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Not sure if already posted
Interesting article
Gold to Be Reclassified in the U.S.
Thursday, June 28th, 2012
By Michael Lombardi, MBA for Profit Confidential
I recently wrote in these pages about the Bank of International Settlements (BIS) proposing to reclassify gold bullion as the safest and the highest quality of asset for central banks and all other banks around the world: Tier 1 capital.
Regardless of how the central banks wish to classify gold bullion, it is the market that will eventually decide the value of gold bullion, which has retained its value and played a significant role as a monetary asset for 5,000 years.
The central bank in the U.S.—the Federal Reserve—has recently released a memo to possibly change the status of gold bullion in this country. (Source: Federal Deposit Insurance Corporation, June 18, 2012.)
Currently in the U.S. and in many parts of the world, gold bullion is classified as a risk asset on which banks are allowed a 50% weighting. This means that for every $1.00 of gold bullion held, $0.50 worth is recognized as value on the books of the banks or central banks. The whole $1.00 is not recognized, because there is a risk, according to the classification, that gold bullion could lose its value rapidly.
Again, these are classifications created by central banks and have no bearing on the true value that the market will place on gold bullion.
Still, it is significant that the U.S. is proposing to reclassify gold bullion as a zero-risk asset, as early as January 1, 2013. This means that gold bullion will join the very short list of assets considered zero-risk by the Federal Reserve: U.S. Treasuries; the U.S. dollar; and assets and/or claims with the International Monetary Fund.
So the central bank of the U.S. has joined the BIS in raising the status of gold bullion. Should the reclassifications indeed be instituted in 2013, it should increase demand for gold bullion by the banks here in the U.S., as gold bullion would be worth dollar-for-dollar on the balance sheet what a particular bank paid for it.
Furthermore, there is new legislation for banks around the world with Basel III. Basel III requires banks to increase their holdings of Tier 1 capital. If gold bullion is reclassified as Tier 1, then the banks can now use gold bullion as a diversification from other assets on their balance sheets.
Central banks around the world are taking steps to reclassify gold bullion to the status that is has held for 5,000 years: money. The proposed and very significant change by the Federal Reserve here in the U.S. should increase the demand for gold bullion and subsequently the price for the yellow metal. (Also see: “Japanese Pension Fund Buys Gold as Currency.”)
Peter schiff was saying that Red Back Mining would be a good pick. Also Capstone mining. He was on Fox business news.
This might DPDW
Petrobras Second-Quarter Profit Beats Estimates as Costs Drop
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By Helder Marinho
Aug. 15 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, reported second-quarter profit fell less than analysts estimated as production costs declined.
Consolidated net income dropped to 7.73 billion reais ($4.19 billion), or 88 centavos a share, from 9.72 billion reais, or 1.11 reais, in the year-earlier period, the Rio de Janeiro-based company known as Petrobras said yesterday in a statement. Six analysts surveyed by Bloomberg had forecast an average profit of 6.23 billion reais.
Chief Executive Officer Jose Sergio Gabrielli is seeking to cut costs for equipment including rigs and metals by as much as 40 percent after oil prices more than halved from a record $147.27 a barrel in July 2008. The cost of goods sold fell about 28 percent to 24.6 billion reais in the quarter and Gabrielli said this year he wants to ”squeeze” suppliers.
“Petrobras’s result was better than the market expected because of lower costs and expenses,” said Luiz Broad, an analyst with Rio de Janeiro-based Agora Corretora. “This was a very good result.” Lower expenses may be related to the introduction of Petrobras cost-cutting programs, he said.
“Extraction” costs fell in Brazil, Chief Financial Officer Almir Barbassa told reporters in Rio de Janeiro Aug. 14, without providing more details.
Petrobras generates $500 million of additional cash a year for each $1 increase in a barrel of oil.
Investment Plan
Petrobras has a five-year $174.4 billion investment plan, the world’s largest corporate investment program. The increase in spending led Standard & Poor’s to cut the company’s credit rating to BBB-, the lowest investment- grade level, on June 10.
“That investment will lead necessarily to an increase of the company’s debt,” said Milena Zaniboni, an analyst for Standard & Poor’s in Sao Paulo, in a telephone interview Aug. 13. “The impact of the plan in Petrobras’ balance sheet will be significant. We are talking about almost $70 billion more than last year’s investment plan.”
Oil has fallen more than 50 percent since reaching last year’s highs. Crude oil for September delivery declined $3.01 to $67.51 a barrel at 2:50 p.m. on the New York Mercantile Exchange Aug. 14, the lowest settlement since July 30. Futures have risen 51 percent this year.
Counting on Discoveries
Petrobras is counting on discoveries to boost output by more than half to 3.66 million barrels a day by the end of 2013. The company faces a “hard task” in meeting its output goal of 2.05 million barrels of crude a day on average in Brazil this year, Gabrielli said Aug. 3.
Production averaged 1.958 million barrels daily in the first six months and will average between 2 million and 2.1 million barrels this year, Barbassa said yesterday.
Petrobras’ production forecast “is higher than what it will deliver,” Paula Kovarsky, an analyst at Itau Securities said before results were released. “Still, Petrobras has increased production by 6.7 percent year to date, which is much higher than the average for the sector.” She has a “sector perform” on the stock and doesn’t own any.
Petrobras wants Brazil’s government to extend the company’s role in the development of the so-called pre-salt region. President Luiz Inacio Lula da Silva’s government is drafting a bill to change regulations for the region after Petrobras announced the largest oil discovery in the Americas in the past three decades, the Tupi field.
Tupi Reserves
Tupi has estimated reserves of as much as 8 billion barrels of oil. About 62 percent of the region has yet to be opened up to exploration. Pre-salt crude is trapped under salt as much as 5,000 meters below the seabed.
“One thing is already decided: Petrobras will be the operator of all fields and have a 30 percent share of all consortiums,” Energy Minister Edison Lobao told reporters in Brasilia yesterday after a meeting with Lula da Silva.
Kovarsky said the possibility of making Petrobras the sole operator of the pre-salt blocks in exchange for a larger government stake could be a “trap.”
“Being the operator of the pre-salt will require substantial efforts and Petrobras may not have enough resources to develop the new areas and also the existing concessions, which seem to be more profitable under the current concession regime,” she said.
Net sales fell to 44.6 billion reais from 56 billion a year earlier.
To contact the reporter on this story: Helder Marinho in Rio de Janeiro at hmarinho@bloomberg.net
Last Updated: August 14, 2009 23:00 EDT
If we get another bottom in the stock market, will Gold stocks or Gold follow until it goes back up?
Amen to that. Great observation.
Thanks ClayTrader and I'll wait with anticipation for your videos.
Do you usually trade over $5.00 stocks or more penny stocks these days?
Would you consider doing a video of a full day of trading to see your technique?
Thanks
Don't know why SGF.TO had such a big move today. Do you see more upside in this stock?
Thanks for all your picks 6_sense.
Does anybody here thinks that HFD.TO might be a good buy soon. Financials seem to be overbought at the moment. They had their run and I see a pull back soon.
I think as someone said before that once we are close to the 9000 mark on the Dow, things will start to go down.
Gold is the place to be.
Would you buy Gold coins or gold stocks? If there is a major pull back, I'd buy the stocks but the market might have a major collapse soon.Not sure if stocks will work in a very bad crash.
Like your board. You have some nice info over here.
Great infomation. Keep up the good work.
I am with you that we will see a crash very soon. The corruption in the market is so obvious it hurts. If you watch the video "The Obama Conspiracy" it explains some of it.
They will take everyones money then make it crash to new lows.
Keep on posting on other boards.
SGF.TO is bouncing again.
GLW.V seems to be holding.Could see a break soon.
I think that would be great. Thanks for keeping this board going. Just seen it not to long ago.
SGF.TO on the move. Should have bought it yesterday.
Thanks for the videos Picassa. Person mark for you.
It will be interesting to see the next quarterly report. It should have some encouraging numbers. jmho.
I wonder what a 50 million contract would bring to the share price.
At least its going up instead of down.
Are my eyes deceiving me or is the bid at .026 and ask at .0437 for real?
We might have a good summer after all.
I don't see gold going below 850 this time around. Seems to be to much support.
So with IMF selling Gold like that, will it bring the price down alot? Didn't seem to affect it to much today.
Was able to get much better charting with the sites thanks alot!
Anything looking good for tomorrow?
Why so much pressure on Gold today?
thanks guys.
Where is the best place to do charts on Canadian stocks. Can you do a search on the top 50 of each sector etc? Free of course.
We finally have some life! It is encouraging to see. Their plan seems to be still alive. Looking forward to a good year.
Thanks for your input. You have to go with the flow to trade these days but it is still hard to find where this market is going.
If the market goes down, will Gold follow and is there a big resistance now for Gold at this level?
Thanks for the article MAI. I knew this was coming 2 years ago. I can tell you that it will happen for sure soon.
With a full year of Flotation in the books and the expansion going on, I think we will see a profitable year ahead. Oil prices seem to be stabalizing and I hope to see a nice contract coming up soon.
If everything is managed properly, this conpany should have a nice future ahead. Just my thoughts.
So what is DPDW worth now.
Is July till Sept. the best time for GOLD?
I heard people are going into oil stocks right now instead because of the oil rally, if you can call it that. But if the market goes lower again, I think that the gold bug will come back.
What would be a good stock to own if the market goes down again besides HXD.to.
Thanks
Thanks. Will keep an eye on it.
What's going on with RCI.B.TO. It's going lower and lower.
Might see a bounce soon or is the sector bad these days?