INDEPENDENT THINKING
The Week Of December 3rd – December 9th, 2005
“A Brief Look Back Into Tomorrow”
Good Afternoon
Following a week that saw the major markets multi-week advance finally exhaust itself, as metals continued to hit higher highs, while consumers turned their attention to the holiday season, and the federal political leaders began their election campaigns by telling Canadians how they will spend their money, the weekend media reported that –
After a month of solid advances, the Dow Jones Index lost 0.49% last week, the S&P 500 lost 0.25%, the TSX was flat on the week, the NASDAQ gained 0.46% and the Venture Exchange gained 1.16%.
Bear Sterns economist John Ryding – “I believe that the big swing in gold prices tend to reflect the underlying stance of monetary policy and gold above US$500 an ounce may be signaling an inflation problem.”
Euro Pacific Capital’s Peter Schiff – “Investors are increasingly turning to gold because people are nervous about storing their wealth; there are a lot of danger signals out there.”
With gold bullion finally establishing a platform above US$500, the market media may now turn its attention to silver, which has quietly gained 25% this year, after gaining 15% in 2004, and at US$8.58 is now at its highest level since August of 1987.
And, whether it is Chinese short covering (TWO November 11th – November 18th) or world demand, copper is on a march that has seen the red metal gain 39% so far this year.
Bill Bonnel – “Gold is a remarkable thing. It is found in the earths crust like lead or coal and sits on the periodic table. It can be mixed, but it cannot be manufactured. It can be polished, but it cannot be enhanced. It can be wrought or worked, but it cannot be manipulated like paper money. It can be flattened into a sheet thinner than paper, but it yields to neither political pressure nor financial desperation.”
Gone almost unnoticed in last week’s metal’s run was the Canadian dollar which established a new 52 week high and at US$0.8613 is just a fraction shy of a 14 year high. (This, while crude oil is still below the historical highs set earlier this year (TWO August 27th – September 2nd, 2005)
Blackmont Capital’s mineral analyst Lawrence Smith – “Everything is basically hitting new highs.” (Basically – base metals…… note the play on words)
Under the heading of ‘Not Quite So Down & Out’ – Statistics Canada reports that auto sales rebounded by 3% in November after a drop in October to 120,615 units, and up from 116,919 units sold in November 2004.
Under the heading of ‘Showing Their True Colours’ – We have often suspected that most of economists and Canada’s media outlets are controlled by the left side of the political spectrum, but now we know for sure, as only in Canada could conservative leaders Steven Harper’s proposed 2% cut in the Goods and Services Tax be interpreted as being bad for the economy, such as HSBC Securities’ Stewart Hall who said “A cut in the GST may prove a recipe for inflation because it gives Canadians disposable income they will likely spend rather than save.” (Wake up people. Don’t listen to this garbage! This is a tax cut in one of the most taxed countries on the globe. This is a tax cut that every consumer will see on a daily basis. This is a good thing.)
The European Central Bank raises interest rates for the first time in five years, from a six-decade low of 2%, up ¼% to 2.25%.
If you’re having a harder time achieving your work load objectives this month, you are not alone, as productivity study by Workopolis reveals that over ½ of workers feel their personal productivity suffers during the month of December. (Oh those Christmas parties)
Under the heading of ‘Running Full Out’ – The Canadian Association of Oilwell Drilling Contractors reports that they are at full employment and that “every rig we can staff is running.”
And Then On Monday December 5th –
Gary Marshall on the continuing strength of the US dollar – “The U.S. has assets, assets that dwarf all their financial obligations at home and abroad. They are the wealthiest country in the world and I see no challengers. Their corporations and products, not low-end variety pumped out by India and China, are everywhere. If the U.S. is grim, then everyone else must be just hellish.”
The Japanese Nikkei Index moves up another 221 points to a new five year high of 15,551.
Under the heading of ‘Conspiracy Theory’ – The Northern Miner on Chinese metals trader Liu Qibing’s potential 200-tonne copper short position – “The mining and metals business tends to get more opaque the further downstream you go. So when the name of an individual metals trader hits the front pages of the financial pages of the financial press, you know something, somewhere has gone terribly wrong and big money is changing hands.
Copper moves up 2-cents to another all-time high of $2.09 a pound.
The Metals Economics Group estimates that total 2005 mineral exploration expenditures will rise to US$5.1-billion, up by 34% (US$1.3-billion) from 2004 and a rise of 168% (US$3.2-billion) from 2002.
Gold bullion moves up $5.60 to a new 22 year high of US$510.60 an ounce.
Silver moves up 9-cents to a new 18 year high of US$8.66 an ounce.
And perhaps the loonie is more than just a petro-dollar, as it moves up another 0.3-cents to a new 13 year high of US$0.8642.
Tuesday December 6th –
As expected, the Bank of Canada raises short term interest rates by 0.25% to 3.25%.
Under the heading of ‘Freedom 58?’ – A study by Ipsos Reid finds that the average age Canadians now retire at is 58, with one-third of them carrying a debt load of some $30,000 and that 25% of them will keep working at least part time to keep a desired income level of about $3500 a month, and to stay mentally active and keep in touch with other people. (One of us has a sister who is beating these odds)
Six weeks after Canadian Finance Minister Ralf Goodale rescinded his review of income trusts and the sector has rallied by about $30-billion to a new record high of 169.63. (This is what you call…….being whipsawed)
Under the heading of ‘From North To South’ – Venezuela’s energy and oil minister Rafael Ramirex says his country is in talks with Brazil and Argentina to build a US$4-billion, 6000 kilometer natural gas pipeline from Venezuela threw Brazil and onto Argentina with spur lines into Uruguay, Paraguay, and Bolivia.
Gold bullion moves up $1.70 to a new 24½ year high of US$511.10 an ounce.
Silver moves up 8-cents to a new 18 year high of US$8.72 an ounce.
Under the heading of ‘Efficiency In Shopping’ – One of us can relate to the International Council of Shopping Centres’ figures that show that gift cards will amount for 15% of this years holiday spending, up from 13% or US$30-billion spent on gift cards last year.
U.S. President George W Bush on the state of the U.S. economy – “The economy is strong, business is booming and people are working. Fortunately, I didn’t listen to the pessimists about tax cuts; the tax cuts are working.” (NDP leader Jack Layton, please take note.)
Bertrand Russell – “Most people would sooner die than think; in fact, they do so.”
The commodities heavy TSX moves up 88 points to close at a new 5 year high of 11,146 with total amount of securities changing hands reaching $1-trillion for the first time ever.
Wednesday December 7th –
Under the heading of ‘Meeting You Halfway’ – The U.S Commerce Department surprises the lumber world by cutting the import duty on Canadian softwood lumber from 20% to 10.5%, a move that will save Canadian lumber producers some $600-million a year. (This is a very good start)
ROB-TV reports that a top welder in New Brunswick earns about $15 an hour, while that same welder at Suncor’s (SU-T) oilsands operation near Fort McMurray can earn about $120 an hour.
Woody Allen – “The universe is merely a fleeting idea in God’s mind – a pretty uncomfortable thought, particularly if you’ve just made a down payment on a house.”
Under the heading of ‘Going For The Gold’ – Further to our comments last week regarding the probability of China entering the gold bullion market, the People’s Daily reports that Asian countries now hold $2.6-trillion in US dollars, against which China has only 1.1% of official reserves in gold, with Japan having only 1.3% of its reserves in gold, and India having only 3.6% of its reserves in gold.
W.K. Hope – “Self-discipline is when your conscience tells you to do something and you don’t talk back.”
Gold bullion moves up another $4.00 to a new 24½ year high of US$515.80 an ounce.
Silver moves up another 9-cents to a new 18 year high of US$8.81 an ounce.
Copper moves up another 5-cents to a new all-time high of US$2.11 a pound.
The TSX moves up 35 points to a new 5 year high of 11,131.
Thursday December 8th –
John Lennon (who died 25 years ago today) – “My role in society, or any artists or poets role, is to try and express what we feel. Not to tell people how to feel. Not as a preacher, not as a leader, but as a reflection of us all.”
In a move that compares to ‘the kettle calling the pot black’, Canadian Prime Minister Paul Martin, at a UN conference on global warming, calls upon the U.S. to join the Kyoto Accord to help reduce greenhouse emissions, even though UN figures reveal that Canada’s emissions are now up to 24% above 1990 Kyoto base levels, and the U.S.’s levels are up by about only 12% from 1990 levels.
Ford Motor Co. (F-N) indicates it will be cutting between 25-30,000 jobs and shut down at least 10 North American plants over the next 5 years.
Barrick Gold (ABX-T.N) chairman Peter Munk testifying at the trial of Bre-X’s John Federhoff – “It never occurred to me that a fraud of this magnitude could happen in a country as developed as Canada.”
Gold Bullion moves up another $4.90 to a new 24½ year high of US$520.70 an ounce.
Silver moves up another 12-cents to a new 18 year high of US$8.92 an ounce.
Natural Gas moves up $1.29 as cold weather engulfs North America to close at US$15.00 per 1000 cubic feet.
The TSX moves up another 36 points to a new 5-year high of 11,167.
Friday December 9th Short Strokes –
The Canadian Mortgage and Housing Corporation reports that new home starts jumped by 7.4% in November to an annualized pace of 211,100 units.
Under the heading of ‘A Sign Of The Times’ – Fonding Coal (FDG.UN) have warned of production shortfalls to come, not because of diminishing grades of material or declining prices for coal, but because worldwide economic activity has made for a shortage of the $50,000 giant truck tires that are needed as replacements on their haul truck fleet.
John Lennon – “Life is what happens when you are busy making other plans.”
The U.S. census bureau reports that the percentage of immigrants that graduate from college has risen from 25.5% in 1996 to 27.3% today. (This is a good thing)
Gold bullion moves up another $7.30 to a new 25 year high of US$528.00 an ounce.
Silver moves up another 11-cents to a new 18 year high of US$9.03 an ounce.
For the Week –
The DJI lost 99 points to 10,779, the S&P 500 lost 6 points to 1,260, the TSE gained 119 points to 11,130, the NASDAQ lost 16 points to 2,257 and the JVX gained 51 points to 2,140.
Gold gained $23 to $528.00, Silver gained $0.45 to $9.03, Oil gained $0.07 to $59.39, Natural Gas gained $0.38 to $14.31, and Copper gained $0.04 to $2.11.
The CRB Commodities Index continued to follow metals higher to add 4.5 points and finish the week at 327.81.
The Canadian dollar added 1/3rd of a cent against the US dollar to finish the week at US$0.8641. The euro finally gained on the greenback to add one cent and end the week at US$1.1816.
And finally, to understand just how hot metals are, we take you to the city of Baltimore, where thieves have recently stolen 130 aluminum……..power poles in broad daylight, and to Belgium, where the country’s main railway just lost 770 of its 800 luggage carts, and to Pittsburg, a city that is dealing with the sudden loss of 400……...parking meters, or to Argentina, a country that is losing 500 kilometers per month of electrical and telephone wire, up from a loss of 200 kilometers a month one year ago, and last but not least to Beijing, a city that has seen at least eight people die because of the theft in the last year of some 24,000……manhole covers. (Keep your head down)
Interesting times, and………….thanks
News 
Market Data 
Discover 
AI
