year for the stocks, so automatically you have to be a little cautious about anticipating another great year. But the long-term outlook is still pretty powerful. Demand is strong, and higher energy demand means more economic activity. The supply picture, obviously, has changed. Last year we learned Saudi Arabia could no longer produce additional light oil. That hasn't changed. We were happy when oil prices dropped back to $55 a barrel because they had gone up a little too much too soon, but they are in an upward trend. We think $60 a barrel is close to the 40-week moving average. Maybe the higher limit for now might be $80 a barrel rather than $60. We don't ever know what is going to happen in the future, but the momentum is good: Oil prices are above the 200-day moving average, the gas price is above the 200-day moving average, refining margins are above the 200-day moving average and the underlying long-term expectation is that oil could still be a lot higher. So it is better to bet on it going higher than not going higher. My vision for oil is $150 a barrel by 2010. We've only gone up threefold so far this decade and we went up 10 times in the 'Seventies, so who knows what's ahead for us? The upside is still pretty powerful.
What of the relationship between stock prices and the price of the commodity in the futures market?
The McDep ratio I use to calculate present value includes a denominator that is the value of the company's oil and gas resources depending on some oil price and gas price. Last December we were using $35 a barrel as our long-term expectation. In January I raised my long-term number to $40 a barrel and in August I went to $50 a barrel. That didn't take a lot of imagination because the six-year price of crude oil was going up at the same time. So today my values for companies are tied to $50 oil. The futures market is at $61 a barrel for six-year oil. The market is at about $60, I'm at $50 and stocks are at $40 and will probably go a lot higher yet.
COP buying BR was on your wish list a year ago. What do you think of this deal?
BR has been one of my favorite stocks for a long time, and my present value on BR is $86 on $50 oil. The current stock price is right at my present value. I've been looking for this deal for a long time, and so I'm delighted that COP bid for BR. It obviously demonstrates confidence in natural gas on the part of COP because BR is about 70% natural gas. While I quote the price for Burlington in oil terms, it is really a natural-gas value. BR is the largest gas producer in the San Juan Basin, and Phillips was about the third-largest producer. The two together will now be the largest producer in the San Juan Basin, which is the largest gas field in the U.S. It has been a wonderful long-term property, and it just gets better and better.
What now? Should investors continue to hold these stocks?
I continue to recommend both. The deal does change the picture a little. Obviously, if you have a lot of BR and you want to cash in, this is the time to do it. You will get cash for half of your BR. Part of the rationale would be to take the cash and recycle it in something else. The rationale for holding BR would be to get COP, which was a cheap stock before the deal and is a cheap stock after the deal. If you are a taxable investor, you don't pay taxes on the COP part of the transaction, so you may as well buy BR. But, of course, BR isn't the best buy out there, while COP could be one of the best buys. You could rationalize you are buying COP at a slight discount if you buy BR, because of the arbitrage discount. COP is my favorite among the megacaps.
What is your favorite part of the energy market?
From a commodity point of view, natural gas has to be a favorite. It has always been my favorite.
But is natural gas too high at $15?
Most people think it is, but I don't. The one-year natural-gas-price for the next 12 months is $12 per million BTU. For oil it is $63. The conversion rate of oil to gas is 5 to 1, roughly the price of heating oil. At $15 you are paying a little bit of a wintertime premium. But for the full year, at $12, you are not paying any more for natural gas than for heating oil, and natural gas is a cleaner fuel than heating oil.
What's changing is that in former years, natural gas would compete with heavy fuel oil and the high-polluting fuels. But increasingly, with the new electrical-generation capacity that runs on gas, gas competes with jet fuel or heating oil, which can also run those turbines. So, the competitive interface is heating oil. If natural gas goes to $12, or $13 or $14 or $15, that means all of it is being used as competitively as possible. In the U.K. the gas price has been around $18 per million BTU, which is really quite amazing.
But there are big shortages in the U.K.
It's a classic case. The U.K. converted to natural gas in the last 30 years and it has been wonderful for the country. But they have been relying on the North Sea fields, which are now running down, and the substitutes of LNG are not coming in fast enough. The LNG market is making a point on natural gas very well, because now we have Spain and the U.K. and the U.S. and Japan all bidding against each other for the incremental LNG supplies. There aren't very many available. A tanker might set out for one of these places and change direction midstream.
The competitive equivalent for LNG, again, is oil, not coal. At $18 a million BTU, natural gas is at a premium, but there are some places where you can't burn oil as a substitute for gas. Eventually, gas will be worth more than oil.
What are you referring to?
Kali is bringing on new gas power plants as we speak. Some of California's electricity comes from coal-fired plants, and environmentally conscious people are objecting to importing electricity from Wyoming that might be generated by a new coal plant.
Everyone's focus has been on $100 oil. Maybe the focus should be on how high natural gas can go. What's your view?
The one-year futures price, or 12-month strip, which is the quote for the next 12 months averaged, is higher than the six-year futures. The six-year average price for gas in the futures market is $9, not $12. That would indicate most people think the price of gas is going to come down. Maybe it will for a while, but in the end there is no reason why natural gas should be any cheaper than oil, and $9 on gas should move up to $12. That's a big, unexploited inefficiency.
An increase in natural-gas prices would be more of a surprise to investors than an increase in oil prices. COP will say they didn't bet on these high prices, but six-year gas going from $9 to $12 makes the BR acquisition look a lot better. BR is selling at a full net present value, yet it is only 4.6 times unlevered, based on cash flow. So in only two to three years, COP gets half its investment back. It all boils down to where the price of the commodity is going. If the price of the commodity stays anywhere near the same level, it is a wonderful deal. The knock on the deal is that COP could have bought its own stock back because it is cheaper than BR. I calculate COP's present value before the deal was $100, and its stock was only around $60 or so. After buying BR, I put COP's present value at 93. If you give them credit for synergies and cost savings, it might be 95. So there are a few dollars a share of value dilution.
What are some takeover candidates?
Close peers to BR are APC, DVN and ECA. I don't cover APA but you could probably include it, though it is a different kind of company. XTO is also among the large-cap independents I cover.
What's the most appealing?
I'm recommending all of them, but Anadarko is a more obvious takeover candidate because it is out of favor with investors. It was the favorite for most of the 'Nineties, and then investors became disenchanted and the company went through a management change. In the end they couldn't grow production and have retrenched to an asset play from a growth play. Not long ago they sold off their short-life properties to concentrate on their long-life properties, and that reduced their cash flow. It should have increased their multiples, though they haven't gotten the increase in the stock market yet. They put themselves up for sale a few years ago and nobody was interested.
Who would be a likely buyer?
Any megacap. The most likely is Royal Dutch Shell. They've gone through their own troubles and now they are ready to roll. They've been quiet. They haven't been doing deals. They had a controversial cost overrun at their LNG plant in Russia. It's going to cost $20 billion instead of the estimated $10 billion, which is often what happens when we are in this kind of a trend: Everybody tries to build something and it is always much more expensive to build than people think. That contributes to the rising commodity price.
How are you playing the LNG market?
I am paying very close attention to the linking of the global gas markets through LNG, but in the end you play it through natural-gas producers, and that leads to my ultimate natural-gas stock. My most interesting recommendation now is Gazprom. This month the Russian parliament has approved the lifting of ownership restrictions on Gazprom, and President Vladimir Putin signed off on that before the end of the year. Before, only 20% of Gazprom shares could be owned by non-Russians, and the stock could only be traded on certain exchanges. There was a little bit of a premium between the Russian shares and the non-Russian shares. Once the restrictions are lifted there should be so much demand for the stock that that premium will easily be absorbed.
What's your target for the stock?
It's $120 a share, and the stock is trading at $77. What's interesting about the present value is that it is tied to what they get for their gas, and that's only about one-fourth of world levels. The Russians are getting only 2.50 rubles per cubic meter -- coincidentally, rubles per cubic meter is the same as dollars a million BTU, or close enough. That's about $2.50 a million BTU based on $15 on a near-month basis, $12 on the next 12 months and $9 on the next six years. But we think the $9 is low, so there is a four-fold-type potential gain for Gazprom.
What are they doing to get the price to the world level?
It is controversial. Gazprom's pipeline to Europe goes across other countries, including Ukraine, and Ukraine apparently steals gas from the pipeline. They are arguing right now over transit fees. Gazprom wants to get the price up and Ukraine wants to get a big chunk of it. Gazprom is building a pipeline under the Baltic Sea that won't pass through Ukraine and other countries. They also built one under the Black Sea to Turkey and southern Europe. They'll have LNG going across the Arctic, and they will be part of an LNG project in far eastern Russia.
What about Russian price controls?
They are being relaxed gradually. There is no assurance they are going to go away, but I think they will. In Gazprom's case there is one oligarch who might own 10% or so. The Russian government now owns 50% of it, and presumably a million Russians own the stock. Twenty percent is owned outside of Russia by people in the global capital markets. So the interests are aligned, and if Gazprom makes a lot of money, the Russian government gets half of it and Russian citizens make a lot of money. The international guys can help drive up the price, and if Gazprom becomes a trillion-dollar stock eventually, it is a great flagship for the whole country. There is talk about Gazprom being bigger than Exxon some day.
Kurt Wulff's Picks
Ticker Recent Price
COP $59.35
APC 96.26
OGZPF 77.60
PWTFF 31.94
XEC 41.26
Gazprom does have an ambitious energy strategy. They want to export LNG to the U.S. Russia has more natural gas than Saudi Arabia has oil. Gazprom has 90% of the production in Russia, and it is not hard to make the case they already own or have access to more resources than any other company. They are bent on marketing those resources, so it should follow they get more recognition in the stock market. It has the lowest McDep ratio of all the major companies at 0.64 on a net present value of $120. They generate $23 billion in cash flow a year. Put a multiple of 11 times on the unlevered cash flow, which is a little higher than normal because Gazprom has very, very long-lived reserves, and you get to $120 present value.
How about an income stock?
In the income category, the Canadian Oil Sands Trust is still one of my favorites. They doubled the dividend, but the yield is still 3.1%. If you want a 10% yield or so, my recommended stock is Penn West Energy Trust, another Canadian company. It is a new trust formed this year, the largest in Canada after Canadian Oil Sands. You can't buy it on a U.S. exchange, though they expect to list in the U.S. next year. The yield is 9.82%, but that will probably increase in the next year to more than 10%. The distribution is only 50% of the equity cash flow, so they are still reinvesting 50% of their cash flow, which will help keep that distribution going indefinitely. Reserve life is about eight years.
The McDep ratio on Penn West, at 1.16, is not very low compared with most income stocks, but they have a long-term project I don't count in my McDep ratio yet. They own a major portion of a giant old oil field in Canada. They will be applying tertiary recovery techniques and injecting carbon dioxide to extract the oil in the next two years. That will add a lot of cash flow. It is actually kind of a miraculous project because, as Canada is a signatory to the Kyoto Treaty, there are companies in Canada that have to get rid of their CO2 emissions. CO2 is a useful product to help get the last bit of oil out of old fields in a clean way.
What's your pick in the small-cap category?
Among small-cap independents, XEC is a real laggard. It is the only one of my stocks that hasn't gone up much this year. It is run by a fellow by the name of Mick Merelli, who was an officer at Apache in the late 1980s and who has had a 10-bagger-type experience in a company called Key Production. XEC acquired MHR this year, and I thought it was a good acquisition that added value. But the stock has gone nowhere.
Some years ago XEC made an acquisition and it took a few quarters to absorb the new company. They lost momentum in their business. Investors might be concerned about a replay here. XEC has a low McDep ratio, 0.69, and has a shorter reserve life, seven years. It is 71% gas and it is selling at 2.8 times unlevered cash flow. They are drillers. They look for wells that will produce a lot of production initially and then drop off. It is a rate-of-return business, and if they can make a 20%-25% rate of return on it, they do it. They've been successful for a long time doing just that, as opposed to somebody who just sits on assets and watches them grow in value.
URL for this article:
http://online.barrons.com/article/SB113538486213031006.html
Hyperlinks in this Article:
(1) http://www.mcdep.com
(2) http://online.barrons.com/article/SB110384733592908785.html
(3) http://online.barrons.com/article/SB113538484383231004.html
Rogue
ksauve......I would recommend Oliver Stones excellent "JFK" as a starting point in the extremely historically significant murder of John F.Kennedy. Watch that movie first if you must....I did back in 1992. It's an excellent starting point to realize that our government has been hi-jacked.
I'd recommend you watch the JFK documentary fully without "dozing off".......you obviously missed some real HEAVY DUTY INFO that is not at all mentioned in the JFK Stone movie that is EXTREMELY relevant to America today!!
http://www.government-propaganda.com/skull-n-bones.html
You'll see in that 92 minute documentary the origins of Fascist allegience to Adolph Hitler by Senater Prescott Bush back prior to WWII (all well documented).
You'll hear a bit of the founding of the CIA by Skull and Bones(German death cult roots) guys.
You'll know why George Herbert Walker Bush flew from Dallas to Washington on the day Kennedy was murdered to speak to FBI directer Hoover in Washington(all documented).
You'll understand truly what "WaterGate" was about and who "burgler" Hunt was and why the "good guy" CIA Director Willaim Colby(who was eventually murdered to silence him) was quickly replaced by George H.W. Bush in 1975 even though the "official record" never had him(Bush) working for the CIA for even a single day in his life. (By the way.....Bill Clinton was also lifetime CIA) Starting to get it????
Maybe you'll even look at the assasination attempt of Ronald Reagan 6 weeks after gaining the Presidential office a little differently after seeing this film.(The entire 92 minute documentary can be viewed on the link below.)
http://www.government-propaganda.com/skull-n-bones.html
The FASCIST agenda rolls on and this documentary should have everyone who views it taking a stand for "freedom and liberty"......
or will you buy into the Fascist AGENDA they're trying to force down our throats???
Rogue
Bobwins.....Do you still like or own Terra Energy??? It's had quite a correction in price the past few months but got a good "pop' today on a news release.......
http://stockcharts.com/def/servlet/SC.web?c=ttr.v,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh...
Terra Energy Releases Results of 2005 Summer Drilling Program
Friday December 23, 3:57 pm ET
CALGARY, ALBERTA--(CCNMatthews - Dec. 23, 2005) - Terra Energy ("Terra Energy" or the "Company") (TSX VENTURE:TTR - News) is pleased to release this report on the Company's 2005 Summer Drilling Program. A preliminary report was made to the investment community in the Company's media release dated October 3, 2005, with a further update being made on October 24, 2005. The Company has carried on drilling operations continuously to this date, and one drilling rig will continue to drill into the new year. The Company's 2005 Summer Drilling Program has been highly successful.
ADVERTISEMENT
"Terra Energy has targeted an exit rate of 4,000 BOED for 2005," stated Cas H. Morel, President of the Company. "The success of the Company's 2005 Summer Drilling Program has resulted in the development of sufficient oil and gas reserves at this time to support a production rate materially in excess of 4,000 BOED. The Company's production exit rate is estimated to be 2770 BOED for the year. However, the completion of two separate pipeline projects which are now underway and scheduled for completion in the first quarter of 2006 will boost the Company's production rate to the 4,000 BOED level. What is most important is the significant inventory of development locations which remain to be drilled in 2006, and the corresponding potential to significantly increase our reserves, production base and underlying value. Our biggest challenge in 2006 will be the drilling of all these development locations and the construction of infrastructure to place our reserves on production."
As a result of the highly competitive environment which exists within the Company's operating arenas and as a result of upcoming Crown land sales, Terra Energy will continue to protect the confidentiality of its drilling and testing results. Accordingly, some of the results discussed herein will use vague formation/location descriptions and project names.
HIGHLIGHTS
- Terra Energy's 2005 Summer Drilling Program has been a highly successful and has resulted in the development of sufficient oil and gas reserves at this time to support a production rate materially in excess of 4,000 BOED.
- Terra Energy experienced a 100% success rate with its exploration wells in this Program, and 83% success with its development wells, for an overall success rate of 92%.
- All five of the Company's previously announced high impact plays have been proved up or advanced.
- At Tower, the Company has proved up plays in two separate formations and has extended each of these plays over two Sections. The potential exists to extend each of these two plays onto a total of four Sections. Furthermore, the Company has mapped a deep exploration play over an additional four Sections of our land. The reserves attributable to the two drilled wells are anticipated to be significant.
- At Septimus, the Company has proved up plays in three separate formations. The Company now has three wells awaiting tie-in with an estimated deliverability of 500 - 700 BOE/day. The pipeline construction project connecting the Septimus Field to the Wilder gas plant is under way, with an anticipated completion date in the first quarter of 2006.
- At Eight Mile, the Company has advanced this 'resource' play and has continued to build up its land position. The Company drilled one 100% well, and is currently participating in the drilling of a second well to test this resource play.
- At Boudreau, the Company has established a sizeable play in the Baldonnel formation, and has drilled two high deliverability wells. The Company is planning on drilling two more wells this winter. The Company completed construction of a pipeline interconnecting the Boudreau Field and the Red Creek gas plant. The Company has just completed the installation and construction of additional new compression at the Red Creek gas plant to accommodate higher throughputs. The Company is currently drilling a well at 8-3 in East Boudreau.
- At Grande Prairie, drilling to date has identified several follow-up locations. The 6-7 well and the 13-12 well will be placed on extended production test early in 2006.
- The Company has made a New Discovery with significant potential, and has now proved up this play with a second well. The potential of this play increases with each well and the play is mapped across several more Sections of Company lands.
- The Company participated in a successful Kiskatinaw exploration well, with the capability of adding approximately 300 BOE/day (net) to the Company's production base. Plans are underway to complete the tie-in and place this production on stream in the first quarter of 2006.
- The Company has significantly increased its land holdings in its Fort St. John Core Area, and at year end 2005 will have 163 Sections of land (gross) with an average working interest of approximately 90%.
- The Company expanded its 2005 Capital Expenditure Plan and Budget to $55MM, and has recently increased its long term debt facility to $40MM on the strength of the success of the 2005 Summer Drilling Program.
- The Company has incurred sufficient exploration and development expenses prior to December 31, 2005 to meet all of its flow-through commitments to shareholders.
TOWER FIELD
Terra Energy has previously reported on the success of the Terra Parkland 12-25-81-17 W6M well, which was spudded on July 23, 2005. The well was drilled by the Company on a 100% basis and had two primary target formations including the Halfway formation and a 'Second Targeted' formation.
From log analysis, the Halfway formation in the 12-25 well appears to have 12 metres of reservoir sand and approximately six metres of net gas pay, with no underlying water. The interval was perforated on October 28, 2005 and subsequently fracture stimulated. Over a 48 hour production test, the 12-25 well flowed at a rate of 1.1 MMcf/day, and in addition produced condensate at the rate of approximately 50 BOED.
Log analysis on the 12-25 well shows that the 'Second Targeted' formation has three metres of net gas pay, with no apparent underlying water. The interval tested at a maximum rate of 2.7 MMcf/day in its drill stem test. The interval was completed and the formation was subsequently subjected to a 48 hour production test. The interval flowed at a stabilized rate of 2.6 MMcf/day, with flowing pressures building throughout the test. This 'Second Targeted' formation appears from the flow test to be 'sweet' and free of any appreciable H2S content.
More recently, on October 9, 2005, the Company spudded the 13-26-81-17 W6M well in the Tower Field. The 13-26 well was drilled by the Company on a 100% basis. The 13-26 well primarily targeted the same two formations as the Company encountered in the 12-25 well.
From log analysis, the Halfway formation in the 13-26 well appears to have 9 metres of gross sand. The Halfway formation was not drill stem tested, as it is the Company's intention of perforating and fracture stimulating the interval at the earliest possible date. A service rig is currently on location.
Log analysis on the 13-26 well shows that the 'Second Targeted' formation has approximately 1 metre of net gas pay, with no apparent underlying water. The interval was drill stem tested and produced at a maximum flow rate of 1.0 MMcf/day.
The Company is planning follow-up wells on each of the two remaining Sections over which the two targeted formations have been mapped. All four Sections are owned 100% by the Company. The follow-up wells are currently being licensed at 14-27-81-17 W6M and 16-28-81-17 W6M.
The Company also owns 100% of the deeper rights underlying four adjacent sections of land in the Tower Field. The Company will be targeting a much deeper formation on these four sections of land, and will be planning an exploration well in 2006 in order to test this deeper play.
The size and potential of the Tower Field has caused the Company to defer any plans for construction of infrastructure until such time as the total size of the reserves is better understood. This will likely require the drilling of at least one additional well, with the result that production will not be flowing from the Tower Field until the second half of 2006.
SEPTIMUS FIELD
Terra Energy first reported on the Septimus Field on October 3, 2005. The Company spudded the Terra Septimus 15-34-81-19 W6M well on August 25, 2005. The well was drilled by the Company on a 100% basis. This exploration well had two primary target formations including the Halfway formation and an 'upper' Doig formation. The Halfway formation in this well was a developmental target, inasmuch as the 15-34 well offsets existing Halfway production located approximately one mile to the east.
Log analysis on the 15-34 well shows that the Halfway formation has 12 metres of net gas pay, with no apparent underlying water. The Halfway interval was perforated on October 6, 2005 and fracture stimulated. The Halfway formation was subjected to a 48 hour production test, during which the interval flowed at a maximum rate of 4 MMcf/day.
The 15-34 well also encountered the 'upper' Doig formation, which was completed in early October of 2005. The interval tested gas but at rates substantially below that of the Halfway formation, so it was suspended in order to facilitate the completion and production of the overlying Halfway gas pool, which is currently being drained by competitor wells to the east.
The Company spudded the Terra Septimus 16-33-81-19 W6M well, on September 21, 2005 as a delineation well to the 15-34 well with a view towards testing the westerly limits of the Halfway gas pool. The 16-33 encountered the Halfway formation, but it proved to be lower than prognosis, so it was abandoned.
The Company then spudded the Terra Septimus 1-3-82-19 W6M well, on November 6, 2005 as a further delineation well. The Halfway interval in the1-3 well proved to have quartz overgrowth making the Halfway reservoir tight in this location. The 1-3 well also encountered a 'Secondary Zone', which was completed. This Secondary Zone was placed on a 48 hour production test and the interval flowed gas at a rates in excess of 1 MMcf/day.
Upon confirming the results of the 15-34 well, the Company commenced work on a pipeline connecting the Septimus Field with the Company's Wilder gas plant to the north. This project involves the construction of approximately 17 kilometers of 6 inch diameter pipe, including the crossing of the Pine River and the equipping of three well sites. This pipeline construction project was originally planned to be completed by the second week of December, however numerous delays have been encountered in selecting a route and obtaining necessary regulatory approvals. The Company is currently awaiting approval from the Oil and Gas Commission in British Columbia. The construction of the pipeline is scheduled to take approximately 35 days to complete once the necessary approvals are obtained, resulting in an anticipated "on stream" date during the first quarter of 2006. Upon start-up, the Septimus pipeline is anticipated to add 500 to 700 BOED to the Company's total production base.
EIGHT MILE FIELD
Terra Energy first reported on the Terra Septimus 4-12-81-18 W6M well, located on its Eight Mile lands, on October 3, 2005. The Company was targeting a middle Doig shoreface which appears as an anomaly on seismic. The seismic anomaly ranges from one mile to two miles in width and has been mapped by the Company as extending across 14 Sections of the Company's lands, all of which are owned 100%.
Similar Doig sands have been drilled and exploited in the area, and are typically 'tight', requiring a significant fracture stimulation. The 4-12 well was drilled by the Company on a 100% basis to a total depth of 2,015 metres KB. Log analysis shows that the Doig sands in the 4-12 well has 19 metres of thickness, with no apparent water. The well was cased and perforated. The well appears to be 'tight' and has low permeability requiring fracture stimulation.
More recently, the Company has participated in the drilling of the 3-3-80-17 W6M well at a 25% working interest cost share. This well is on 'confidential' status.
A 24 kilometer 2D seismic program is planned for the coming winter season to assist in identifying drilling locations. Following further drilling results, the Company will evaluate this resource play, and will prepare a development strategy for the entire Eight Mile Field.
BOUDREAU FIELD
Terra Energy first reported on the Boudreau Field on October 3, 2005 and provided a further update on October 24, 2005.
The Company has experienced a high level of success with recompletions of the Baldonnel formation in several wells located within its Boudreau field earlier this year. These recompletions resulted in production test rates ranging from 750 Mcf/day to in excess of 2 MMcf/day. Geological mapping by the Company based upon geological controls and seismic data indicates the size of the Baldonnel gas reservoir in Boudreau to be extensive and extending across several sections of land now controlled by the Company.
The Company spudded the Terra Boudreau 8-26-84-21 W6M well on September 9, 2005. The 8-26 well was drilled by the Company on a 100% basis into the Charlie Lake formation at a total depth of 1,528 metres KB., targeting the 'upper' Baldonnel formation as well as several deeper formations. The 'upper' Baldonnel interval was perforated and acid stimulated on September 28, 2005, and was flow tested at rates approximately 2.7 MMcf/day. The 'lower' Baldonnel formation has production tested oil and gas at modest rates of production of approximately 20 BOE/day.
The Company spudded the Terra Boudreau 10-23-84-21 W6M well on September 8, 2005, and this well was drilled on a 100% basis. The 10-23 well was production tested from the Baldonnel formation at rates of 2.2 MMcf/day.
The Company completed the construction of a pipeline connecting the Boudreau Field with the Company's Red Creek gas plant to the north during October of 2005. The Company completed the construction of a tie-in of the 8-26 well during November of 2005. In addition, the Company has on December 20, 2005 completed the construction and installation of a new gas compressor at the Red Creek gas plant, bringing the total plant throughput capacity to approximately 8 MMcf/day. All of this work has been done on a 100% basis.
In East Boudreau, the Company spudded the 8-3-84-19 W6M well on December 8, 2005. The 8-3 well has several prospective targets and will reach its target depth in the Doig reservoir. At the time of this media release, the 8-3 well is still drilling.
Two additional wells will be drilled early in 2006 in Central Boudreau, and will add to the Company's production base.
GRANDE PRAIRIE FIELD
Terra Energy reported on progress at Grande Prairie in its October 3, 2005 media release. The Company spudded the Terra Dimsdale 6-7-71-6 W6M well on August 1, 2005, targeting an 'upper' Charlie Lake formation. The Company's 13-12 well tested as a high GOR oil well, with approximately 100 BOED capability from this 'upper' Charlie Lake formation which is two metres of net pay in this well. An abandoned 9-12-71-7 W6M well located one half mile to the east of the 13-12 indicates two and one-half metres of net pay thickness in this formation.
The 6-7 well was drilled by the Company on a 100% basis to a total depth of 2,237 metres KB., reaching into the Montney formation. The 'upper' Charlie Lake interval was perforated and fracture stimulated, and appears to be tight. The 'lower' Charlie Lake formation in the 6-7 well was perforated and stimulated with a 20 tonne fracture stimulation. The well was swabbed and indications are that initial production rates will be approximately 50 BOE/day.
The Company is planning follow-up delineation wells on three or four of the Sections over which the 'upper' Charlie Lake formation has been mapped. These plans include at least one additional exploration well to be drilled into Section 15, Township 71 Range 6 W6M, which, in addition to the 'upper' Charlie Lake formation described above, is targeting the Halfway formation. Following further drilling results, the Company will evaluate this resource play, and will prepare a development strategy for the entire Grande Prairie Field.
NEW DISCOVERY WITH SIGNIFICANT POTENTIAL
Earlier in the year, the Company made a new discovery with significant potential. The Company first reported on this discovery in its media release of October 3, 2005. At that time, only one well had been drilled and tested. The first discovery well encountered net gas pay across two separate intervals within this zone. This first interval tested gas at a maximum rate of 1.5 MMcf/day. This second interval tested gas at a maximum rate of 750 Mcf/day. The tests indicated that both of the intervals were damaged as a result of drilling muds, such that it is anticipated that the tested intervals will produce at higher rates with further stimulation.
The Company participated in the drilling of a second well testing this new discovery zone. The second discovery well was located approximately one mile from the first, and it showed good correlation of the intervals within the discovery zone. The two intervals tested in the first discovery well proved to be tight in the second discovery well. This third interval was completed and production tested gas at rates in excess of 500 Mcf/day, without any stimulation. Following acid stimulation, the interval flowed at rates in excess of 3 MMcf/day.
Management believes that this new discovery has significant potential, as the Company already owns 100% of more than seven Sections of land which are prospective.
OTHER DRILLING OPERATIONS
In the Wilder Field, the Company successfully drilled the 13-6-83-19 W6M well on a 100% basis. The 13-6 well was completed in both the Montney formation and in the Charlie Lake formation. The Charlie Lake formation has recently been placed on production and produces through the Wilder gas plant, contributing approximately 80 BOE/day to the Company's total production base.
In another operating arena, the Company participated in the drilling of an exploration well. The well was completed as a Kiskatinaw gas well and was subjected to a 48 hour flow test. The well flowed from the Kiskatinaw formation at rates in excess of 3.5 MMcf/day and showed indications of natural gas condensate production during the test. This well also tested favorably from an uphole formation, which will be developed at a later date. The participants are currently surveying a proposed pipeline route with a view towards placing the Kiskatinaw well on production. It is anticipated that the licencing and construction of the connecting pipeline will take several more weeks, resulting in an estimated 'on stream' date in the fist quarter of 2006. Upon completion, it is anticipated that the Kiskatinaw well will contribute approximately 300 BOED (net) to the Company's production base.
In yet another operating arena, Terra Energy participated in the drilling of a deep exploratory test. The Company participated in 30% of the cost in order to earn an 18% working interest in this well. The well reached total depth, was cased and has been completed. The well tested dry gas, without any stimulation, at rates of 3MMcf/day (gross) or 540 Mcf/day (net). Uphole zones also appear to be prospective based on log analysis and surrounding offset production. The Company anticipates that the well will be placed on production early in 2006.
LAND HOLDINGS
Since January 1 of 2005, the Company has endeavored to improve its land holdings in its Fort St. John Core Area, as well as in the greater Peace River arch. As at year end 2005, the total gross acreage of the Company in the Fort St. John Core Area, both developed and undeveloped, will be 101,273 acres, or 163 Sections, with an average working interest of approximately 90%. The foregoing numbers exclude the Company's lands located outside of the Fort St. John Core Area. The Company will continue to acquire land in its focus areas with a view to protecting its plays and maximizing shareholder value.
EXPANDED 2005 CAPITAL EXPENDITURE PLAN AND BUDGET
The Board of Directors of the Company approved an increase in the 2005 Capital Expenditure Plan and Budget to the level of $55 MM. The Capital Expenditure Plan has been expanded in 2005 in order to allow the Company to continue its efforts to aggressively expand its land position, drilling operations and infrastructure development in the Fort St. John Core Area. The increase in the 2005 Budget will be funded from a combination of cash flow and bank debt. The Company has recently increased its long term debt facility to $40MM on the strength of the Company's operational and drilling results.
FLOW-THROUGH EXPENSES
Terra Energy is pleased to announce that it has incurred sufficient Canadian exploration and development expenses prior to December 31, 2005 in order to satisfy all of its commitments to flow through expenses in respect of the 2005 calendar year to those shareholders who participated in the purchase of the Company's flow through securities.
Terra Energy is a junior oil and gas company engaged in the exploration for, and development and production of, natural gas and oil in Western Canada. Terra Energy's common shares trade on The TSX Venture Exchange under the symbol 'TTR'.
Volume Reporting
The term, BOE, may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Forward Looking Statements:
Certain information set forth in this media release contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Terra Energy's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Terra Energy's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward looking-statements will transpire or occur, or if any of them do so what benefits Terra Energy will derive there from.
THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Contact:
Mr. Bud Love
Terra Energy Corp.
Vice-President of Finance and Chief Financial Officer
(403) 699-7777
--------------------------------------------------------------------------------
Source: Terra Energy Corp.
Hillsborough Resources is currently a member of my "TOP 10" investment ideas list for 2006.
I've set up a special page on my trading platform for these special companies that I feel have compelling value and capital gains potential for the next few years.
This means it's going to be actively monitored and traded and "campaigned" by myself from the long side with the other 9 on the TOP 10 list.
Good luck to holders!
Rogue
Latest from Coxe...
Nesbitt Burns Institutional Client Conference Call for December 22, 2005
Don Coxe
Chicago
”Hard Rock Rocks”
http://stockcharts.com/def/servlet/SC.web?c=RTP,uu[w,a]waclyyay[pc50!c100][vc60][iUb14!La12,26,9]&am....
Thank you all for tuning in to the call, which comes to you, of course, a day early this week and a Happy Chanukah and a Merry Christmas to everybody out there.
The chart that we sent out was Rio Tinto and the comment was “Hard Rock Rocks”. I’d like to update the mining story and of course we’ve had a big mining story this morning with the announcement by Barrick, they’ve significantly improved their takeover deal with Placer and it’s been settled with all sides which means the three parties, Goldcorp, Placer and Barrick have knit the knot.
And you’ll notice from the upward revaluation in it that first of all the Barrick offer had not been doing well and what has to be the highest returns on drill holes in the history of mining occurred when Placer announced the results of drilling deep in their Campbell Red Lake mine and showed the connection to the adjoining Goldcorp property.
So my congratulations to the people at Placer and whoever the geologist was who came up with that, deserves some sort of award. If he worked for a technology company, he would be granted an option for ten years on a hundred million shares. I don’t think we do things that way in Canada, but anyway, it was a very interesting development.
But of course the story here is of the rest of the mining industry. And Rio Tinto is one of the Big Four: BHP Billiton, Rio Tinto, Anglo American and Phelps Dodge. And these companies are so powerful and their stock performance has been so great. But what’s interesting is that Rio Tinto announced this week a big stock buyback program which drove the stock up to a new all-time high. And what is interesting about this is that Rio has been saying all along that they’re not going to do any takeovers because values are excessive. So, they’re under pressure to do something because of course they’re accumulating cash at an unbelievable rate.
So the dilemma of Rio Tinto in doing a stock buyback, when your stock is already trading at an all-time high, is this: that if you believe values are too high because metal prices are about to fall, then, if you’re acting in the long-term interests of your stockholders, what you would not do is do a stock buyback now. You would wait until your forecast came true and the stock would retreat back down from these lofty levels and you would then be in a position to buy it in cheaply. And you would show what a great manager you were.
Because the stock is trading at what is a high P/E ratio for the group, it’s a P/E ratio of sixteen times earnings this year and the estimates are thirteen and a half times next year, but you must always be cautious because mining analysts tend to use such low metals forecasts. But as you see from the chart, this stock has been a tremendous performer.
But, I didn’t pick Rio Tinto alone for that, because frankly when I chose the stock chart for this, Rio Tinto had not yet announced the stock buyback. I chose that simply because I’ve tended to focus in the past on BHP Billiton, which has been sort of “my favorite” large-cap mining stock and I regularly quote from Chip Goodyear. And frankly, the only person I’ve been quoting from Rio Tinto is somebody that I met briefly at ___ Ayer’s Rock, Australia five years ago and who had just stepped down from running the operations at Rio Tinto in Australia for fourteen years. He told me then that the mining industry had, for twenty years, been run by guys who wanted to prove their virility by building bigger mines than their competitors did.
And so they all went out and built big mines to prove what real guys they were. And he said, finally they figured out that the stockholders didn’t benefit from that. And he looked me in the eye, and this was after several glasses of wine after sunset and he said, “Don, I can assure you that will never happen again.” And that was the first sign, for me, that the Triple Waterfall crash of base metals was about to be over.
And so, I think that the success of Rio Tinto since then…I was just pulling up a chart to see where the stock was, back then, as opposed to where we are today, and yes, it was a fabulous investment if you had jumped into it, which I neglected to do because I was interested in other stocks at the time. But if you’d bought it back at the time we were talking, you’d have been able to buy it for about $70 a share. And given that were up at about $180 now, that’s been a great investment.
But, my thesis is, of course, much bigger than that. The thesis is, that these stocks are now attracting investment attention, at long last. And that the values that are coming out there from the ground are being somewhat recognized in the marketplace, although they remain cheap.
As of this week, the two mining stock groups, which are the base metals and the golds, ranked fourth and fifth in the Investor’s Business Daily survey of a hundred and ninety seven stock groups, based on their performance in the US stock market for the last six months.
So, the “Hard Rock Rocks” comes from the title of our August issue of Basic Points. And those with long memories will recall that we were in the midst of oil fever at that time, partly Katrina-induced and also partly as a result of a Wall Street analyst having predicted $105 oil and various other prominent figures predicting $100 oil. And we took the view then that this might be a good time to take some money off the table in the oils or certainly not to put any new money into them and to buy the mining stocks instead. And that’s worked out pretty well.
So, I thought by coming up to year-end, that we might sort of review that strategy as to if you’re putting new money in before year-end, which group would you favor and why? Because obviously the mining stocks are a small-cap group compared to the oils. All the mining stocks together aren’t worth as much as ExxonMobil. And so therefore from the standpoint of an investor, it’s a pretty obvious choice to invest in energy, but to invest in the mining stocks takes more of an effort.
First of all, you have very little research on it, that is, if you’re not a client of Nesbitt Burns. And the other problem you have is that, whereas everybody understands, to some extent, or they think they do, the energy dilemma, the case for the mining stocks is a much more complicated one.
And so, we’ve been urging these stocks partly because we think that the mispricing may now be greater within the mining stocks than it is within the oil stocks. And the theme of the Basic Points issue which was published on e-mail today, published at the close yesterday, actually, which is “The Twin Mispricings” about the commodity stock groups. We compare the oils and the mines and we point out of course the mining stocks have one-tenth the market cap of the oils. But there are still some very interesting values in there and there’s a lot of liquidity for institutional investors in the bigger-cap stocks in the group. So that it’s not a case that this group is just a collection of small-caps and that major institutional investors shouldn’t be involved.
But in the case of Canada, what we’ve had is massive consolidation. Look, this time last year the three biggest-cap base metal stocks in Canada were Noranda, Inco and Falconbridge. I don’t include Alcan in this because that’s a special difference, because aluminum is congealed electricity. Well, they’re all going to be one very shortly, unless Marc Rich’s boys pull off a bid to break up the coming merger between Falconbridge and Inco. Because Falconbridge and Noranda merged together about nine months ago.
So, as an institutional investor, you had in Canada, three big-cap mining stocks, now you’re going to be down to one. It’s a much bigger-cap mining stock, alright, but it’s a different company. And whereas the way things stood before, if you liked copper better than you liked nickel, you could buy Noranda first and Falconbridge second and Inco third. By the time these companies have all merged together, it’s going to be primarily nickel that drives the earnings.
Well, the point about this is to illustrate the fact that the mining companies realize that they have to bulk up a bit if they aren’t going to be swallowed up by very big companies. And that the China Minmetals deal which at this time last year, there was a tentative deal for Noranda to be bought by China Minmetals, and they just got too cute. And they were trying to do a deal in the high teens for Falconbridge and that turned out badly for them. Falconbridge is currently 29 and ½. And I just don’t think, though, that that’s the last time you’re going to see participation from the Chinese and pretty soon the Indians, in buying these companies.
Because as long as these companies trade at such modest price/earnings ratios and these companies collectively…take the big twenty-five mining companies of the world, which means you go from very big down to pretty modest…they own just about all the freely available copper, nickel, lead and zinc. I say, just about all because you have state-owned companies, like Codelco in Chile and the quasi-state-owned company, Norilsk Nickel.
But apart from those kinds of exceptions, what you’re looking at is that these kinds of companies have what is absolutely needed for the economic forecasts of China and India to be realized. So, if you are a planner in China or India and you’re coming out with these forecasts saying that you’re going to grow your people’s incomes by seven to nine percent a year, year after year, and if you have the view of Dr. ____ Singh of India who says we’re going to abolish poverty forever in the next ten years, well, you’ve got a problem.
Because in order to do all this, what you’ve got to do is you’ve got to house the new middle class. And you’ve got to give them one of the accoutrements of the middle class, which is cars. And you aren’t going to be able to do this without driving up the price of the metals. And so you’re in the position that if you just play it in a free-market-naïve deal and simply bid for the metals, then you’re going to watch the stock price of the companies that produce this going up and it’s going to be because of your success.
At some point, I think you’re going to scratch your head and say, this isn’t a very good deal for me. We have these forecasts, which any idiot looking at them is going to say, it means much, much higher metal prices for years to come. And that when there is a recession they’re going to go down much less than would have otherwise because the game has changed for the metals industry.
And it just happens that there’s so many dumb capitalists out there who have just looked at the performance of these stocks over the previous twenty years who’ve said “Well, I’m not going to touch them”, that you say “Wait a minute, at such point as they register that we’re likely to carry out our forecasts, they’re going to say, how do I play this? What’s the best way to play China and India together?” And oddly enough, it’s the base metal stocks.
Now, we’ve had a really amusing development on that front in the last two weeks. As faithful listeners and as readers of Basic Points know, I’m sort of Action Central for reports distributed by that cottage industry that’s developed on Wall Street, the China Crash Industry. So, clients send in to me, reports from these various anointed experts on China. They’ve been doing this for the last three years. And the reports have been unanimous, saying that the Chinese figures are not to be believed, Chinese figures on GDP. They’re overstating their growth and they’re heading for a crash. And these are always done from the standpoint of experts and they have reports coming to us saying this kind of thing.
Well I’ve chosen to take the attitude that there’s just too much evidence the other way. And there’s some people on this call who’ve been out to China themselves who’ve reported to me and frankly to carry off a scheme of fraud on the scale they’re talking about is beyond the abilities of any Marxist government or indeed, anybody else.
So, I’ve taken the view that China was doing at least that well and maybe even better. Now this has been presented from a position of cussedness, really, which was that these self-anointed experts, I thought, were just creating big prestigious jobs for themselves out of nowhere on Wall Street, because they knew more than anybody else did, allegedly.
Well, it turns out the Chinese figures were wrong. Ha! They’ve restated them upwards by 16.8%. And this is because…are you ready for this…this is because their previous statistics were oriented toward industrial production. And this time they did the work on the service industry and they discovered they had a whole middle class out there that didn’t count before.
And so, the difference between the economic statistics they had before and the ones they have now are because of all these middle-class people who are in various service industries. Now this is exactly, as some of you’ll know, what we’ve been taking the view was inevitable. And we were citing this book, which we’ve recommended before by an American transplant who’s lived in Toronto for thirty or forty years, Jane Jacobs, Cities and the Wealth of Nations. And what she talked about, the progress from poverty to wealth, in countries that she contrasted those who stayed in a pure export strategy such as Argentina, and they failed, and those who developed a middle-class and went to import substitution and by growth of wealth of the middle class and doing things at home, they became wealthier.
Well, it turns out that China is well along in this process. And, of course, it’s the middle class people who, in getting their homes and cars, create the demand for metals. Now the part of the argument that I’ve had with those who’ve been skeptical of our call on the base metals is they say, “Well the only reason for that is because of their capital spending boom and capital spending is an unsustainable 46% of GDP.”
Well, once you restate the GDP numbers, although capital spending is still very high as a percentage of the economy, it’s at levels that have been seen in previous growth spurts in other Asian countries before, such as Taiwan and South Korea and even Japan.
So that the argument was, of those who were telling us that this whole Chinese thing was a gigantic fraud, a crucial part of their argument was that the 46% of GDP showed that the economy was wildly overheated, that they were building stuff that nobody needed and they were heading for collapse. And there are some goldbugs out there who believe that. And that one of the reasons they were making the argument for rushing into gold, was that they said once it became apparent that China was going to collapse, that the Chinese were going to bid up the price of gold.
I’ve always found that a somewhat circular argument, because if the Chinese are so broke, how do they buy gold? But, you know, with the paranoid types, it’s best not to try to argue with them. It’s best just to shrug your shoulders and to say, “Look, we really can’t talk about this.”
So, the reason I come back to it now, is that the restatement by China is truly historic. This is the first economic census they’ve done and what it shows you is that, although the emphasis has been, definitely, on the massive capital spending boom and the preparations for the Olympics and all those things that everybody knows about, but meanwhile what’s been happening is there’s this internal upgrading of society itself. And when you add millions of people to the middle-class, which they’ve just done, it explains why it is that we’ve had this big move to two dollars in copper.
See, one of the problems that I had about a lot of the people who were saying it’s all capital spending, was that the capital spending that they pointed to was so steel-heavy. And I said, well that doesn’t necessarily tie in to what’s happening in copper then. Well then of course they had an answer for that, which was, that copper prices were being manipulated.
And they said – to my amazement – they even had their argument that this story about the trader, Mr. Liu, who had shorted copper, that this was actually a brilliant new scheme from China to sucker in fools like me, into believing that copper prices were going to go up. And then what they were going to do is unload the millions of tonnes of copper that they had secretly hidden away. And some pretty respectable people have fallen for that viewpoint.
Well, now that we know that there’s more middle-class, we also know that there’s less copper. Because, as soon as you go into a dwelling that’s got electricity and basic appliances, then what you’ve got is big, big demand for copper. And this is different than the capex and the infrastructure spending which is more steel-oriented.
So, therefore, I would take the view that the easiest way to look forward is to say that “Sure, Chinese and Indian economic statistics are dubious, but boy, when you see the restatement of GDP in the US and the monthly payroll numbers even, that even with the armies of bureaucrats that we have over here in honest bureaucracies, that mistakes get made. But the trendline is what counts. And the trendline is that we’ve got self-sustaining growth over there. And therefore, what we have then, is this tiny market capitalization of companies that somehow or other, must develop the resources that are absolutely going to be needed as they keep adding new middle-class dwellings.
So, hard rock rocks. Hard rock rocks because, whereas base metals are not a big deal once you have an advanced economic system you spend your money on other things primarily as opposed to something that uses copper, nickel, lead and zinc. But when you’re getting there, along the way you have tremendous need for it.
So, this…we are still in the early stages then of the story. And I really believe that the good base metal companies remain a core investment. And this is notwithstanding the fact that next year there’s a very good chance we’re going to have a significant economic slowdown.
And I would take the view that investors should start to adopt a five-year view, which means they will gradually phase in their positions. But you should - even they’ve been skeptical about it - have at least a core position in some of these fine companies. Because it’s quite obvious that this industry is going to make more money than the people who run it thought. And although one of the ways they’re going to give money to stockholders is in buybacks, what that implies is that these stocks are not going to get cheaper.
As for the precious metals, what we’ve had is another demonstration of the importance of what we call The Great Symbiosis, or the Beijing-Tokyo axis. Because we had this $70 run-up in gold and the pullback once the Yen, it was quite apparent, was heading for that magic 122 area and then pulled back to 116. We took gold back down below 500, the magic number. And we’ve had a very good rally since then back through 500, as we see the Yen settling down in the midst of its trading range, which is around the 116 level. And so, not that there aren’t other developments effecting gold from a day-in, day-out basis, but this is really reassuring that that currency regime is in place.
Now, a client e-mailed a criticism of our viewpoint on this saying “Well, wait a minute, you talked in terms of a 122 being a line in the sand, but that got violated big time. That got violated big time back in late ’01 and in early ’02. And I hadn’t explained that point recently, so I’ll come back to it for those who have not been following it for a long time.
The Dollar bull market, against all other currencies, began in 1995. And the Dollar eventually rose 45% on a trade-weighted basis. Now, the final orgiastic rush to the top came as we were getting down for the Euro’s expiration, which was January 31st of ‘02. Up until January 31st, you could trade in your various European currencies, your Lira, your French Francs, your Deutschemarks, your Gilders, you could trade them in for Euros. But once past that date, if you tried to trade them in, they had expired and you had to get special permission and so forth. So January 31st was the expiry date.
But when people found out about that there was an expiry date, they also found out, Jacque Delours stuck this in, that if there was a substantial amount – this was left up to the individual governments to define it, but it was like a few thousand dollars worth – where you had the previous currency, there was a note sent to the Minister of Finance of your country that you were trading these currencies in for the new Euros.
Now Jacque Delours, bureaucrat to the core, chuckled that this is where they were going to get all those tax cheaters, particularly the Italians, although he allowed as though he estimated there may be some in France too, who had all this money hidden under the mattress or under floorboards. And this was even a problem for Russians, because a huge percentage of European currencies were stuck under the floorboards across the former Soviet Union.
Well, what these people did, was the logical thing. They simply took the money to the foreign exchange wickets and there is such a basic tradition there that there’s no documents filed with governments when you hand them in and you take paper currencies back. And what they bought was Dollars, because that was what you did, that was the other side of the trade. Naturally, you would not take back another European currency because you were going to have to cash it in anyway. So what we had was a huge surge to the top. And the Dollar immediately started its bear market. If ever there was a case in which you knew the top of a bull market, it was January 31st of ‘02 for the Dollar.
Now, why is this important for The Great Symbiosis? Was that the powerful part of The Great Symbiosis came in when it was necessary for China and Japan to start buying Dollars to prevent the Dollar from collapsing. That’s when the real muscle came in. Well, as long as the Dollar was doing nothing but going up and because Japan was deeply affected with deflation and China’s economic growth rate was so strong, China was able to tolerate some brief bits of deviation.
But once it was necessary, for the two of them to get together and buy, to support the Dollar when the Dollar was just going down, down, down, then what you had was you had that line in the sand reassert itself. So we come back to why it was so important in November, then, and why we had that first rush through $500 and all the way up, was, it looked like that we were going to have a breakdown – and this was being reinforced by such public displays of acrimony in those so-called spontaneous demonstrations in China against the Japanese embassy and Japanese corporate installations.
So that’s the background there. Now, we got a $10 move this time because there are other reasons why I think at year-end that people may decide gold is a good asset to own. But, the Fear Factor is taken out of it. And the Fear Factor is that we’re not going to have a global currency crisis. As long as the Yen is trading in that range, I think you can look forward to, as I say, having merry holiday celebrations and even doing what I’m going to be doing, is going to a two-week vacation starting January 4th in the Caribbean. Because the underpinnings of the financial system should stay in place.
So with that, that’s the summing up of why it is that a combination of base metal stocks and gold mining stocks should be in everybody’s portfolio.
I put it open to questions.
Caller 1: Good morning, Don.
Don Coxe: Good morning, Stephen.
Caller 1: Yeah, this is not a question as such, but a comment, affecting the base metals is the whole idea of pollution and what goes on. And we’ve got some major spills now in China, for their largest zinc smelter. This is going to have some effect on the prices.
Don Coxe: Very good point. Thank you, Stephen. I also thank you for the material that you send to me. I’m delighted with your help. You are one of a group of people out there who make my research easier.
Yes, this is exactly…I mean, those of you who missed that splendid nine-page, nine full pages, series back in October in the New York Times about the pollution problems of the mining industry worldwide, particularly the gold mining industry, that’s worth going back and archiving. Because what it illustrates is the problems this industry faces and another reason why it is that it’s so difficult to get permits for new mines and why a company, in effect, like Rio Tinto might say it’s better to buy in stock because I’m buying in ore reserves then. And the Chinese so mindlessly expanded their plants, not worrying about these things.
One of the reasons why zinc was an underperformer for years, was the Chinese were net zinc exporters. Well, of course, now they’re finding out that those plants weren’t well designed. So, good point, that the mining industry is one with a history of pollution, that’s one of the points we made in the essay in August, that this is an industry with a lot of history and a lot of it’s very bad. And some of this is being litigated right now.
I will tell you that I had dinner recently with a long-standing friend of mine who went through high school together who became Chairman of the Department of Geology of a major university. We were talking about the manpower problem now in the mining industry, that there weren’t enough geologists. And he talked about how the enrollments declined during the 90’s and he said we noticed that not only we’re getting fewer students, but the mix of those that were enrolling changed. We got students who came into geology because they wanted to be engineers but they were really poor in mathematics, or relatively poor and we didn’t have as much emphasis on it as they did for Electrical Engineering or Mechanical so they’d get an Engineering degree with us.
But the most important point was, he said “I think something like a half of our current class are in there, not because they want to build mines but because they want to protect the world against the mining industry. They are greens who want to be forensic experts so they can testify at trials and participate with NGO’s and governments in constraining the mining industry.”
So, what this means is that the problems of this industry, of those who are not running their mines well, have just begun. So thank you for that point, Stephen.
Any other questions?
Caller 2: Don, quick question on that China and their domestic market. I’ve been hearing for a long time now about their necessity to exporting to the US primarily until their domestic market is such that they can almost self-fund themselves. You have made a comment earlier that they have reached that stage. Do you think that that’s the case?
Don Coxe: No. I didn’t want to suggest that they’ve become independent of exports but what Jane Jacobs point was, that Japan, within, after about twenty years of growth, managed to move away from reliance primarily on exports and development of their own middle class. And so their share of GDP from exports dropped. Japan’s is only about ten percent of the GDP is reliance on exports and that’s been that way for some years. And so, China is behind the curve on this, further back, but it’s that pattern in place.
And remember, my call on the base metal stocks is that this is a fifteen year call because the Triple Waterfall crash of technology will last about another fifteen years, which means that the mining stocks which are inversely correlated to tech stocks should be outperforming. But then in addition, we have the fact that there’s these hundreds of millions of people that are going to be joining the middle class in China and India. And this process will be self-reinforcing.
So this is a long-term call. And what it says is by the year 2020, the relationship in the Chinese economy of capex to total economy and exports to total economy are going to look much more like Japan’s than they do a Third World economy. And so, what that’s going to mean, of course, a displacement in which metals are most in demand. So that’s the importance of this announcement this week of that undiscovered middle class.
This is a characteristic example of the way you organize bureaucracies. That everybody was wanting to prove how great they were at exporting and building things and the idea that you had all these people in soft occupations, that wasn’t something for the Commissars to brag about. Well now they are.
So it turns out that they’re there and their number is growing and they’re going to have a bigger share of GDP. What it means is, it’s now the fourth biggest economy in the world. And this was simply by a restatement and finding these new middle class people. And I guess another way to have found them would have been taking the move of copper from about a buck and a quarter to two dollars. Because you couldn’t explain that on the basis of capex. Thank you.
Thank you all for tuning in. The call next week will be, once again, on Thursday. And so it will be Thursday the 29th. In the meantime, have a great weekend.
Don Coxe Profile from the BMO websites:
Donald G. M. Coxe is Chairman and Chief Strategist of Harris Investment Management, and Chairman of Jones Heward Investments. Mr. Coxe has 27 years experience in institutional investing, including a decade as CEO of a Canadian investment counseling firm and six years on Wall Street as a 'sell-side' portfolio strategist advising institutional investors. In addition, Mr. Coxe has experience with pension fund planning, including liability analysis, and tactical asset allocation. His educational background includes an undergraduate degree from the University of Toronto and a law degree from Osgoode Hall Law School. Don joined Harris in September, 1993.
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Basic Points – Archive
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Rogue
UAHC....looks like it's "setting up" well here. Thank's for the head's up. Seems as if it's getting ready to bottom out soon.....and it may be in the process of being accumulated by smart money(see CMF).
http://stockcharts.com/def/servlet/SC.web?c=uahc,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh1...
Al Frank owns a slug of it and he's a good micro-cap guy.
Rogue
IVAN....Ivanhoe Energy ,sold a total of 10,000 shares at $1.11 for a gross profit of $1000. Still have a block of 10,000 with a mental stop below yesterdays low of .99 cents.
Looking to pick up another "trading" block on a pullback here.
Rogue
kozuh....good job riding that one out to "completion" and holding long and strong!
Now PLLLEEAASE!....what is the next "10-bagger" you would like to bring to our attention?????
What do you think has 10-bagger potential RIGHT NOW at current prices??
Rogue
TRNT....that's a blast from the past. I recall "range trading" this one when back when I was a young man in the mid 1980's or so. If I remember correctly I'd buy 1000 shares around $1 and sell them at $3 or so.
Even as a young guy I thought the strong balance sheet back then gave a "margin of safety... ala Benjamin Graham style" if the trades went bad. Must of been in and out of that one with profits plenty of times throughout the years back in the days of $27 commisions at "deep discount" rates.
I'll take a look at it again....it's been years since I last looked at it.
Rogue
IVAN.....Ivanhoe Energy, bought some more here with a mental stop below today's low of .99 cents.
http://stockcharts.com/def/servlet/SC.web?c=IVAN,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh1...
Could be a BIG GAINER in 2006 from these levels!
Rogue
IVAN....Ivanhoe Energy looks good for accumalation for a nice rally after extreme tax-loss selling.
http://stockcharts.com/def/servlet/SC.web?c=IVAN,uu[h,a]daolyyay[dd][pb50!b200!f][vc60][iut!Uc20!Lh1...
Picked up a couple of blocks of stock in this one with a mental stop below todays low of .99 cents.
Could be a BIG GAINER in 2006 from these levels!!!
Rogue