"Platinum is a picture-perfect image of a classic bull market that's getting more exciting by the day," says resource expert Eric Roseman.
In his Commodity Trend Alert the advisor explains, "Prices continue to explode higher amid the largest supply shortfall for any precious metal this decade. As such, I'm urging my readers to buy the new E-Tracs UBS Long Platinum ETN (NYSE: PTM)."
"Find me a commodity -- any commodity -- that's approaching or extending a net supply deficit situation and I'll compel you to buy that commodity ahead of a major rally; that's what's happening now to platinum. Indeed, no other precious metal is suffering more from growing supply shortages since last year -- and it's getting worse.
"Platinum production in South Africa, which accounts for about 80% of global output, declined 4.9% to 5.04 million ounces in 2007 as a result of smelter closures and a host of safety issues that interrupted mining operations.
"The agriculture, mining and oil and gas businesses are booming globally, and mining firms have been plagued by a lack of available earth-moving and subsurface mining equipment," notes Paul Tracy.
"The prices of wheat, soybeans, corn and other basic food commodities are surging to new multi-year highs. There are two main drivers of this trend: rising consumption of agricultural commodities in emerging markets and increased consumption of crops for biofuels production.
"The developing world is also driving demand for petroleum products and other raw materials. A building boom in China, for example, is driving demand for steel, copper and aluminum used in building construction.
"One problem holding back these industries in recent years is a shortage of equipment. Mining firms have been plagued by a lack of available earth-moving and subsurface mining equipment. And agricultural products producers need tractors, combines and other equipment that are in short supply globally to efficiently run their farms.
Economists surveyed by Bloomberg News had expected industrial production to rise 0.1% in May. Industrial production fell 0.7% in April.
Further, manufacturing output was unchanged in May, the Fed said, while utilities output declined 1.8%, and mine output increased 0.1%. The Fed added that factory output was boosted by a small pickup in the index for motor vehicles and parts; the end in late May of a strike at a parts producer had little effect on vehicle output for the month.
Also, capacity utilization declined to 79.4% in May from 79.6% in 79.7 in April. Economists surveyed by Bloomberg News had expected capacity utilization to total 79.7 in May. The May utilization rate is 1.6 percentage points below its average for 1972-2007 and is at its lowest level since November 2004. Capacity utilization totaled 80.3% in March and 80.9% one year ago, in May 2007.
U.S. economy operating well below capacity
Economist David H. Wang said U.S. industrial production continues to operate well below capacity. "We are continuing to see a downward path of industrial production and this is not a good sign. Industrial production has declined for about one year, and this will weigh on commercial activity. It's also a major job loss area," Wang said. "The U.S. economy is complex and multi-faceted but it's hard for GDP to grow without industrial production increasing."
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models which have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Agnico-Eagle Mines is worth a look.
Agnico-Eagle Mines (NYSE: AEM) is a Canada-based gold producer with mining operations located in northwestern Quebec, mine construction projects in northwestern Quebec and northern Finland, and exploration and development activities in Canada, Finland, northern Mexico and the western United States.
Analysts like the fact that Agnico produces about 270,000 ounces of gold annually, and has about five million ounces of gold in proved and provable reserves.
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models which have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Joy Global is worth a review.
Joy Global (NASDAQ: JOYG) makes heavy equipment for the mining industry through two subsidiaries, Joy Mining Machinery and P & H Mining Equipment.
JOYG is well-positioned to benefit from two global trends that show little sign of ending: infrastructure development (which requires copper, among other commodities) and energy usage (which requires increased use of coal for electric power generation.)
Analysts like JOYG's sector-leading high-teens margins, superior management team, and revenue mix that tilts toward its lucrative aftermarket parts and service business. In addition, it appears that 2007's supply chain issues have been addressed and resolved.
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the above in mind, Bucyrus International is worth a review.
Bucyrus International, Inc. (Nasdaq: BUCY) manufactures and markets a variety of machines used in surface mining, and provides aftermarket parts and service for these machines. It has one of the largest installed bases of said machines in the world, as measured by replacement cost.
Demand for the BUCY's products is being driven by increased demand for surface mined commodities such as copper (in South America), oil sands (Canada), and coal (China, United States, India, Australia, South Africa and Russia). As one might sense, mining opportunities in China and India represent long-term business opportunities for the company.
Rio Tinto's above-consensus sale price for its gold mine to Barrick Gold almost certainly increases Rio's negotiating stance vis-a-vis takeover bids from BHP Billiton or from other potential suitors, an analyst told BloggingStocks Friday.
"Rio's sale of its gold mine to Barrick for $1.7 billion when the market was expecting something like $570-$700 million is a fundamental data point the market cannot ignore," independent stock analyst C. Leonard Bauer said Friday. "It will force BHP Billiton and others receptive to a deal to redo their fair-value projections for Rio."
Rio (NYSE: RTP) has twice rejected hostile buyout offers from BHP Billiton (NYSE: BHP), the last for $147.4 billion, involving at least 3.4 BHP shares for each Rio share, arguing that the bids substantially undervalue Rio. Rio gained 64 cents to $452.89 while BHP gained $1.01 to $72.89 in Friday afternoon trading.
At first glance, the idea of bidding wars for targets appears to be a paradox in the current economic environment. After all, the U.S. economy is barely inching along, and the credit markets can be described, at best, as being cautious regarding potential deals. But the mining sector is another story, Bauer said. Strong economic growth in emerging markets has created surging demand for raw materials, minerals, and commodities. Further, the sector is in the midst of mergers and expansions that will produce miners with global market capabilities.
Iron ore war?
The above demand, particularly from Asia, Bauer said, has offset recent, modest quarterly earnings performance from some miners, and has driven up the value of miners like Rio and Freeport McMoRan (NYSE: FC).
In addition, China's size and its economic development plan has further increased miners' value. China, which with Alcoa (NYSE: AA) earlier this year jointly purchased a 9% stake in Rio Tinto through its Chinalco aluminum company, has said it will continue to seek acquisitions of foreign companies, including mining companies, Bauer said. Bauer added that he does not have a rating on any mining company nor own their shares.
"China may ultimately try to outbid BHP because a BHP / Rio union would unite two of the three largest suppliers of iron ore, which China needs for its economy," Bauer said. "A BHP / Rio union would likely leave China in a weaker negotiating position regarding iron ore prices. So you can see why Rio feels BHP's offers so far have not valued the company fairly. Rio knows that as long as China grows, it has a commodity likely to increase in value substantially for years to come. And that's a good place to be in, from a corporate standpoint."
Gold soared to a new record high Friday on reports that South African mines were halting their operations, due to power supply problems, Bloomberg News reported.
Gold hit a record $924.30 per ounce before pulling back slightly, and was up $14.20 to $920.00 per ounce in mid-day Friday trading.
South Africa's AngloGold Ashanti Ltd., Gold Fields Ltd. and Anglo Platinum Ltd. shut their South African mines because of power problems, Bloomberg News reported. South Africa is the world's No. 2 producer of gold, behind China.
While looking for a present for my daughter's birthday last week, I wandered into a jewelery shop but just as quickly as I dropped, I headed out. Not being one of those big shoppers, I suffered an intense bout of sticker-shock when I saw how much a simple gold necklace would have set me back.
Bloomberg ran a story this morning saying the ride is not over. It seems prices are set to go even higher when news hit that Africa's top producers AngloGold Ashanti Ltd. (NYSE: AU) and Gold Fields Ltd. have halted output because of a power shortage.
Gold, which surged 31% in 2007, has gained 9% since the start of this year, breaking through $914/oz. Production issues, inflationary pressure and market volatility were all cited as reasons for gold's recent surges.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
Among the many investment pontificators you will find in the media, I pride myself on laying everything out on the table, good calls, bad calls and even my unfortunate periodic stupidity. All of my 2008 picks are down to a varying degree, making me look none too smart in the opening weeks of the year.
Among the stocks I like, Anglo Amercican PLC (NASDAQ: AAUK) has gone down from the $30 level where I recommended it to around $25 a share today. Its 52-week low is $23.38, and its high was $38.75. It pays a dividend currently yielding about 2%.
There has been a push to get big in copper, and all of the news out of South America supports this theme. Meanwhile MarketWatch reported China now world's largest gold producer; foreign miners at door. China is now producing more gold than South Africa, which has been the top producer since 1905.
I read a quote in an article recently which stated, "What Wall Street is about is smart guys thinking about ways to make money from dumb ones." That quote is attributed to one John E. Fitzgibbon, the publisher of an online newsletter, in an article from Eric Dash via The New York Times. While Mr. Fitzgibbon's remark might validate special investing skill on the part of some smart and timely investors, I take exception to the notion that all those investors who lost money in the markets over the past year are the dumb ones.
The question now is, where is the smart money headed?
Alcoa has agreed to sell its packaging and consumer businesses to New Zealand's Rank Group Limited for $2.7 billion, the company announced Wednesday.Alcoa (NYSE: AA)'s shares gained 37 cents to $37.38 in Wednesday afternoon trading.
Alcoa's packaging / consumer unit generated about $3.2 billion in revenue and $95 million in after-tax operating income in 2006, or about 3% of operating income, the company said.
Alcoa said it's also seeking to sell its Reynolds Wrap, consumer products, flexible packaging, and plastic / aluminum packaging closure units in order to more fully concentrate on its mining / aluminum production business.
Private equity may be dead, but it is not buried. The Blackstone Group (NYSE: BSX) is working on a bid to buy and split up mining company Rio Tinto (NYSE: RTP). Metals company BHP Billiton (NYSE: BHP) has already made an offer of its own.
According toThe Telegraph, "the U.S. private equity giant is in the middle of putting together a consortium -- believed to include a Chinese sovereign wealth fund -- to mount the bid for Rio." Blacktone's plan would be to break Rio Tinto into pieces and auction them off.
Rio Tinto has a current market cap of over $150 billion, so the U.S. firm must believe that it can garner much more than that for the pieces. Rio's largest business is its iron ore operation.
The move is a sign that private equity may be making a comeback, but with a twist. So far there is no mention that bank loans will be part of the Rio bid. It would appear that most of the support will come from a fund run by an affiliate of the Chinese government.
Private equity may have found a new financial partner in overseas government funds.
Douglas A. McIntyre is an editor at 247wallst.com.
China Investment Corp, which manages China's foreign exchange reserves, and China steel companies Baosteel Shougang Group and Angang Steel are said to be working on a bid for Rio Tinto (NYSE: RTP), Forbes reported Monday, citing China Business, the state-owned Chinese weekly. Rio denied receiving an approach from Chinese investors, Agency France Presse reported.
Deal talk had sent Rio's shares up about 7% in Australia early Monday. However, in the U.S., there was little follow through: Rio's shares fell $2.20 to $433.85 in mid-day Monday trading.
Earlier this year Rio rejected an offer from BHP Billiton (NYSE: BBL), saying BHP's offer undervalued the company. Two subsequent requests for talks by BHP were also turned down.
The market's choppy/consolidating (or perhaps worse) period continues. No single market participant can change that reality, but you can make the best of it -- specifically by looking for bargains.
Miner Freeport-McMoRan (NYSE: FCX) is one such opportunity. Freeport is the world's second-largest copper producer and a major miner of gold and molybdenum. Further, FCX's purchase of Phelps Dodge in March 2007 means that the company now has proven and probable reserves of: copper, 75 billion pounds; gold, 128 million ounces; and molybdenum, 1.9 billion pounds, net minority interests.
But perhaps most important, Freeport is one of only eight companies that have the economies of scale to compete in the global mining sector of the early 21st century. Look for continued merger/acquisition talk in the sector, but don't think of Freeport as an acquisition play: FCX has a large portion of the global copper market, geographical diversification, and enduring relationships with key customers, among other strengths, to continue to perform well in the years ahead.
Among the many investment pontificators you will find in the media, I pride myself on laying everything out on the table, good calls, bad calls and even my unfortunate periodic stupidity. All of 
I read a quote in an article recently which stated, "What Wall Street is about is smart guys thinking about ways to make money from dumb ones." That quote is attributed to one John E. Fitzgibbon, the publisher of an online newsletter, in an 
Private equity may be dead, but it is not buried. 
China Investment Corp, which manages China's foreign exchange reserves, and China steel companies Baosteel Shougang Group and Angang Steel are said to be working on a bid for 
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