Hard Assets NY Conference

[smurff]

I had a great time at last week's conference.  Sprott Money was there, selling gold and silver bullion coins.  I bought some, and hope they do it again next year.  Companies gave out lots of swag--pens, lens cleaners, stress balls, t-shirts. I collected enough pens to last until next year's conference.

The most interesting product offering for sale, however, was from a company called Masterpiece Investments Corporation.  They were "transforming the fine art marketplace" and selling limited edition fine art medallions and bars and sculptures by Lorenzo Ghiglieri in bullion silver.  My favorite was the silver bull made of silver bullion, which the manager told me weighted 180 pounds.  He said the silver was not plated with rhodium or other precious metal, but was solid .999 silver.  Very nice.  It was an interesting way of hiding part of your wealth out in open view.

http://www.mpibullion.com/items.php?CID=1

Frank Trotter of Everbank was one of several keynote speakers.  There were the usual predictions (For the USA:  Two to three more years of delinquencies and foreclosures, additional QE-fueled Dow and S&P stock rallies, rolling state/county/local crises--the states and cities can't QE their way out of their problems), but the most interesting one was his prediction of social unrest.  He believes upcoming social unrest will not be based on the Occupy Wall Street model, but based on the Wisconsin-teachers-takeover-the-statehouse model--a more ominous possibility since teachers are part of the backbone of the middle class.

He put up an interesting chart on money and where it is:  Money, A Chart of All of It (an economist must have been on crystal meth when they made this chart)    http://xkcd.com/980

[smurff]

BTW, there are other Hard Assets Conferences in the USA this year, in Chicago and San Francisco.  They're free, so if you're in the area it's worth it to attend.

Hard Assets Chicago
http://www.hardassetschi.com/
September 21-22, 2012
McCormick Place Hyatt 
Chicago, IL

Hard Assets San Francisco
http://www.hardassetssf.com/
November 16-17, 2012
The San Francisco Marriott Marquis
55 Fourth Street
San Francisco, CA 94103

[smurff]

My favorite piece of swag was a pen handed out by Asturgold.  The company soon discovered they were so popular they had to be judicious about who they gave them away to, to keep from running out. The bottom half of the barrel is black with the name stamped in gold; the top half is clear with gold leaf floating in it, like in a snow globe.

Anyway, Asturgold has a gold mine in Western Europe, the Salave Gold Project, in Spain.  They had a display which described how this area has been mined since Roman times, some 2000 years ago, and the marketing person I spoke with gave me a prized pen and told me a story about one of the Caesars to connect this mine to the founding of Christianity. 

http://www.asturgold.com/s/Home.asp

[Ad Orientem]

...an economist must have been on crystal meth when they made this chart    http://xkcd.com/980

Concur.

[smurff]

The guy at Woulfe Mining, which mines a variety of precious and base metals, seemed to brag about Warren Buffett's joint venture investment in their tungsten mine more than he talked about his own company.

Peter Grandich ("The Grandich Letter") calls the gold market "the mother of all bull markets."  He says there is no gold bubble:  To have a bubble you need lots of people participating in it.  He stated that 99 1/2% of investors have NO gold exposure, so there is no bubble.

He believes the bull market has been fueled by the creation of the ETFs, which helped the physical purchases of bullion by large institutional investors.  It gives investors (individual and institutional) direct exposure, low overall cost, liquidity during the day.  He remains bullish for gold; it's one of only four big currencies in the world (US Dollar, Japanese Yen, E.U. Euro are the other three).

[smurff]

If they had given Grandich a pair of gloves he would have duked it out with Dennis Gartman ("The Gartman Letter"), who holds almost opposite views, and the two angrily "referenced" each other in their talks. 

Gartman summarized his investment philosophy:  "Do more of that which has been working, and do your damnest to stop doing that which is not."  He stated this as he discussed individual investors' tendency to chase prices downward.  If you start averaging down, you have no idea how far down things will go.  It it trends low, sell; if it trends high, buy more.  Current trends show gold moving lower, and "it won't stop a moment before it stops."

What to buy?  He states emphatically:  "Don't buy gold.  It's not going up anymore; it sucks and was never a safe harbor."

(My BTW editorial comment: I'm simply reporting what he said, not that I believe or plan to act on it.)

Instead of buying gold, which is unsafe ("Gold will go to $1200 and not budge.") the safest place for your money is with the dominant military power--the USA and currencies of English-speaking countries.  These countries still respect  contracts, have good education systems, good ports, and stuff to sell (wisdom, iPads, creative thinking), which is not necessarily the case with others.

He said that fiscal, political, and economic circumstances in the world are horrible, therefore he was so enthusiastic about the future he couldn't see straight.  ("So enthusiastic about the future I can't see straight" is what he said.)  Things will be so much better in ten years it will be shocking. 
He said the Euro concept was nonsense attempt at making a currency to begin with, and it will be gone in ten years.

The origin of the Euro currency:  He believes that France, Belgium, the Netherlands, and Italy looked around and asked what they could beat the Germans at.  Their answer was bureaucracy; they decided to defeat the Germans with bureaucracy, and Germany fell for it.  But the German people have had it with paying for lavish Greek vacations and retirement schemes. (Greeks could retire at age 55 at 95% of their salaries, vs. Germans retiring at age 65 at 50% of salary.)  So Greece will leave the Euro and return to the drachma (which will allow them to become dominant in shipping and textiles again).  Portugal will look at Greece and decide they want to do the same thing.  When that happens, the whole monetary union thing falls apart.

He pointed out that Japan was a basket case, with nihilist prospects, due to how they manage demographics.  The Japanese gov. says the birthrate has fallen off a cliff, and within 20 years the population will fall by half.  Some villages in Japan haven't heard a baby cry in ten years.  More diapers are sold for elderly in Japan than for babies.  With a debt to GDP of 220% that in the past was sold to Japanese families, with low birthrate Japan is facing the worst fiscal problems of anyone.  The clientele are dying out faster than the Japanese government can sell to them--which if Japan Inc. were a business, this is not a good business model.

He pointed out that other countries are having similar demographic problems, but the big difference is they tend to welcome immigrants.  This is not the case in Japan. 

He predicts that North America will be energy-independent in five years, and in seven years will be exporting to the the rest of the world. 

Gartman's biggest fear:  That we will do something to balance the budget.  He believes if taxes are raised, the economy will sink, and tax revenues will sink faster.  The net result, according to him will be a depression.  He believes the USA should use the New Zealand 1980s/1990s model and cut spending and cut taxes.

[smurff]

Mickey Fulp, a geologist (http://www.mercenarygeologist.com) said that natural graphite was the newest Next Big Thing.  He said the demand for natural graphite (a form of carbon--old-fashioned pencil leads are one form of graphite) is driven by the demand for lithium ion batteries for phones, computers, iPods, etc.  As luck would have it, some 75% of natural graphite is controlled by China.  He said investors should look for advanced deposits and former mines in geopolitically stable and mining-friendly countries with infrastructure, because graphite mining requires highways, nearby water, power, and ports, as are present in Sweden, which he mentioned as a country with mines worth considering.

[MachineGhost]

The most interesting product offering for sale, however, was from a company called Masterpiece Investments Corporation.   They were "transforming the fine art marketplace" and selling limited edition fine art medallions and bars and sculptures by Lorenzo Ghiglieri in bullion silver.  My favorite was the silver bull made of silver bullion, which the manager told me weighted 180 pounds.  He said the silver was not plated with rhodium or other precious metal, but was solid .999 silver.  Very nice.  It was an interesting way of hiding part of your wealth out in open view.

I think I'm in love....  

[MachineGhost]

Gartman's biggest fear:  That we will do something to balance the budget.  He believes if taxes are raised, the economy will sink, and tax revenues will sink faster.  The net result, according to him will be a depression.  He believes the USA should use the New Zealand 1980s/1990s model and cut spending and cut taxes.

That took a drunken Prime Minister having a knee-jerk reaction.  I won't hold my breath.  But its encouraging that it is held up as a model for reform.