So, 2013 is over, and it’s back to work for most.
As I’ve previously stated, I would be introducing a few investment areas for further research.
Over in the U.S., their economy grew at its fastest pace for a few years in 2013. The stock market grew at over 30%, and the pull-back expected by many didn’t appear.
Gold lost over 20% of it’s value, and Silver too, had a big sell-off. No surprises from me there.
Early reports suggest it has been a mixed picture for Britain’s High St. retailers during the Xmas period – Debenhams and M&S having a difficult time, while House of Fraser and John Lewis were up by substantial margins.
On the wider front, RT’s Max Keiser interviewed David Blanchflower on his show this morning, David (Danny) Blanchflower used to be one of the members of the Monetary Policy Committee, at the Bank of England – now he lectures at one of the US’s premier universities – Dartsmouth College, and declared that the QE programme as it was implemented in the UK., could have been improved, by buying Business assets and instigating a Bond to back business lending to small and medium sized Businesses.
As it was, BoE Governor, Mervyn King had other ideas.
Britain’s Daily Telegraph seems to think that 2014, will be a year of good economic numbers – especially if you’re invested in FTSE100 companies. The FT has not fared as well in the last two years as both the Euro-zone, and the U.S. which had relaxed monetary limits with the Fed’s QE programme and the ECB’s LTRO programme. Also the FT100 index has a higher complement of Mining outfits with Antofagasta, BHP-Billiton, Fresnillo and Randgold Resources to name but a few.
The argument therefore goes that, a recovery in these which form a large part of the weighted index, would raise the index to a new high. The previous peak in 1999, as the millenium approached 7,000 has not been bested, but is likely to be this year, with suggestions this might be as high as 7,500 or even one optimistic report of 8,000+.
That said, a great deal will depend on events in the US, Europe and middle and far-east.
China, and Japan are getting closer to a military struggle as resources are competed for beneath the South China Sea, and Japan’s debt to GDP ratio of 270% by year end, will add to problems for the world’s third largest economy. China’s lax financial regulations mean that some large corporations do not have the financial exactitude that we expect in more western regulated markets, and thus it is difficult to ascertain a complete financial picture of those corporations. That said, China’s stock markets seem at low levels compared to the west, and thus a small investment in some of these larger corporations, might be a prudent move.
Fed tapering which is expected shortly might be the catalyst that leads to higher interest rates, and this ultimately might lead to lower market valuations.
Europe is still mired in difficult financial conditions, as the Greeks are still existing on essentially the largesse of the German people.
In Greece, several extreme right-wing groups are regularly protesting at the conditions imposed from outside by the “Troika of the EU, ECB and IMF.
Oil prices which are still high for several reasons are unlikely to fall much though, as increased production from the US, as fracking production has risen five-fold in recent years, is off-set by rising demand in OPEC exporting nations, coupled with a fall-off in supplies as Libya, Syria and Egypt suffer because of rising tensions there.
This changing supply/demand dynamic though will benefit the dollar which may begin rising in value as the Fed’s QE programme gets withdrawn, though it is expected that Janet Yellen will stand by the currency if interest rates begin to rise precipitously.
Which brings me to some of the research I’ve been doing into companies that are likely to benefit over the next few years.
Sempra Energy listed in the U.S., owns a subsidiary, called Cameron LNG, who back in 2005 began production of a LNG import facility close to the national pipelines in Louisiana, and which it is now known has been retro-fitted to enable it to export the glut of Natural Gas to the emerging markets of China and India, via the soon to be opened, enlarged Panama Canal.
Another such organisation is Cheniere Energy who last year signed an agreement with British Gas to supply it with LNG for the next 25years. Cheniere is the owner of one of just 4 LNG terminals, that have the authority and capability to export when they finally get full approval.
Though both these companies’ prices have risen substantially, I expect them to rise still further over the next 5-10 years as the fracking revolution expands in the U.S.
On the minerals front, demand for copper and Precious Metals is still strong in the East, but especially both India and China, with China importing over 1,000 tonnes of the yellow metal in 2013, and with their goal to have a fully tradable currency by 2015, they will I suspect still continue to be big buyers in 2014. This together with the recent report of a flight from UAE into India, in which almost every passenger on the flight had 1 Kilo of Gold on their person, suggesting India’s love affair with Gold will continue despite attempts by their Government to reduce consumption. Though rising silver demand suggests some of their money is now going into Silver too.
In Mongolia, a mining outfit bought by Rio Tinto and re-named Turquoise Hill Resources (traded on the Toronto Stock Exchange) is primed to supply its Chinese neighbour with Copper, Gold and Silver and has 45 million ounces of Gold and over $300BILLION worth of Copper at its Oyu Tolgoi mine.
Only Mongolese Government incompetence and/or Chinese economic collapse will likely stop this from being a huge success story.
Over in Mexico, a company I’ve mentioned before is currently installing a newly refurbished mill and is likely to be producing at the cost of less than $15/oz by late 2014. As it has already delineated 130million ounces of silver, and I expect a small rise in silver prices by year end, it will be profitable providing it can free itself from its debt facility at some point this year. With as few as 50million shares in issue, each share currently at less than 25p, has the rights to 2-4 ounces of silver per share, depending on a 5th round of exploration slated for this year with expectations to extend their reserves to in excess of 200 million ounces when fully delineated.
In the technology sphere, two companies producing Graphene, with one of them a sizeable outfit by British standards, and who developed the heat-shield that served to get the Mars lander safely onto the Martian surface last year, will be successful over these next few years. Graftech International is currently below $10, and holds key patents in this emerging technology. They have also recently signed agreements to work with Samsung and Apple who will take advantage of their technology in the near future.
Graphene-Nano-chem, a British listed company is a company which will produce Graphene based chemicals from waste materials at its Malaysian facilities, which will provide graphene enhanced lubrication drilling fluids, used in the Oil and Gas sectors among others.
That just about wraps this post up for today.
Anyway, just for the FCA compliance, Any mention of the companies named above is not a solicitation, but is for education and general informaton only. For the record I am a holder in Arian Silver.