Gold. Golden goose, golden opportunity, good as gold… our associations with the word are inevitably rich, optimistic and positive. It’s a popular metal for wedding bands and other jewelry, and has always signified affluence and prosperity.
But did you know that gold remains one of the favoured commodities for trading? One of the main reasons for this is that gold is an extremely liquid asset, meaning it can be converted into cash very quickly. Generally, trading is done in the form of traditional gold bullion – heavy gold bars – although gold coins are sometimes bought and sold during trades. The price of gold is determined by supply and demand, so it is subject to the same market fluctuations as other traded commodities.
If trading in gold seems a little old fashioned, just take a look at your television. Many new companies seem to have sprung up almost overnight, promising fantastic prices for your unwanted gold. Many of these have been deemed disreputable – however, it proves that the demand for gold is extremely high.
So, how do you go about trading gold? Well, if you’re new to the investment market then you need to have an expert on hand to advise you on your purchases and make sure that you are making successful investments. Gold traders can often fall victim to counterfeit products, scams and frauds, so having a professional by your side can help you to avoid these pitfalls. Companies such as GEC gold trading can help you every step of the way, guiding you through the trading process and making sure you are making sound and well-informed decisions.
Safe and sound
What to do with the gold you have just bought? You need to keep it safe and secure – and again, most trading companies can offer you high-security facilities for storage. It’s unlikely that you’re going to buy some gold bullion simply to lock away for the rest of your life, however, so you need to be canny about the right times to buy and sell (once again, professional advice is invaluable here). It’s all about playing the markets at the right time, understanding its patterns and establishing when the prices are likely to be at a premium. Of course, the main aim is to buy low and sell high. You can also trade gold without having any gold physically in your possession – in the form of gold futures contracts, exchange traded cash or via online gold trading platforms.
Know your trade
Trading and investments are complex areas of finance which can take a long time to fully understand. Even if you are asking a trader to make your investments for you, it is always a good idea to have at least a rudimentary understanding of how the markets work. By doing some research you can establish market patterns and understand when you are most likely to make a profit. Of course, there are no guarantees, which is partly what makes the trading market so exciting…
With the housing market finally looking like it is turning a positive corner, investing in buy-to-let properties could once again be a viable option for those looking to make their future more secure. However, if you are planning to delve into the world of property investment, there are a number of things you should think about and plan.
Research your location before you buy
It’s so important that you are able to think like a local and know the area you are planning to buy in like the back of your hand. Never purchase a property in an area if you are unsure about the type of housing, the kind of people that live there and what kind of amenities might attract people to rent in that particular location. Make sure that you are only buying if other homes in the area are valued at, or have been sold recently at a similar price. If you are concerned, perhaps consider buying your first two or three properties in the town you live in.
Think about your target market
Bringing in the rent can be great, but you need to consider how much you want to make and how much risk you are willing to take. For example, you would make by far the most money from buy-to-let investing by renting your property out to students, as it allows you to let on a per-room basis. However, would you be willing to take the risk of the property being damaged, or upsetting the neighbours? Whilst professional people or couples often make the safest tenants in terms of risk, you may not be achieving the yield you want against your mortgage. Try to weigh up the pros and cons of all of your options before coming to a decision – it may be that you want to try a mix to see what you are comfortable with.
Get your finances in order
Don’t be afraid to start off slow with property investment. Eventually you could find yourself with multiple mortgages to pay, as well as rents coming in from your various tenants, so it’s important to stay on top of your finances. Stay friendly with your bank manager to ensure you can get the best deals on mortgages when considering a new property investment. Also look into bridging loans in the event that a house comes onto the market that is too good a deal to miss. “What is a bridging loan?” I hear you ask. Well, it’s a way of getting the finances in the short term before your mortgage lender finalises the pay-out, and can be very useful in these kinds of situations.
Do you want to be a hands-on landlord?
The last point we want to make is whether you want to be a landlord who deals with the tenants in a hands-on way, i.e. taking the rent payments, checking the property on a regular basis and doing viewings, or whether you want to leave this to a lettings agency. If you have get to the stage where you have multiple properties on your books, you will find that being hands on can take up a lot of your time, to the point where it becomes your full-time job. Leaving it to a lettings agency, whilst coming at a cost to you, would allow you to deal with the business side of things, as well as continuing to make further investments. Again, it is a case of weighing up the pros and cons of both options.
Only four years have past since the world was hit with one of the worst financial crisis of all-time and while many believe our economies are improving others disagree stating that some of the improvements are superficial as in fact the world is faltering again.
According to The Economist’s calculations, world GDP grew by just 2.1% during the first quarter of 2013 compared with a year earlier. Just 12 months ago, output was growing at a reasonable clip of 3.1%. The European Union, the world’s second-largest economy, which welcomes its 28th member on July 1st, is back in recession. Meanwhile there are concerns about stumbling blocks as China seeks to rebalance toward a more consumption-oriented economy and more moderate growth rates. Long the mainstay of the world’s fortunes, China alone has been responsible for nearly half of all world economic growth since the end of 2009 when the world began growing again. Other big emerging markets, Turkey, Brazil and India, are struggling to quell social unrest over frustration with governments’ inability to deliver growth and make appropriate reforms.
How do you feel about the overall health of our global economy? Are we truly making improvements to get back on the right track or have we yet to fix the true problems that crippled our economy just four years ago? People always point to the success of the stock market as a sign that out economy is improving but history has shown us that the correlation between the stock market going up and our economy improving can sometimes be very far apart. We want to hear what you think so simply click on the link & share your opinion on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.
Shares of the iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR) has soared throughout 2013 and has even hit its 52-week highs trading at $77.38. Turkey as a whole has been experiencing robust growth as the Borsa Istanbul National 100 has surged to its highest levels in the past 25 years. We have been huge supporters of TUR dating back to August 8th, 2011 when we issued our first ‘BUY’ rating for the ETF in our article ‘iShares Turkey ETF (TUR) Poised for Success‘. Since then, TUR has appreciated +69.67% over the past 22 months.
What Attracts Investors to TUR
Investors looking to play the Turkish markets have few options. iShares MSCI Turkey Investable Market ETF (TUR) originally launched in 2008 is the only option available to investors seeking a pure play exposure in the Turkish equity space. TUR is also the only ETF with dedicated Turkish exposure. The banking sector also plays a prominent role in the investable market in Turkey and TUR has a high concentration of financials in its portfolio.
What To Expect Going Forward
When it comes to Turkey, it has been the talk of a higher sovereign debt rating that has been lifting TUR, the lone ETF devoted exclusively to the country. Turkey, which has been engaged in a multi-decade conflict with Kurdish militants in the Southeast part of the country, is working to end the conflict. The government there is in negotiations with Abdullah Ocalan, the jailed leader of the Kurdistan Workers’ Party or PKK, in a bid to end the bloodshed.
Just last month, Moody’s Investors reported that Turkey’s ongoing efforts to bring an end to the conflict could be a positive credit step. Fitch Ratings upgraded Turkey’s long-term foreign currency Issuer Default Rating (IDR) to BBB- from BB+ back in November and the Long-term local currency IDR to BBB from BB, this is huge news as it’s giving Turkey its first investment grade ratings in nearly two DECADES.
This has been great news for investors as the speculation of a possible credit rating upgrade has lifted Turkish banks shares. TUR is heavily centered on the Turkish financial sector with 51.9% of its holdings in financial services stocks, quadruple its next largest sector weight, industrials.
Turkey’s economy has some good signs heading their way. Beyond this falling inflation rate, investors should note that Turkey has seen a plunging growth rate as well.
Turkey has good medium-term growth prospects and a diverse economy. The nation’s debt-to-GDP ratio stands at 39.9%, much lower than the debt-to-GDP ratio of many developed economies. On top of this, the country has a low employment rate, government reforms, strong, solid banking system, and improved credit rating. Adding all these solid growth factors together and Turkey could prove to be a great investment market in Europe for years to come.
If you have any further questions on either TUR, Turkey’s economy or any investment at all don’t hesitatet to contact us at all by emailing us at jameshartje@StocksonWallStreet.com or Follow our Contact Form
Also make sure to tune in later this week for our long-term outlook on TUR along with more detailed analysis on both Turkey and other emerging markets.
Everyone make sure to tune into ABC tomorrow night at 8:00 PM to watch a new episode of their hit show, Shark Tank. For those of you who’ve never see the show, your missing out. Shark Tank is where five successful entrepreneurs fight over promising startups, and ruthlessly chew up the unprepared or those who aren’t business minded. Anyone who is interested in the world of business, venture capital, or money will love this show. It provides a wealth of knowledge about what venture capitalists need to hear before they invest in your company. Plus the fighting between the sharks alone is as great as entertainment can come. The key to being successful when you come into the shark tank is as easy as three steps:
- Have a great idea that either makes money or has potential to.
- Be prepared, from top to bottom know the in’s and out’s of your business and have everything to present to wow the sharks. Being unprepared, stuttering, or having any mix-ups will get you eaten alive through harsh criticism and ruthless comments and leave you empty handed.
- Have the X-Factor, something to wow the Sharks and get them opening their checkbooks to get a part of your business. If you nail the presentation and wow the Sharks your financial worries will be all over as you’ll have every Shark their willing to not only give you and your business the money needed to grow and expand but they will provide you with the necessary resources and contacts to take your business to the next level.
Like the business world, things can get quite ruthless in the Shark Tank and there is no holding back. It’s what makes the show such a hit and so entertaining the constant battling not only between the entrepreneurs and the sharks but the sharks themselves. Before we get into the many great business lessons you can learn from the show we first have to let you in on who the five sharks are that you will be presenting to, ranked from net-worth:
Mark Cuban, Net Worth $2.3 Billion: You might all know Mark Cuban as the flamboyant, outspoken owner of the Dallas Mavericks. You see all these great qualities in full effect during Shark Tank where Cuban constantly battles Kevin O’Leary as the most critical and harsh of the all Sharks. Cuban started out his career by launching a company, MicroSolutions, which was a system integrator and software reseller. He sold it to H&R Block for $6 million and used this seed capital to launch his next venture, Broadcast.com an online sports webcasting company. He capitalized by selling Broadcast during the dot come boom to Yahoo for $5.9 billion. Since then along with running the Dallas Mavericks and being a prominent figure on Shark Tank, Cuban runs his own investment company and has become a rather outspoken, popular media mogul.
Kevin O’Leary, Net Worth $300 Million: Kevin like Cuban is by far one of the most entertaining of the bunch. It’s because his ruthless behavior and no limits deliver great punch lines, sometimes they can be quite mean, as he doesn’t hold back. While some people might be offended others find it hysterical as if you like Simon Cowell from American Idol and the X-Factor and his harsh criticism then you will love Kevin, as it’s hard to imagine but he’s even more ruthless than Simon. The guy only cares about one thing and that’s making money. If you have a great idea then he’ll be your best friend but if you stutter or goof up at all during your presentation be ready for his ruthless comments. O’Leary has had a successful business career making the majority of his wealth by creating an education software program that he sold to Mattel for $3.8 billion. Since then along with his duties on Shark Tank and being a venture capitalist he runs O’Leary Funds, a mutual fund company that targets buy and hold investors.
Robert Herjavec, Net Worth $100 Million: Robert is the kindest of all the male Sharks however he can dish out criticism from time to time. A software guy himself he founded an Internet security company that he later sold to Nokia for $225 million. He currently is CEO of Herjacveck Group, a security software program he founded in 2003 along with being a venture capitalist through his Shark Tank duties.
Daymond John, Net Worth $100 Million: The original founder of the popular clothing line, FUBU. John is a true story of rags to riches as he use to sew and make his clothes himself in his mothers basement making $800 a day until he and his mother mortgaged their house for $100,000 to generate startup capital. Well this great risk paid off, as FUBU has become a prominent global clothing brand that at its peak has generated over $400 million in revenue in a single year. Along with being current CEO & President of Fubu, John is an active venture capitalist, which is why he has been a great addition to the show. While critical he is very articulate and educated when it comes to giving advice and voicing his opinion.
Barbara Corcoran, Net Worth $50 Million: Barbara is a real estate mogul and has been doing it for quite some time. She originally founded her company, The Corcoran Group, in 1973 with the help of her wealthy boyfriend, who fronted her the original loan. After having a successful career she sold her company for $66 million in 2003 and now along with being an investor on Shark Tank she has become a motivational speaker, author, and popular television personality. Considered the nicest of the bunch also being the only woman, Barbara often sides with female entrepreneurs and gangs up against the men calling them ruthless pigs. However don’t let her pretty face fool you, she can get down and dirty and be just as ruthless as the boys at times.
So now you know who the Sharks are make sure to tune into ABC every Friday at 8:00 PM to watch the show!
Hedge Fund titan Jon Paulson pulled off the greatest trade of all time in 2007, raking in a cool $15 billion in his bet against subprime mortgages - according to the International Business Times who ranked the top ten greatest trades of all-time. Some were brilliant masterminds, others were just plain lucky.
The Top Ten Greatest Trades of All-Time
1. John Paulson’s bet against sub prime mortgages made him $15 billion in 2007
2. Jesse Livermore’s call on the Crash of 1929 (a legendary trader featured in the popular book, Reminiscences of a Stock Operator).
3. John Templeton’s foray into Japan in the 1960s (a true investment pioneer, Templeton foresaw the rise of Japan after World War II and profited hugely from it).
4. George Soros’ breaking of the Bank of England in 1992 (Soros made $1 billion).
5. Paul Tudor Jones’ shorting of Black Monday in October 1987 (he predicted the crash, bet a bundle & tripled his money as the market crashed 22% in one day).
6. Andrew Hall’s $100 oil prediction (with oil trading at $30 per barrel in 2003, Hall bet prices would rise to $100 in 5 years; they did and he took home a personal paycheck of $100 million in 2008).
7. David Tepper’s 2009 bet on financials (as the market hit its low in early 2009, Tepper bought financial services stocks & his fund earned $7 billion that year ($4 billion of that went to Tepper).
8. Jim Chanos’ prescient shorts (his sharp analysis led him to predict the demise of Enron, WorldCom, and other firms, and he is known as the best short-seller in the world).
9. Jim Rogers’ early call on commodities (he was bullish on commodities back in the 1990s & has been riding them to great profits ever since).
10. Louis Bacon’s geopolitical play (he correctly predicted that Saddam Hussein would invade Kuwait in 1990 & profited handsomely by going long on oil & shorting stocks, which helped his fund return 86% that year).
Most of these trades were ‘global macro’ plays where huge, concentrated bets were made by analyzing fundamental economic/business conditions. These investors excelled at turning a great observation about the world into a great investing idea. But, while these make the headlines, you never hear about the other investors who made a big call and missed, and ended up out of business.
It’s almost impossible for regular investor folks to make a ‘big score’ like these traders. Rather than trying to throw a touchdown pass on every play and make a big score like these traders, the smarter game plan is to focus on trying to get consistent first downs. Do your homework, watch market/sector developments, don’t chase stocks up or down. Do that, and the score may take care of itself.
Source: International Business Times
The Cliff Stevenson Group is a leading real estate group that offers all the services one can expect from a top-tier real estate firm. From the start, one thing that really sets the Cliff Stevenson Group apart from its competition is their web presence and the amenities they offer online. Not only do they have a full service website with all the basic information but they also have many other great extra amenities that we rarely see other real estate agents implement. For example, all of the Cliff Stevenson Group’s current active listings are right there on the website so within one click of the mouse a potential buyer can see everything he has to offer including added details and information about each property. On top of that, you are able to access all of the Cliff Stevenson Group’s recent and past sales, which are great for prospective sellers who are shopping around real estate agents, as they are able to see the Cliff Stevenson Group’s track record and make the educated decision on whether or not it’s the right fit for them.
The thing that most impressed us about the Cliff Stevenson Group’s website is all the educational tools and resources they offer to their clients. By browsing through the website you are able to learn all the different aspects of buying and selling a home including added analysis on what effective strategies work and what doesn’t work. To most buyers this would be a huge resources as on average people don’t buy and sell their homes that often so it’s expected that they won’t know all the strategies to getting that great sale or making that great purchase. In addition to all the educational resources offered, the Cliff Stevenson Group also has a regular blog and a video blog to keep clients updated with their progress and to offer more additional resources and information. They also offer clients with market reports and detailed analysis on past and present sales plus what the real estate markets current trends are.
From going through the Cliff Stevenson Group’s website you can clearly see that not only are they a great real estate group offering all the top tier amenities and resources but that they also care and will go the extra mile to help you out. If you select the ‘Meet the Team’ page you are able to get acquainted with each and every member of the Cliff Stevenson Group. In addition, you can also read past testimonials from various clients and after reading them you will see that everyone leaves more than pleased with the Cliff Stevenson Group’s service. There is no question that the Cliff Stevenson Group is the premier real estate group in the Calgary area and if I were a home buyer or seller in that area I would hands down pick them to be my real estate broker and agent. Simply click on the link or go to http://www.cliffstevenson.com to get your own first hand experience at how great the Cliff Stevenson Group’s service is.
The senior citizens of today are slowly becoming more and more aggravated and increasingly discontented with their current life insurance plans. Part of this is because of the major changes that have taken place. In the past, people believed that life insurance was a necessity and as a result policies were accepted without argument. The reasons senior citizens are becoming more and more aggravated by the life insurance companies is due to the fact that the life insurance policies responsible for insuring individuals are not resourceful and offer little instruction to those interested in selling their policies. Furthermore, others have succumbed to simply receiving a small cash value for their policies, from the insurers themselves.
Due to all these problems, a third alternative has emerged, known as a life settlement. A life settlement is when a life insurance policy is sold to a party other than an insurance company, for more than its cash value, but less than the benefit that would be insured after death. For those who intend to liquidate their policies for financial gain, a life settlement can be an indispensable economic tool.
Currently the problem with life settlements is the fact that most of the population has no idea about what they are or how they work. As a result, many policyholders often resort to surrendering to a life insurance company just because they are not informed. Making such a move could cost you a significant amount of money, on average users can get 8 times the payout vs. surrendering to the life insurance company. That can add up to some serious money so make sure to read our full article as we are here to educate you on how the life settlement process works and how you can take action. We will also provide you with the right resources to take advantage of such an offer yourself.
What Are Life Settlements?
Life settlements function as a profitable source of security for senior citizens unable to afford their current policies. If a life insurance policy doesn’t meet the necessary requirements or if it fails to provide enough death benefits, the senior citizen is able to then sell his or her policy to a third party.
Once you have sold your life insurance policy, you are no longer required to pay for insurance premiums. Policy owners posses certain rights. Someone’s life insurances policy is basically their personal property therefore giving that owner the ability to manage or sell it if they wish. As far as sale value is concerned, there are no limitations to this process as a life insurance policy owner may sell their policy for whatever price they want. Life settlements work according to the policy owners’ rights. These liberties include changing the designation of the beneficiary, borrowing against the policy, selling the policy to another company or party, using the policy as collateral for a loan, and naming the beneficiary of the policy.
What Happens After You Sell
Once a sale is made, the seller may user the funds in any way they wish and they are not required to be above or below certain asset or income levels. During the sales process there are no upfront fees or hidden costs associated that might sneak up on a seller. After someone chooses to sell their policy, they then give all their death benefits to the new owner and in return receive a lump sum payment. The total amount of payment is based on the life expectancy of the seller.
How to Get Started
If you are now interested in taking advantage of the life settlement process or just want to learn a little more about how it works and speak to a professional broker then simply go to A Life Settlement’s website and click the ‘FREE! Get Started’ button. To be directed to the website simply click on the link below or go to http://www.alifesettlement.com/
The Long Lost Oracle the Documentary Trader an Insight into the Life Investment Strategy of Paul Tudor Jones
Take a good hour, relax, & watch The Documentary Trader: An Insight into the Life & Investment Strategy of Paul Tudor Jones. It will be one of the most enlightenting & educating things you can learn from. Words cannot even describe how much it will help improve your investing repertoire. If you call yourself a trader or investor & don’t know who Paul Tudor Jones is then you have a serious problem. For the rest of you, here is a brief little bio to give some background on what both myself & Stocks on Wall Street consider to be one of the greatest fund managers/traders of all-time & a mentor we have long studied & used to implement our own trading strategies. Just in our article the other day, “The Top Ten Greatest Trades of All-Time” we mentioned Paul Tudor Jones as he came in #5 on the list for his infamous call of Black Monday on October 1987 when he predicted the crash, shorted the markets by betting a bundle & tripled his money as the market tanked 22%. That’s just one of the many great achievements this man has accomplished throughout his career, the bio below followed by his documentary will give you the true insight to his greatness.
Paul Tudor Jones II
Paul Tudor Jones II is the founder of Tudor Investment Corporation, a multi-billion dollar hedge fund. He is worth an estimated $6.3 billion in 2009 and was ranked by Forbes in March 2007 as the 369th richest person in the world. In 1976 he started working on the trading floorsas a clerk and then became a broker for E.F. Hutton. In 1980 he went strictly on his own for two and a half profitable years, before he “really got bored.” He then applied to the Harvard Business School, he was accepted, and packed to go when the idea occurred to him that: “this is crazy, because for what I’m doing here, they’re not going to teach me anything. To be a trader, this skill set is not something that they teach in business school.”
He consulted his cousin, William Dunavant Jr., for advice. Dunavant, whose Dunavant Enterprises is one of the world’s largest cotton merchants, sent Jones down to New Orleans to talk with commodity broker Eli Tullis, who hired and then mentored him in trading cotton futures at the New York Cotton Exchange. During his time working for Eli, Jones was quoted saying:
“He was the toughest son of a bitch I ever knew. He taught me that trading is very competitive and you have to be able to handle getting your butt kicked. No matter how you cut it, there are enormous emotional ups and downs involved.”
In 1980, Paul Tudor Jones founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency, and commodities markets. They manage around roughly $18 billion dollars in capital.
One of Jones’ earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions.
Jones uses a global macro strategy when trading in some of his funds. If you want to see this strategy it can be seen in the 1987 film “TRADER: The Documentary”. The film shows Mr. Jones as a young man predicting the 1987 crash using methods similar to market forecaster Robert Pretcher. This video is absolutely thrilling because of the amount of detail it gives into how he trades and manages risk.
The video used to sell for hundreds of dollars as competitors/enthusiast viewed it as the Holy Grail into Jones trading strategy. It has been banned from circulation; only original copies exist. It was original shown on public television in November 1987, however very few copies exist. Those that do are hoarded by traders who watch the hour-long movie in the hope of gleaning possible trading tips from Jones. According to Michael Glyn, the video’s director, Jones requested in the 1990s that the documentary be removed from circulation. Jones in fact, even went as far as purchasing what he thought were all the remanining copies of the docunemnaty but he was unfortuantely unaware of the power of the internet & how quick something can virally spread.
Still as it is there are very few websites that have the original version of ‘Trader’ so luckily for you, Stocks on Wall Street was able to get our hands on the original for you all to enjoy. How we found it, don’t ask but to re-emphasize the main point, EVERYONE NEEDS TO MUST WATCH THIS VIDEO ASAP. If you have any aspirations of becoming successful in the world of trading one day then you must watch this video. If you have work in the morning- you shouldn’t go until you’ve watched this; it’s your mom’s birthday tonight? – Not until you’ve watched this video; you’re tired and need sleep? – You don’t sleep until you’ve watched this. I hope we emphasized the importance and the value this video has. Don’t take for granted how much longer it will be live as Jones is still on his witchhunt to take it down across the web. So share with your collegaues, family, and friends heck even all your social media buddies as this is one of the greatest gifts you can send them. To watch the video simply follow the link below, enjoy!
With all the scandals coming from the banking sector over the course of the past few years, the average consumer has lost faith in their bank. This is not just the big banks we’re talking about, it trickles all the way down to your local bank and credit union. The big question left is have you lost trust in your bank? If so do you believe this is something that can be changed or forever will banks be viewed as greedy corporations not looking out for the best interest of their customers? Please share your thoughts below or on our Facebook Fan Page or our Twitter Page.
(Below is a poll illustrating the levels at which people distrust their bank)
Source: The Financial Brand
Although copper prices hit a one-month low this week, we believe the broader global trend bodes well for copper prices to rebound through the remainder of 2013. The convergence of emerging market demand, a global boom in infrastructure development and a constraint on new supplies of copper will pus copper prices higher.
Prices will be influenced by demand from China and emerging markets, economic activity in the U.S. and other industrialized countries and especially a renewed international and U.S. push to rebuild global infrastructure.
Limited New Supplies of Copper
A major factor will be the timing of new supplies of copper and production levels of mines and copper smelters. Companies that have a high leverage to copper prices will benefit immensely from the potential demand for the metal in the developing markets. We believe that a slowdown in developing new copper supplies presents a major investment opportunity. Copper mining stocks that are well positioned to capitalize on this slowdown and poised to quickly develop new supplies of copper supplies represent a significant investment opportunity.
Temporary Weakness, but Strong Outlook.
Weaker-than-expected U.S. housing construction data and worries about China’s real estate market fueled concerns about future demand for copper. China accounts for 40% of global copper usage. And real estate construction is a major drive of copper demand. This week’s $3.63 per pound price on the Comex division of the New York Mercantile Exchange is the lowest traded price since Jan. 17.
Traders still see positive signs in the U.S. housing report, however. Compared with a year ago, new U.S. home sales were up 23.6%. Investors follow construction data closely for clues about future demand for copper. Analysts at Goldman Sachs said in a report, “The ongoing structural recovery in U.S. housing activity is set to be an important contributor to global copper demand growth (as well as market sentiment) in 2013, and should be a bullish drive of copper prices.” Goldman reiterated its forecast for copper prices to reach $4.08 per pound within the next six months.
Talk that China might introduce new restrictions for its property market also drove copper prices lower. Some local Chinese governments set limits on mortgage lending to dampen speculation as property prices in major Chinese cities rose for the first time since 2011.
Copper Prices Correlate Strongly to Economic Outlooks
Copper ranks third after iron and aluminum in terms of consumption of industrial metals. It is particularly important for infrastructure development. Construction comprises the single largest market for copper, followed by electronics, transportation, industrial machinery and consumer products. We witnessed record high prices for copper from 2006 to 2008 as growing demand from emerging economies and, in particular, China powered a surge in prices and very low inventory levels. Then prices dipped in December 2007 to a low of $1.26 per pound due to the U.S. financial market crisis, concerns about the global economy and reduced consumption. However, Copper prices bounced back to an average of $4.00 per pound in 2011 and averaged $3.61 per pound in 2012 – a drop of 10% from 2011. This drop reflected concerns about China’s slowdown, the European sovereign debt crisis and a sluggish U.S. economy.
The drop in price has hurt the results of major copper producers like Freeport-McMoRan Copper & Gold (NYSE:FCX), Southern Copper (NYSE:SCCO) and Newmont Mining (NYSE:NEM) – all of which suffered in 2012.
Long-term Bullish View on Copper
Nevertheless, in spite of its volatility, we have a long-term bullish view on copper. Our perspective is supported by copper’s widespread use in construction, limited supplies from existing mines and especially the absence of major new development projects.
Zack’s Industry Outlook (Feb. 14, 2013) stated that all signs point to a recovery in copper prices driven, in part, by accelerated production among Chinese manufacturers. Morgan Stanley predicts copper prices will rise 7.6% in 2013 to $3.88 per pound or $8,554 per metric ton (MT), up from $7,952 in 2012. HSBC’s chief economist, Hongbin Qu, said last week that, “Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China’s ongoing recovery in the coming months.” And Bloomberg reported that the forecast for rising copper prices is based on anticipated demand increases from China, the U.S. and even Europe.
Global Infrastructure Investments will drive Copper Higher
The push to expand global infrastructure is a key indicator in our belief that copper prices will continue to push higher through the remainder of 2013. Consider these key indicators driving global infrastructure investments:
Emerging Markets. Growth in the emerging markets, particularly China and India, was a major driver of copper demand over the last few years. However, of late, demand in China has slowed down. China’s recent $150 billion infrastructure stimulus has helped improve the sentiment somewhat and holds promise for the metals and mining industry going forward, as we note below. This global economic slowdown is the biggest headwind for the metals space overall at present. Nevertheless, the long-term picture remains a lot more promising as the emerging market economies are expected to get back in shape with the help of expected fiscal and monetary stimuli.
China’s Infrastructure Expansion. China’s economy is beginning to rebound even though the pace of the recovery will be slower than previous periods. China’s new leadership recently announced fresh stimulus measures that will likely bolster demand for copper. Although Chinese exports remain weak, the good news is that home prices and homes sales in China are rebounding. The new Chinese leadership has reiterated its support for a conventional mix of proactive fiscal policy and many analysts believe they will be successful in boosting growth from +7.8% in 2012 to +8.0% in 2013 and +8.3% in 2014. The implication for the construction market is that growth will continue. The stabilization in investment since mid-2012 has prevented China’s slip toward a feared hard landing, supported by a V-shaped recovery in infrastructure, which hit a trough with a -4% contraction in the first two months of 2012, but is now increasing by nearly +15% year-on-year.
The main construction driver in China will continue to be infrastructure. Although the heyday of growth for China’s construction market may be over, the sheer size of the market will keep it among the most attractive in the world for the foreseeable future. China’s new leaders are pushing a new type of urbanization that has major implications for the construction sector and, in turn, for copper prices. In particular, their “intelligent city drive” which relies on modern information technologies such as telecommunications and cloud computing, will involved the building of intelligent systems serving a wide range of sectors from public security, healthcare, transportation and the power grid.
Group 20 Global Infrastructure Push. A hot topic this week in Moscow at the The Group of 20 agenda is an issue that has long affect emerging markets’ economic growth plans: weak infrastructure. India has called for better infrastructure funding. Russia has made investment financing a priority on how to kick-start global growth. In emerging Asia, much-needed infrastructure projects fall through as a result of funding problems. The World Bank estimates that countries in the East Asia Pacific region need $400 billion of investment in infrastructure annually, while South Asia needs around $200 billion. Infrastructure spending will remain a key issue throughout 2013. This focus on construction will only serve to drive global demand for co copper.
Obama’s “Fix it First” Policy. President Obama’s recent State of the Union plan to repair the nation’s ailing infrastructure should not be overlooked. His “fix it first” policy calls for investing $50 billion in transportation infrastructure. Obama also called for the creation of a National Infrastructure Bank to bring public and private financing together to plan projects. Coupled with the U.S. housing recovery we touched on earlier, we believe the U.S. will certainly contribute to what we believe will be a growing demand for copper in 2013.
Bottom Line: The bottom line here is that the global push to rebuild infrastructure will almost certainly create a knock-on effect that will drive the prices of industrial metals higher. Copper promises to be at the forefront of that trend.
Supply Constraints will Drive Demand Higher.
Copper prices will be heavily influenced by the timing of new supplies of copper and the production levels of mines and copper smelters. Companies that have a high leverage to copper prices will benefit immensely from the potential demand for the metal in the developing markets. Cost inflation in the sector is also expected to be a headwind for metal and mining companies over the next several years, driven by a number of factors such as labor, energy, ore grades, currencies, supply constraints and taxes. Plus, global economic uncertainties, softening commodity prices and higher input costs are increasing the pressure on company margins.
To counter all this, mining and metals companies must constantly review their portfolios to identify underperforming assets and shut down or divest high cost and non-core assets. Industry consolidation, automation technology, owner-operated mines and investment in energy assets are some of the steps that companies can take to offset to the impact of rising costs.
Production drops for World’s Largest Copper Company.
Expanding copper mining production continues to be a challenge for Chile’s Codelco, the largest copper producing company in the world. Codelco (the National Copper Corporation of Chile) is the Chilean state-owned copper mining company, formed in 1976 from the foreign-owned copper companies that were nationalized in 1971. Codelco produced 1.66 million tons in 2007 – 11% of the world total. It controls about 20% the total global copper reserves. They recently reported that their own production dropped in 2012 to the lowest level in four years. And figures from the last monthly newsletter issued by Cochilco (Chilean Copper Commission) show that the state-owned copper company produced a 5.1% less copper in 2012 if compared against 2011. According to CEO, Thomas Keller, Codelco’s 2012 production was down primarily due to “dwindling ore grades” in all its deposits. BHP executive, Peter Beaven, recently told an industry gathering in Santiago, “Mining in Chile is at a turning point as the industry requires large expenditures just to maintain throughput.”
Copper miners across the globe continue to expand production. Grupo Mexico (OTC Pink: GMBXF) plans to spend $2 billion on its mining division this year, a portion of which will go towards the company’s Buenavista mine in Northern Mexico. The company wants to produce 1.4 million metric tons of copper per year by 2015, Reuters reported. BHP Billiton (NYSE:BHP) expects its copper production to increase in 2013 and 2014 by a 10% compound annual rate, largely driven by its Escondida mine in Chile, which is on track to increase its production by 20%.
10 Biggest Copper-Producing Countries
(000 metric tons)
10 Biggest Copper Producers
(000 metric tons)
|1. Codelco (Chile)||1,757|
|2. Freeport-McMorRan (USA)||1,441|
|3. BHP Billiton (Australia)||1,135|
|4. Xstrata (Switzerland)||907|
|5. Rio Tinto (UK/Australia)||701|
|6. Anglo American (UK)||645|
|7. Grupo Mexico (Mexico)||598|
|8. Glencore Intl. (Switzerland)||542|
|9. Southern Copper (USA)||487|
|10. KGHM Polska (Poland)||426|
Freeport-McMoRan’s (NYSE: FCX) fourth-quarter net income rose 16%, to $743 million, as sales in the previous year were depressed by labor disruptions in Indonesia. The company aims to grow its annual copper production to over 5 billion pounds per year in 2015 from 3.66 billion pounds in 2012, and expects its $20-billion acquisition of Plains Exploration & Production (NYSE:PXP) and McMoRan Exploration (NYSE:MMR) to close in the second quarter of this year. Union workers at two of Southern Copper’s (NYSE:SCCO) properties in Peru may go on strike if they don’t reach an agreement with the company within 15 days, Fox Business reported, citing a union leader.
Back to copper, the metal is essential for modern living. It delivers electricity and clean water into our homes and cities and makes an important contribution to sustainable development. More than that, it is essential for life itself. Copper is interwoven with the story of humanity’s progress. It has crucial role in our homes, in transportation, as well as in infrastructure and in our industries is omnipresent.
Economically, copper consumption is closely associated with industrial production, and therefore, tends to follow economic cycles. During an expansion, demand for copper tends to increase, thereby driving up the price. As a result, copper prices are volatile and cyclical. Swingplane Ventures has seen some analysts pick up as one research firm just issued a $10 target price on Swingplane Ventures. The firm said that a due diligence property evaluation suggests there is a significant opportunity to further develop the mineral potential of the property and dramatically increase the current level of production. The company intends to evaluate potential to: 1) increase the current level of production and 2) undertake construction of a processing facility to maximize recovery of economic grades of copper concentrate.
Notably, in early January, First Quantum Minerals, a $9 billion mining company, made an offer of $5.1 billion to purchase Inmet Mining which holds a very coveted copper mine in Panama. Inmet Mining, a company with a prized copper mine has almost doubled in market valuation this past year alone. Swingplane Ventures operates in the copper market in Chile, located in South America. This part of the world has been proven to possess extremely profitable copper mines as seen by First Quantum’s offer for Inmet. After further due diligence and research, we are upgrading the stock to $11.50 with a possibly buyout looming.
There have been some worries surrounding copper because of the short-term macroeconomic concerns regarding the US and Europe. However, the fundamentals are still excellent for copper: as Asia represents over 60% of world demand with China by itself at 39% and could reach 45% in 5 years. Southern Copper forecasts that China and Emerging Markets countries will continue growing, albeit at a lesser pace, but still showing substantial gains. The company also notes that limited production upside and falling grades will result in a deficit copper market going forward.
Now, we take a closer look into a recent news item for the metal signifying of some larger trends. The fundamentals for copper are clearly improving as the world’s copper usage and demand for copper is picking up. Friday, was a prime example of that as copper futures rose the most in a week as China’s trade expanded more than forecast, and car sales jumped to a record in the Asian nation, the world’s biggest consumer of industrial metals. In January, exports from China surged 25% and imports climbed 29% from a year earlier, both topping projections by economists in Bloomberg surveys, government data showed today. Sales of passenger vehicles surged 49%, a state-backed trade group said. A 6 month price chart of copper follows.
Knowing that we are not the only ones bullish on the metal has given us more confidence in our own thesis. This fact was demonstrated this week when Kevin Puil, the Malcolm Gissen & Associates portfolio manager, went through his bullish thesis on Seeking Alpha. Puil said “The fundamentals for copper remain highly favorable and I continue to see secular demand for most commodities, copper in particular. Industrialization and urbanization, especially in the BRIC [Brazil, Russia, India, China] countries, is not about to stop, and this continues to put pressure on copper miners, who struggle to keep up with demand. Supply growth has slowed due to lower grades, higher costs and political unrest. In addition, the new projects and mine expansions that were scheduled to come on-line haven’t materialized, and if they do, it will not be in a timely fashion. Quite frankly, I think you could see copper peak above $4 a pound [$4/lb] this year…”
The decline in output that Puil discussed is already being seen in the financial markets as Teck Resources (TCK), Canada’s largest diversified miner, may consider acquisitions in copper mining to help offset an expected decline in the company’s output of the metal.
(HBM) is a Canadian integrated mining company with operations, development properties and exploration activities across the Americas principally focused on the discovery, reduction and marketing of base and precious metals. The company’s objective is to create sustainable value through increased commodity exposure on a per share basis by growing long-life deposits in high-quality and mining-friendly jurisdictions. HudBay is a strong stock with great analyst coverage. Of the five analysts currently covering HBM, all five have buy ratings or higher.
Southern Copper (SCCO) is one of the largest integrated copper producers in the world, and has the largest copper reserves of the industry. The company produces copper, molybdenum, zinc, lead, coal and silver. SCCO is 81.3% owned by Grupo Mexico, a Mexican company listed on the Mexican Stock Exchange. The remaining 18.7% ownership interest is held by the international investment community. All of its mining, smelting and refining facilities are located in Peru and Mexico, and the company conducts exploration activities in those countries and Chile. Southern Copper has performed quite well recently with shares soaring more than 23% over the course of the past three months.
China’s Jiangxi Copper (SSE:600362) and Japan’s Pan Pacific Copper said mining companies will pay “at least 10% more in fees” to process copper this year, China Daily reported. And Chinese mining companies have invested more than $1 billion in copper. Newmont Mining (NYSE:NEM) expects gold and copper production in 2013 of approximately 4.8 million to 5.1 million ounces and between 150 and 170 million pounds, respectively. The company plans to spend up to $2.3 billion on various projects this year. Sierra Metals (TSXV:SMT) announced that in 2012 its copper production rose 51%, to 15.9 million pounds, from the year before. For 2013, it expects copper production of up to 23.1 million pounds.
Bullish Stance on Copper
Notwithstanding the current volatility in prices, we have a long-term bullish stance on copper, supported by its widespread use, limited supplies from existing mines and the absence of significant new development projects. Prices will be influenced by demand from China and emerging markets, economic activity in the U.S. and other industrialized countries, the timing of new supplies of copper and production levels of mines and copper smelters. Companies that have a high leverage to copper prices will benefit immensely from the potential demand for the metal in the developing markets.