Friday, 18 April 2014

New blog is at www.SiamKidd.org

Hi there, this blog is now defunct, please visit my new blog at:


Many thanks!

Tuesday, 13 August 2013

Silver up over 12% in 3 days! What's happening?

My friend who's one of the economists at Saxo Bank pointed this article they made: http://www.tradingfloor.com/posts/silver-11-percent-week-s-going-1073612091

And it's spot on. However there's other factors at play here. It's also due to extreme lack of liquidity which has made it very easy for the Banks/firms to do stop runs as there were a LOT of stop losses just above the local resistance of $20.50. So once all of those stops (including mine!) were hit, that massive amount of short orders closing = net long. Also combined with the fact that JPM are winding down their commodity prop office, there's not so much overt naked shorting going on at the moment
. However despite price action blasting through resistance, I still think Gold and Silver have more falling...but don't get me wrong, I'm still expecting Gold and Silver to at the very least rise by 500% within the next 1-5 years and Silver going to parity with Gold within the decade...

Monday, 29 July 2013

Wednesday, 24 July 2013

Government Financial Stats Are Rigged – Here’s Why

As you probably know by now, financial professionals don’t really like me. Quite a few IFAs have actually called me a conspiracy kook and that I’m spreading information which is misleading to the public. I still find this amusing considering all I’m doing is spreading cold hard facts. Facts which the media doesn’t know or just won’t publish. This includes the Financial Times by the way. Also I still haven’t met a financial professional who predicted and prepared for the 2001 Tech collapse or the 2008 meltdown. And just like those instances, I’m still yet to meet one who is preparing for the mother of all crashes, the crash of 2013/14/15/16/17/18. Unfortunately I don’t have a crystal ball and so I can only forecast this for sometime in the next 5 years, but this one will be many orders of magnitude greater than the 1929 Great Depression. How do I know? Trends. But this will be a topic for another edition. This rant is solely for Government Stats and was sparked due to a twitter conversation I was having with an IFA and he said that when investing you can and should only plan using the Government figures as they are the facts. Now this is incredibly short-sighted on his behalf and if he did a tiny bit of due diligence instead of blind trust, he’d see my point. So here are the main lies:


Inflation
According to the Government, UK inflation right now is 2.7%. Now this is the most farcical of all stats as it’s becoming almost common knowledge that REAL inflation is near 10% now. The way they calculate inflation is by taking a metaphoric ‘basket of goods’ which the public buy from day to day like bread, milk, cars, iphones and CDs etc. (But funnily enough, not rent or houses. They used to, but they took it out of this calculation in 1983 as they started to inflate the housing market). So they just compare the prices of this basket to last month, last year, last 5 years etc and plot a graph. So right now they’re telling us it’s 2.7%. Well what they fail to realise or purposely ignore is that EVERYTHING in that basket is now smaller or of less value than previous times. For example, let’s take a Snickers bar (my favourite). In 2003, they were on average 30p. But now, they average around 60p. In fact I’ve spent around 90p in some places, so in 10 years, the price has increased by 100% minimum! AND they are all now 7.2% smaller. This same stat applies to everything else in the basket. So when you crunch the numbers, REAL inflation is near double digits.

GDP
Recently the US GDP calculations have been changed. They are now including Research and Development (R&D) spending as part of the revenue. Now this is absurd. The US spends more money on Military (R&D) than every country in the world combined. Even their medicine R&D dwarfs other nations. Now it could be argued that medicine R&D could produce more efficient medicines which would positively bring more revenue in, but it’s negligible. Military R&D has next to no productive use (other than for war) and so this ‘ploy’ is something which will make the US Debt to GDP ratio not look as bad as it really is. They’re the only country in the world to do this but it probably won’t be long before the UK follows suit in order to hide our problems.

Jobs/Unemployment Data
This is a huge topic which I could ramble on for but in a nutshell, when calculating these figures, they are now on purpose stretching the parameters of what a full-time employed person really is. They are now counting people with a ‘part-time job but are seeking a full-time job’ as ‘fully employed’. They are including some forms of charity/volunteer workers as ‘fully employed’ many other profiles. But they’re doing it on the other end of the scale as well by classing some people without a job but are seeking employment as ‘part-time’ employed and so on. So they’re trying to make these figures show that unemployment isn’t as bad as it really is when the poor/rich divide is increasing dramatically! Just have a look at the BBC Documentary ‘Skint’ – it’s shocking but a real insight into the UK’s deprived areas.

Housing Data
Again, another topic which I could bore you on but this one is probably as laughable as the inflation data. For some reason the Government likes to promote to the public that a rising housing market means that the UK economy is improving. And as the public are grossly ignorant with these and investing matters, we just nod and accept what we see in the news etc. So 2 points here: i.) The housing market is NOT a reflection on how our economy is doing, and ii.) The Government is now openly trying to pump up this market again with 95% mortgages! Also when you look at US housing data that’s even more of an exaggeration. What they fail to show us is that the Fed is buying up $85 billion a month of Mortgage Backed Securities, other toxic bonds and also at least 70 000 empty homes per MONTH using proxies.

So there you go. Hopefully you can now see that we need to at the very least question what we get told. Housing, employment, GDP and inflation data is rigged which I hope I’ve demonstrated and that’s only the tip of the iceberg. If they are rigging interest rates, imagine what else they are doing. So when you’re next going to buy a mortgage, invest in the stock market or pensions etc, just please do a double check of REAL adjusted data, not nominal data which gets published. www.ShadowStats.com is a great site for real data…


The Bank Could Seize Your House Within 10 Years

As a nation, it seems as though we're doomed to repeat our past failures. It feels as though we're living in 2005 all over again as the Government has decided to try and artificially pump up the housing bubble again! Just in case you weren't aware, one of the main reasons for the 2008 Melt Down was because the US and UK Governments were inflating the 'Sub-Prime’ market. This basically means that they were giving pretty much anyone a mortgage whether the borrower could afford the mortgage or not.

So fast forward to 2013, the UK has got into bed with the US again with another stinking policy and is now offering 95% mortgages. This may be great news for the 1 million renting young couples (18-35 years old) in the UK who have been refused a mortgage within the last 5 years, but when you really investigate things, it has shockingly awful consequences for the new home owners, the future housing market and the Government.

Reports show that this 95% mortgage scheme has received great interest from the public. This isn’t surprising considering that we in the UK and US are literally obsessed with owning a home due to the Thatcher-Reagan era starting the theme that everyone should be a homeowner. This isn’t the case with other countries around the world. Even on our doorstep, France and Germany are predominantly renters. Most people I speak to on this subject all follow the same thinking - ‘Rent money is throwing money down the drain when it could be used to pay off a mortgage’. I don’t exactly agree with this mentality (but that’s another topic). So now these 1 million couples are rushing in to buy a new house, what does this mean? What is likely to happen? Why is this bad for all parties?
-         Bad for the new home owners. The majority of the homes which come with a 95% mortgage are new builds. Although attractive on the face of it all, these new home owners are moving into houses which are rushed into construction, composed with the cheapest materials and built with shoddy tradesmanship. Due to targets and deadlines, a large percentage of these houses experience teething problems down the line.  Just speak to any builder or tradesman and they’ll tell you how crud these houses are and that within 2-10 years, serious work will be needed on them. Also on top of all that, the new homeowners are instantly 20% down at the very least. In order for these building contractors like Bovis etc to make a profit out of this, they have hiked up the premiums for each house. So you’re using extreme financial leverage to buy an overpriced shoddy house which will require on-going repairs down the line and you’re already in negative equity.

-          Bad for the housing market. It’s likely that the UK housing market will temporarily boom in prices due to this Government scheme. Eventually the letting side of the property market will wane as all of these renters become home owners which will make rents slide (good for renters I guess). However just like we’ve seen multiple times already, in order to curb this rapid growth in house prices, the Bank of England will be forced to raise rates. This is another bad thing for these new home owners.

-          Bad for the Government. Due to the raising of rates, the UK will end up more in debt as the interest on our £1.2 Trillion debt will increase greatly, mortgage repayments will go up and those on a Standard Variable Rate or tracker mortgage will get severely burned! The UK will be a repo nation.
Most people fail to stress test their property portfolio or mortgage repayments properly so here's my quick rule of thumb to see whether you will be able to keep the Bank from repossessing your house or not:


1.) On a £100k house, for every % rates go up, your monthly mortgage repayments go up by £83. So on a £200k mortgage, if rates went up by 1%, you'll have to fork out an extra £166 per month if you don't have a fixed rate mortgage.

2.) UK average rates are between 7-9%,  so at the very least, let's work to 7%. So if you have a £200k mortgage and rates rise by 7% (which I can GUARANTEE it will happen), can you afford to pay an extra £1162 per month for your mortgage?! In fact, where would the UK find an extra £301 Billion to service this increased interest? – Fancy new taxes…

If the answer is no to that last question, please have a serious rethink with your IFA or mortgage advisor. I don’t give advice (and never will), but a straight forward solution to this pending problem would be to fix your rates for as long as possible. Definitely longer than 5 years! Rates are at rock bottom now and they can't go any lower. But one thing is for sure, rates will go up to historic averages at the very least and when this happens, people will lose their homes so please make sure you spread the word and to just question your current situation…

Thursday, 11 July 2013

Thursday, 4 July 2013

Interview with Gold and Silver UK

Was recently interviewed by www.goldandsilveruk.com - Here's the interview:



The full link to the interview is here.

Monday, 13 May 2013

China Heading For Epic Disaster...


THE PAINFUL CHINESE BURN BUBBLE

Almost every Sunday lunchtime, Ellie and I go to this lovely Chinese restaurant in Norwich for some Dim Sum. If you haven’t tried it, try it. It’s great. Now my parents have known the owners for years and they started off as a really small restaurant and have now grown into a rather large outfit. The same goes for a lot of the other notable Chinese cuisines around here. But one thing I've noticed is that over the last 5 -15 years, there’s been a large influx of Chinese families moving over here. But there’s a stark difference between these families compared to the Polish and other nationals that have migrated over here. The Chinese families tend to be rather wealthy. I’m aware that my findings may be influenced by my social group and contacts, but this apparently isn't just localised to little old Norfolk. I've slowly been spreading my feelers out across the UK for months now and it’s the same story. When comparing the wealth of immigrant families, the Chinese sector grossly outweighs the other nationalities in terms of wealth.

But why?
More light was shed on this when I had a rather candid drink with my friend. He’s Chinese, his family moved over here in the last 20 years and they are very wealthy. He said that in China the Government are extremely strict with all sorts of freedoms we take for granted such as heavily filtered internet etc but also with investments. Chinese citizens are banned from investing overseas and are only allowed to invest in a small selection of products which their Government sees fit. (And I thought the FSA was bad!). But 15 years ago, their Government allowed the public to invest in property.

 As a result there is a property bubble which is grossly bigger than our Western Housing Bubble which popped in 2007/8. This new investing freedom opened the flood gates for the rising middle class and they began investing with 3 generations worth of family savings. This effectively started China’s historic growth out of poverty and so they wanted more growth. The Government then shamelessly promoted to their public that everyone should buy a house or 10 and that property prices always rise! (We've heard this one before). As a result, the average middle class family now owns between 5-10 apartments! It’s now got to the point that they’re building 16 cities (the size of Birmingham) a year!

Not only that, they’re building 82 new airports by 2015 and over 20 of them will be BIGGER than Heathrow. This has created dozens of ghost cities and districts. There are at least 3 districts (the size of East Anglia) whereby every town and city within it whereby every building has been bought, but are empty. 71 million empty uninhabited homes to be precise…(that’s the same as having the UK, France and Italy completely uninhabited).


The top 10 cities with the worst price bubbles in the world are in China and the average house price in Shanghai is more than 55 times the average wage. I met an IFA the other day who said that ‘this whole Chinese property bubble is a myth’….just look at the stats!
However they've hit a temporary road bump. Though the 2008 crisis only slowed their property bubble ever slightly, it evidently gave their Government a reality check and so in 2011 they forced a 1-investment-house-only-policy. Similar to their 1 child policy. This then reduced the amount of money going into their bubble, house prices plunged and it affected their work force of 50 million construction workers first. They were simply not getting paid, so lots of them walked away. This has left dozens of cities being half built and developers bankrupt. But it wasn't enough to pop this ‘hyper bubble’. Unfortunately they are still inflating it and are continuing to build the world’s tallest building, 4 space ports and a 860 mile long aqueduct. The aqueduct alone is costing them $62 Billion.  I’m afraid that the whole of their middle class and a big chunk of their upper class will be completely wiped out when it finally does ‘POP’. I feel especially sorry for their middle class who will lose 3 generations worth of family savings and more…

However there is a Silver lining which may save some families. In 2011 the Chinese Government added a new product to their public investment basket – Silver bullion. Not only that, they’re encouraging citizens to buy as much as they can, and boy they’re buying a lot of it…

Saturday, 13 April 2013

Gold & Silver just got gunned down in broad daylight

This is an update of the orchestrated Gold and Silver attack on Friday 12th April...

Caption Competition

This is the world largest portable phased array radar. It's called the SBX-1 and it's just left Pearl Harbour for North Korea. It's supposed to detect, track and target even the smallest of things moving through the atmosphere at high speed. Is this really JUST a radar? Hmmm...

Friday, 5 April 2013

Japan has fallen on its sword...

Japan is spending 1/4 of its tax revenues on just the interest of their debts!

Saturday, 23 March 2013

Financial Terror-Plane...Mayday mayday...


Right now we're all in a financial airliner. We hit some turbulence in 2008 which woke the pilots up from their sleep, and in 2011 they realised that they were leaking fuel and at some point would have to ditch into the ocean. But instead of preparing the crew and passengers, they've just got the cabin crew to dish out free alcohol and have a party in 1st class.

However there're a few air force pilots in the back of the plane who can see this fuel leak and are trying to warn the other passengers in economy class that something horrible is going to happen unless decisive action is implemented ASAP. But the cabin staff keeps patronising them and telling them that the pilots are very well qualified, have many degrees and know what they're doing. However it's obvious that the crew and airline pilots are very drunk by now. It's 2013 and the whole plane is now completely oblivious that engine No.1 has just cut out.

Now Captain Berninke, despite making some horrific decisions and radio calls is actually a very smart guy. He knows perfectly well what's about to happen, but he's powerless to change the predicament as they are losing fuel and have long gone past the 'point of no return'. But he's under orders from his airline (Goldman Airways) to keep the status quo amongst the passengers and VIPs in 1st class. So he's ordered his co pilot Frederica Reversa and head of cabin crew Julie P Morgain to cover up the inevitable crash as long as possible by dishing out the drinks.

As a result of this constant alcohol stimulus, the passengers in 1st class are having the time of their lives! Everyone is merry and despite the large flow of alcohol, only a small portion of it is reaching economy class. The bankers in 1st class are just keeping it amongst themselves. In a way, this is probably a good thing. If all of a sudden the Tequila slammers and Sambuca poured into economy class, there'd be a hell of a party which would most likely lead to hyperintoxication. Not so long ago, Zimbab-Airlines went bankrupt after they served too much booze on their planes and experienced hyperintoxication. The wise air force pilots on our flight are warning people that hyperintoxication could happen to us, but the cabin crew just keep telling them to shush. Even though 21 airlines have suffered from hyperintoxication in the last 25 years...

Somehow, a group of bickering mothers in economy class have managed to sneak a few bottles of whisky onto the plane. But the alpha mothers, Germania and Belgica have been trying to ration it as the party girls Italine, Espagnie and Gretel have borrowed too much and are suffering from an awful hangover. However, the rest of economy class are shocked when Belgica, out of the blue, just forces her way into Cyprissy's handbag and steals some mini wine bottles.

Engine No.2 has now cut out....

All of a sudden, economy class are beginning to worry a bit as Belgica seems to be a bit of a bully and are wondering if she can steal other people's alcohol. But oblivious to everyone there's a passenger called Mr. Prutin who's quietly furious about Belgica stealing Cyprissy's alcohol. As Cyprissy was a bit of a shrinking violet who never attracted much attention, Mr. Prutin thought it was a safe idea to store his secret alcohol in Cyprissy's handbag. So it turns out that over 80% of Cyprissy's alcohol was actually Mr. Prutins. Now despite all attention being on the mothers to see if they start drinking or hiding their alcohol from Belgica, the air force pilots are concerned about Mr. Prutin. He’s a quiet stocky guy with a strong right hook and he’s been known to source his Russian Vodka from dubious sources. He’s been asleep throughout the whole flight but is evidently miffed about the Cyprissy situation.

Now the wise air force pilots who actually predicted the turbulence in 2008 and 2011 have long since donned their rare Sliver & Glod parachutes. As a result of this, some of the other passengers in the back like Mr. Prutin, Mr. Chow, Mr. Kahn and Mr. Singh have paid attention to the air force pilots and have started to put on their Sliver & Glod parachutes. However they’re not just stopping there, instead of swapping and sharing their alcohol (as they know it will only worsen the situation), they have started to hoard and accumulate as many parachutes as possible. In fact Mr. Chow has got dozens of his young cousins to rummage around the aircraft and bring back any materials which they can use to make and hoard more parachutes. But Mr. Chow is quite the cheeky one as he’s started to sell a lot of fake parachutes to the other passengers…
As a result of this parachute accumulation frenzy, the other passengers are starting to ask some questions, but the cabin crew just keep dismissing the queries. They just keep saying that Goldman Airways always stores enough parachutes for everyone aboard stored in the special Fort Socks vault in the cockpit.. However the air force pilots are skeptical about this as Germania recently asked Captain Berninke for her parachutes she stored there and Berninke said it would take 7 years to deliver them. Despite it taking only 4 months to deliver Mr. Vuvuzela’s parachutes 2 years ago…

Now while all of this is going on, Mr. Sayonara, who’s been drinking his sorrows away for the duration of the flight, has suddenly announced that he’s now going to hold a drinking competition and that the last one to ‘down their drinks’ is a loser. The air force pilots are now very worried because every plane flight they've been on where there’s been a drinking competition, it always ends badly. Nasty words are said and fights always break out. It also doesn't help the situation that there’s a drunk guy called Mr. N. Cornea who’s got ‘little man syndrome’ and in an attempt to gain credibility has just brandished a 9mm pistol…

Monday, 18 March 2013

How corrupt can banks actually be?


Ellie (fiancĂ©e/house executive) and I are going back to our roots and have recently moved house from Leicester to Norwich. Now normally on long journeys I insist on listening to an audiobook of some sort to capitalise on this dead time (to Ellie’s usual protest), but on our last trek back to Norwich we listened to a music radio station for the first time in a while. I soon remembered why I don’t listen to the radio much due to the tripe that’s on it, and Ellie’s not fond of Radio 4 but what I found amusing on the news piece is that another bank has been found guilty of fraud and cooking the books and all they got was a slap on the wrist.  The radio then just flowed nonchalantly onto the next story. It’s amazing how that we’re all so used to hearing of banking sector scandals these days that we just shrug and mention nothing of it. Surely I can’t be the only one who’s outraged and slightly shocked that nothing’s being done to fix these continuous scandals? I think part of the problem is that we as a whole think that we can’t fix it all as it’s way over our heads. People tend to think that unless you have a whole alphabet of letters after your name, you shouldn’t go near finance and the banks. Also I don’t think that many people actually fully understand the real significance and extent of this ‘banking cancer’ because if we did, I’m sure there’d be a revolt!
So like with any issue, a full comprehension of the topic is a good start, so I’ve done the leg work for you and compiled a small list of some of the things the banks have been caught doing recently:
  • LIBOR scandal
  • UBS carries out unauthorised trading, loses $2.3 Billion and tried to cover it up by cooking the books in order to not become nationalised during the 2008 crisis.
  • Societe Generale hid over $4.5 billion in losses from unauthorised trading.
  • Wells Fargo were fined $175 million for discriminating against certain races.
  • JP Morgan lost $5.8 billion from a trade that went wrong. This was made using customer funds.
  • Standard Chartered (a UK bank) were fined $327 million for illegal dealings with rogue nations. Then fined again for $340 million for being caught doing over $250 billion of transactions with Iran and making hundreds of millions in profit from fees.
  • A former Goldman Sachs Director, Rajat Gupta was fined $5 million and jailed for 2 years for sharing inside information.
  • Kabul Bank siphoned $861 million out of war-torn Afghanistan by issuing fake loans.
  • The wife of Philipp Hildebrand (former Chairman of the Swiss National Bank) made £322 000 by buying US Dollars just before the SNB manipulated their currency by grossly devaluing the Swiss Franc. The ‘Swissy’ was becoming too strong against the Dollar and it was hurting Swiss exports. Hildebrand has recently quit his position due to this ‘insider-trading’.
  • HSBC has recently been fined £1.2 billion for money laundering for drug cartels, terrorists and rogue nations. They also facilitated 25 000 undisclosed transactions with Iran (despite UN sanctions) over a 7 year period.
  • Barclays Bank has just been caught committing fraud by hiding £11.5 billion from their balance sheet by giving it to a Qatari company. Then using that company to re-invest it back into Barclays to help the share price. Barclays have only been fined £290 million.


I could continue, but I think you get the point. Bear in mind that these are only a few examples of the times the Banks have actually been caught red handed. Who knows what else they’re doing which is going unchecked? It’s also comical how they’re treated once they are caught. They are simply slapped with a small fine, effectively told to not do it again and at worst, given a bit of bad press in the papers. That’s all. It’s extremely rare that anyone actually ends up in jail so there’s no real deterrent. Most of these fines are below $500 million and it may seem large, but I can assure you that it is simply loose change for the banking world. It’s like you making hundreds of thousands of Pounds in profit from running an illegal Ponzi scheme, laundering money for drug dealers, going to the casino with your grandmother’s pension money, then get caught red handed by the Police and simply given an ASBO with a £4.50 fine. Now if you actually did get caught doing all of that in real life you’d be on the front page of the Sun newspaper, fined and imprisoned for years. You’d be more hated by the public than Tesco Value lasagne. Now for fear of sounding a bit crazy, it’s almost as though the Banking Industry has got such an influence and grip on politicians and the Government that they’re simply helpless to do anything about it. And these fines are just lip-service to appease the law in some manner. I may be completely wrong about this, so please enlighten me if I am, but I just can’t see any other reason. I’m pretty confident that the Government relies heavily on private funding/donations from the financial sector in some way, but as I said, I’m just speculating here. My only aim for this article is to just make you slightly more aware of the Banks so that you understand their propensity for huge profits and how far they’ll go to procure it. Stay tuned, as I’ll be explaining in 6 year old language just exactly how they make their money day to day. You’ll be scarily surprised to the core…


Thursday, 14 March 2013

Stock Market Crash imminent - 2013

This video quickly explains how it's highly possible that we could experience a Stock Market correction any time within the next few months. The scale of this is likely to match that of the 2011 crash, but there is scope that it could escalate into something as large as the 2008 sub prime mortgage (housing bubble) collapse.

This would force the UK into the commonly used 'triple dip recession'. Could this be the start of the huge Bond market bubble popping? Could be, but I don't think the currency/bond bubble will pop just yet. It's probably got another year or 2 before we see that happening...

Saturday, 23 February 2013

A great video!

This is worth watching. A comment on the video is extremely valid. All one has to do is do the exact opposite of everything Bernanke says!

Thursday, 31 January 2013

Silver to become EXTINCT by 2020...

Now this is a pretty strong statement. This 'fact' is being bounded around the internet quite a lot at the moment and so with all bold headlines like this, one needs to be wary. This is where you need to get your Due Diligence hat out and do some digging around before you take any action upon it because I'm sure there are many Silver dealers out there who have just used this 'fact' (without investigating it) in order to sell more Silver. So let's break this down a bit. It all started a decade ago when the US Geological Survey published a report that Silver could be totally exhausted by the year 2020 and that it was looking likely that Silver would be the first element on the periodic table to become extinct! As you can imagine, this caused a ruckus amongst the investing/Silver world and the majority of links on Google about this, stem from that very statement from the USGS. However, what a lot of sites fail to mention is that a few weeks after this statement, the USGS released an ammendment to their Silver comment and stated that Silver wouldn't be 100% exhausted from the Earth's crust, they just meant that by 2020 it would be economically unfeasible to mine for more Silver at those prices (roughly $4 an ounce).

So is this 'fact' true then?

Partly. Well it really depends what source you look at. There are several notable Geological companies/organisations around the world that specialise in analysing minerals and the Earth etc and all the results vary. In fact, if you look at the most recent USGS report from 2011, it now states that there's around 17 billion ounces of Silver left in the crust. So with the world consuming roughly 1 billion ounces per year, that indicates another 17 years before Silver becomes 'extinct'. As I said, different reports issue different figures and after hours of Googling (I made it to page 24) the general consensus does indicate that we have anywhere between 8-17 years left of Silver reserves in the Earth's crust. HOWEVER, we can't just stop there. There's a lot more to this scenario to appreciate.

The USGS wasn't incorrect in stating this, they just lacked a bit of detail to their fact. Either that, or people in general have ignored the finer details. There's a big difference between Silver becoming extinct and Silver becoming economically unfeasible to extract. Despite it's increasing rarity due to huge global consumption, Silver will never become 'extinct'. It will always remain in existence in the form of posh cutlery, ornaments, antiques, electronics, clothing and medicine etc. But there will come a time whereby it's economically unfeasible to extract more Silver from the ground. At this point, to all intents and purposes, (especially for investing) it will have the same effect as becoming extinct. It's at this point where I wouldn't be surprised to see crazy Silver prices like $10 000 an ounce and upwards. Rhodium entered a similar situation between 2004-2008. There was a global deficit in supplies and so it went from $500 an ounce all the way up to $10 000. And Rhodium isn't even half as in demand as Silver.

So how long do we have then?

This is where the USGS is partly correct. There may be around 15 years left of Silver in the crust, but we only have about 7-8 years left of economically feasible Silver to extract (at these current prices). You see there's a common misconception in the rare earth mineral world between rarity and scarcity. Silver is very rare in the periodic table, but it's also extremely scarce. This means that the Silver deposits in the Earth's crust are of small volume and are scattered all over the place. As a result of this 'peppered' location of deposits, it's just a waste of time/effort and money to set up a drilling operation for such a small return. So normally they don't bother. It's like being in a football stadium with loads of 1p coins scattered around it and there's a few stacks of £20 notes dotted around. If you only had an hour to collect as much cash as possible, you'd just go straight to the big deposits of money and would ignore the 1p coins.

Also due to Silver being extremely undervalued and under-priced at the moment, Silver is simply a byproduct of base metal mining operations like copper and zinc mines. These companies just get small amounts of Silver and sell it on for minimal profits. Also a lot of people are unaware of how time and money consuming mining is. From the moment a feasible deposit is found, it normally takes 7+ years to set up a producing mine! So we do effectively have 7-8 years left of Silver available.

BUT...

There's more to this story. What a lot of people have overseen (including the USGS) is the availability of diesel. 97% of all transportation in this world is completely reliant upon diesel. This is mostly because trucks and lorries are the backbone to our way of modern life, which is why nations go to war for oil. It's the 'Weetabix' of every country and more importantly, mining operations are 100% reliant upon diesel. No diesel = no mining. So how are diesel/oil reserves doing I hear you wonder? In a word: badly. How bad? Well you remember when BP messed up and spewed oil all over the Atlantic in 2010? That Deepwater Horizon oil reserve was one of the largest oil finds in recent history. Probably within the last 15 years at least. So even if BP managed to extract every single barrel of oil from that oil well, it would only be enough oil for just 24 HOURS of world consumption! I won't labour the point, but the human population is in exponential growth as is our consumption of oil. But oil reserves are dwindling fast. Please read my previous article, 'http://siamkidd.blogspot.co.uk/2013/01/nuclear-power-shale-hype-and-ignorant.html' for more info on this. But if we continue with the rate of wars waged as we've seen, and with oil reserves as it is, I wouldn't be at all surprised if we only had about 5 years left of feasible Silver to mine due to rapidly increasing oil prices. Just putting it out there...but only time will tell...

CONCLUSION

In a nutshell, the USGS were partly correct. We currently have about 15 years left of Silver in the planet, but we only have about 7-8 years left of economically feasible Silver available for extraction. So combined with Silver being far rarer than Gold in investment form, prices need to increase 1000% before dedicated Silver mining operations start and the world is now buying 3 times more Silver than Gold, the next 1-5 years are going to be extremely interesting...

In the meantime, I'll continue building my financial Ark of Silver and Gold in preparation for this economic Perfect Storm brewing in the horizon...

Wednesday, 30 January 2013

Keeping an eye on the markets, so you don't have to...


Investor's Insight is out now! If you'd like to receive a copy through the post every month for FREE, please email: siamkidd@ukbulliondirect.com with your postal address.

Friday, 25 January 2013

Apple is screwed...


Back in 2012 I indicated to my subscribers that one should be extremely careful about buying Apple shares. This was around the time that Apple shares hit an all time high of $700 and pretty much every other person and their dog that I spoke to had bought their shares or was about to start piling into it. The general consensus was that Apple was a great company with great products, it's outperformed nearly every other share out there and that they were still producing innovating products. And if you said or thought that, you'd be quite right. They are a very profitable company and have completely revolutionised pretty much every industry they've jumped into like portable music players and phones. To be honest, I used to be a bit of an Apple junkie and had iPhones from the start, all the way up to the 4, but I'm afraid the prices of a share go far deeper than being a 'great company with great products'. To an extent it's about supply and demand of the said share but Apple was always doomed for being a bubble once it got the attention of mutual funds and hedge funds. Its own fame was its nail in the share price coffin...

You see it really doesn't matter what the company is or what it does once a few big mutual funds targets it. I'm being very general here, but what tends to happen (mostly in the States) is that people with a bit of spare cash to invest go to a mutual fund and speak to an investment advisor. These advisors are normally just sales people and just pump whatever stock is paying the juciest commissions. And if the mutual fund is quite big, the chosen stock normally starts to rise. This attracts more investors and there you go, you've got your bubble started. Netflix is a key example of this. However there's only so much interest and people to buy a certain stock and you normally get to the point where there's simply no one left to buy this new super stock. But the hedge funds (normally coined as the smart money) notice this as they tend to be ahead of the curve and exit the stock to realise their profits. This doesn't help the bubble stock one bit and the price tends to start falling. Then you eventually get to a pivotal point where everyone starts a mad dash to try and grab their profits before it crashes even further and the rest is history. This happens all the time to good and crap companies and I'm afraid to say it Apple lovers, but Apple is a bubble. I called the top of $700 and said it would probably fall to about $400. Well looking at the price today, it's crashed down rather fast to $452. That's a huge 35% loss in the last few weeks.

But surely it'll rise up again?

No is the simple answer. In order for Apple shares to climb to their previous highs, there needs to be some intense economical stimulus like QE5, or Apple needs to completely revolutionise another sector...perhaps TV? But the main reason why there is next to no hope for them is due to the Nasdaq 100. This index is simply an average of the 100 biggest/most traded tech companies in the States like Google, Apple and Amazon etc. So when the Nasdaq is going up, US tech companies are doing well and vice versa. However when you look at the weekly chart, we're seeing a textbook Head and Shoulders set up. In a nutshell, this is a very strong (and reliable) reversal signal. So it's very likely that in the next few months, we'll see it testing the neckline. If this then breaks below it, this will then start the long anticipated market correction I've been talking about for the last few months. It'll bring down the other indexes like the S&p 500 and the Dow.


Summary
I'm currently shorting Apple and the Nasdaq. Getting ready to short the S&P and the FTSE and for anyone reading this, please have a long hard look at your current share portfolio. In particular, look at their history. If your share did well during the 2008 and 2010/11 crash, you may be ok, but if it didn't, things could get rather stressful for you in 2013.

Note: I am completely out of the stock market. I only trade on the movement of it and the only things I invest in is physical Gold, Silver and Melina trees.