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Reports: BHP, Lynas, Acmil

Reports: BHP, Lynas, Acmil
January 24 2012 - Australasian Investment Review – (AIR)
It will cost as much as some of the huge LNG projects currently planned or underway: at $20 billion and eight years, BHP Billiton’s plans to expand its key iron ore port at Port Hedland, off the northern WA coast, will be gigantic by any measurement.

To put it another way, the project will have a cost roughly equal to the estimated cost of expanding the already large Olympic Dam mine of BHP in South Australia. The BHP board has to give that project the final go ahead later this year, but the Port Headland expansion will be finished before Olympic Dam is completed, assuming all the approvals are given.

Iron ore is BHP’s mineral of choice and the expansion is vital for the company keeping up with the ambitious plans of Rio Tinto and Vale of Brazil, to boost their iron ore output in the same time.

Both will be enormous projects with huge earth moving, excavation at their heart.

Both should also generate enormous business for local contractors and suppliers, especially the Port Headland expansion.

Yesterday that ambitious plan moved a step closer with approval by WA’s Environment Protection Authority with only minor conditions. [Read more →]

January 24, 2012   No Comments

How You Can Profit from Kodak’s Biggest Mistake.

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How You Can Profit from Kodak’sBiggest Mistake
Friday, 20 January 2012 – Melbourne, Australia
By Kris Sayce

In today’s Money Morning: …the demise of Kodak…a lesson for investors…analysing the energy index…where to now for the BRIC economies…

How You Can Profit from Kodak’s Biggest Mistake

Successful businesses detect change.

They don’t always have to act on it (although they may be foolish if they don’t).

The same goes for successful investors. If you can spot a change (or even a potential change) early on, it can lead you to a big pay day.

But if you spot the change and don’t act on it… well, the results aren’t as good.

Take Eastman Kodak [NYSE: EK] as an example. The company had a great new idea in 1975… it invented the world’s first digital camera.

That’s some foresight.

Today, digital cameras are a central part of new media and the social networking fad. Photos on Facebook. Twitpics. Photos taken and published seconds or minutes after both trivial and important events. [Read more →]

January 20, 2012   No Comments

The Oil of the 21st Century.

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The Oil of the 21st Century
Thursday, 19 January 2012 – Melbourne, Australia
By Kris Sayc

In today’s Money Morning: … more taxpayer money needed to bail out banks and governments…having an emergency plan…there are still profitable ideas…a part of the world set to boom…

The Oil of the 21st Century

Yesterday the papers splashed the latest warning from the World Bank.

The Financial Times reported:

“Predicting significantly slower global growth in 2012 than it expected last summer even if the eurozone muddles through its crisis, World Bank economists said that if financial markets deny funds to eurozone economies, global growth would be about 4 percentage points lower than even these figures, with poorer economies far from immune.”

There’s no doubt there will be another downturn. The pieces are already in place for it to happen. The only unknown is when.

Of course, the knee-jerk reaction is to say, what would the World Bank know? It never gets things right. But it is worth remembering what the Bank wrote in 2007… [Read more →]

January 19, 2012   No Comments

The US-China Power Struggle…and What It Could Mean for Aussie Energy Stocks

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The US-China Power Struggle…and What It Could Mean for Aussie Energy Stocks
Tuesday, 17 January 2012 – Melbourne, Australia
By Dr. Alex Cowie

In yesterday’s Money Morning I wrote to you about the oil crisis brewing in the Straits of Hormuz. This is the narrow channel that runs between Iran and Saudi Arabia. Forty per cent of the world’s sea-borne oil is shipped through here. Iran recently threatened to close the channel in response to a US-led embargo on Iranian oil. Global oil supply could fall 40% if Iran followed through on its threats.

This is not a new story. Iran and the US have been squaring off for 10 years. Not that this means it is a less important story to monitor today.

In the last few days, Saudi Arabia has offered to bridge any shortfall in production. Iran is not happy about this and is warning of ‘unpredictable consequences’ in return.

The Saudis are not worried, and are pushing on.

The Saudi Oil minister, Ali Naimi, just announced a goal to keep oil prices in the region of $100 a barrel. The Saudis are the world’s largest oil exporters. November 2008 was the last time they set a goal, which was $75 a barrel. The oil price increased from $50 to $75 within six months. The price then oscillated around the $75 level for the next 12 months. [Read more →]

January 17, 2012   No Comments

Investment: Tough Time Ahead, According To Early Reporters

Investment: Tough Time Ahead, According To Early Reporters
January 17 2012 - Australasian Investment Review – (AIR)

It’s not ‘new’ news, given the damage done to share portfolios over the past six months or so, but we had further confirmation yesterday that the poor performance of equities is going to be bad for the country’s listed investment companies and broking firms.

Three companies operating in and around the market have so far reported December half year results: Euroz Ltd the Perth-based broker. Mirrabooka, the Melbourne-based listed investor and its stablemate, Djerriwarrh Investments which yesterday produced its interim figures.

None of the trio’s reports makes for happy reading.

Djerriwarrh said interim profit fell 9.5% to $23.1 million, from the $25.6 million result in the first half of the 2010-11 financial year.

That figure however is a bit misleading, as it includes the sharp rise in the unrealised value of the company’s investment in Hastings Diversified Utilities Fund and Peet Notes, which is required under current accounting standards. (Hastings is under takeover attack from APA Holdings, a rival pipeline company.) [Read more →]

January 17, 2012   No Comments

How Global Oil Supplies Could Fall 40% Overnight

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How Global Oil Supplies Could Fall 40% Overnight

You’d never know if from the oil price, but the global seaborne oil supply might face a 40% cut. In the last few days the Brent Crude price has dropped from $115 to $110 a barrel, where it has spent much of the last three months.

So why could the global oil supply fall by 40% overnight?

Iran has threatened to block the Strait of Hormuz in response to US sanctions.

The Strait of Hormuz is the narrowest part of the Persian Gulf. Oil from producing countries like Saudi Arabia, Qatar, and the United Arab Emirates also ship their oil through the strait. All up, 40% of the oil produced around the world each day goes through this narrow channel.
The Strait of Hormuz - a weak point in global oil shipping

So what sanctions would trigger Iran to block the Strait?

The US has asked the world to stop buying Iranian oil.

The US has lobbied China and Europe to buy their oil elsewhere. The US stopped buying Iranian oil years ago. China, Spain, Italy and Greece are still big buyers. Iran still makes up 5% of global production.

The US has put the pressure on Iran in this way to get Iran to give up its nuclear ambitions.

This reeks of hypocrisy. How can the US, which has the world’s largest store of nuclear weapons, tell other countries not to develop them? It is also inconsistent. The US let Israel develop its nuclear capacity with minimal interruption. [Read more →]

January 16, 2012   No Comments

Silver Ready to Explode.

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Silver Ready to Explode
Tuesday, 10 January 2012 – Melbourne, Australia
By Dr. Alex Cowie

In today’s Money Morning: …a bumpy ride for silver investors…what to do when the price goes backwards…hard assets to rise in value…debts do matter…

Silver Ready to Explode

In the last eight years the silver price has increased close to five-fold, from US$6 / ounce to US$29 / ounce.

It hasn’t been an easy ride for investors.

The price crashes intermittently when the trade gets overcrowded. With just $50 billion of silver bullion above ground, it is a very small market and gets crowded easily. Silver has had four major crashes in the last ten years but has still increased five-fold.

In the first half of 2004 it fell by 36%.

Then during the first half of 2006 the silver price fell 38%.

In 2008 it fell for most of the year with the peak to trough fall a colossal 61%. [Read more →]

January 10, 2012   No Comments

Will the Gold Bull Keep Running in 2012?

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Will the Gold Bull Keep Running in 2012?
Monday, 9 January 2012 – Melbourne, Australia
By Dr. Alex Cowie

    2011 was a long, painful year for nearly everyone in the market.

    Even the self-appointed kings of the financial sector, the hedge funds, were put out to dry.

    The ‘hedge’ part of their name alludes to their investing methods which let them ‘hedge’ out their risks. It didn’t seem to work for them last year. Nearly all of them lost money.

    The Paulson Advantage Plus Fund lost an epic 48%. And despite the name, the Paulson ‘Recovery’ fund wouldn’t have been much use with a loss of 27.7%. The Henderson European fund lost 42.8%. Senvest lost 36.9%.

    The list goes on. In fact, out of the 300 hedge funds on HSBC’s score card, just fifteen of the 300 actually gained by more than 10% for the year.

    Put another way, just 5% of the world’s hedge funds outperformed gold last year.

    Gold put in a gain of 10.1% by the close of the year, despite falling $400 from its September peak of US$1925 / ounce. Aussie gold had a similar result of 10.2%. [Read more →]

January 9, 2012   No Comments

Sell-Offs & Super Spikes.

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Sell-Offs & Super Spikes

Saturday, 7 January 2012 – Melbourne, Australia
By Murray Dawes

Sell-Offs & Super Spikes

Kris asked me to write a quick note to you about my predictions for the stock market for next year. That’s a problem. Because as a trader, my job is to focus on the forces in the market that are affecting the price right now.

I look to take advantage of my understanding of those forces to find good risk/reward opportunities for entering stocks.

In fact, my ability to predict where the stock market will be in a years’ time is next to zero when using charts. That means anything I told you about the future direction of the market would be meaningless twaddle… that wouldn’t be worth the paper it’s written on (even though it’s not written on paper!).

So, if Kris doesn’t mind, I’d prefer to discuss where the pressure points are in the market, and the impact it will have on investors and traders. But first I’ll cover my long term macro-economic view…

You’d have to be living under a log not to know there are some serious headwinds facing the world economy right now. Europe is in recession. America is plodding along at very slow speed, in danger of being sucked back into the “debt vortex” by Europe. And China is fast losing steam on the back of a weak Europe and a slow America.

The European debt monster is slowly consuming all in its path and the central bankers and politicians are throwing as much of our money at the problem as possible. Money printing can never be far away under these circumstances. Next year will be a story of to-ing and fro-ing. On side will be the forces of deflation. And on the other, central banks printing money to avoid it. [Read more →]

January 7, 2012   No Comments

The Sun Starts to Set on China

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The Sun Starts to Set on China.
By Kris Sayce

In today’s Money Morning: In China you can only be amused twice a week… A lose-lose situation for the West… How being tied to Asia hurt Australia in 2011… An early warning sign of China’s imminent collapse…

The Sun Starts to Set on China

In you’re still banking on the Chinese consumer to bail out the West, stop. The following news from the BBC should make you think again:

“Satellite broadcasters in China have cut entertainment TV by two-thirds following a government campaign, state news agency Xinhua has reported.

“An order by the State Administration of Radio, Film and Television (SARFT) to curb ‘excessive entertainment’ came in effect on 1 January.”

According to the BBC, the Chinese fun police will allow only two entertainment programs per week… for 90 minutes, max. Any more than that is “excessive”.

Yet some contrarians will tell you China is freer and more capitalist than the West!
It’s a Lose-Lose Situation

Of course, whether China embraces consumerism or not, it’s a lose-lose situation for us all. [Read more →]

January 5, 2012   No Comments