Basilio Chen

Gold and the Dow in 200 Years and Now

Basilio Chen — Sat, 19 May 2012 09:54:10 +0000

The Dow/Gold Ratio is 7, up from it’s recent low of 5.

Historically, here is the Dow/Gold Ratio since 1900.

Facebook IPO Transacts Over $21 Billion

Basilio Chen — Sat, 19 May 2012 09:26:40 +0000

How the market will perform post Facebook IPO is one question, let it be no doubt that the Underwriters did a great job. Here it shows that Facebook in the first day of trading over 527 million shares were transacted. The approximate volume transaction is over $21 Billion.

What History Tells Us About Commodity Trends

Basilio Chen — Fri, 18 May 2012 14:47:06 +0000

Here is a clear quantitative chart showing the past 200+ years.

History has repeated several times since 1795 with the same ending with large scale war aespecially by looking at the gricultural commodities curve.
From peak to peak is years to 60

e end result – a long term commodity trend that escalates in prices running up in a final hyperbolic move.
Notice that the drops in commodity prices are always shorter than the uptrend (as is also the case with equities) and it (commodity) always ends when there is a parabolic move up (as equities – as this is mass and herd behavior), then commodity prices collapses and toward the end of the commodity lows, the stock market spikes up ending with new bubble.
Commodity cycles from bottom to peak are:
1824 – 1872 (bottom at 1879) Civil War 1861 – 1865
1879 – 1922 (bottom 1932) World War I – 1914 – 1918
1932 – 1948 (bottom 1970) World War II – 1939 – 1945
1970 – 1982 (bottom 1992) Cold War 1945- 1991
1992 –

Equity cycles from bottom to peak are:
1920- 1929 (bottom at 1932) Grow period
1932 – 1949 – NO Grow period
1949 – 1965 Grow period
1965 – 1982 – NO Grow period
1982 – 2000 Grow period
2000 – 2016(?) – NO Grow

A final look at the Grow – No Grow is clearly seen and especially from 2000 to Present

Gasoline Prices Jumps 3.5% in 3 days

Basilio Chen — Thu, 17 May 2012 13:58:24 +0000

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Iron Ore Prices Catapulted 2002-2012

Basilio Chen — Thu, 17 May 2012 12:52:05 +0000

The peak of Iron Ore was in February 2011 at 187.
Prives have been relatively low at 12 until 2004 when it took off.

Adding Value to Manufacturing and Commodity Chains

Basilio Chen — Thu, 17 May 2012 12:31:35 +0000

The manufacturing function for many modern corporations has been reduced due to globalization.
Manufacturing accounts today for one of the least added value activities, particularly if it takes place within a subcontracting and off-shoring framework.
The massive entry of low cost manufacturers led to a high level of competitiveness in many production sectors, reducing profit margins as well as its overall level of contribution to added value.
This led to a growing contribution and importance to the concept and logistics segments.
Consequently, in a global production and consumption market R&D, branding and design (creating a product) can be a significant component of the added value function of a commodity chain and it can be the biggest contributor to bottom line margins.
On the logistics segment (making a specified product available on markets), distribution, marketing and sales / after sales services (such as customer support) are the activities generating the most added value.

Source: Adapted from the Stan Shih “Smile Curve” concept.

China Commodity Consumption

Basilio Chen — Thu, 17 May 2012 12:27:40 +0000

China’s economic growth continues to absorb major commodities resources.

Elements of an Economic System – Simplified

Basilio Chen — Thu, 17 May 2012 12:25:17 +0000

Elements of an Economic System

Economic systems mainly deal with the relationships between production (supply) and consumption (demand). What is being produced has to be consumed and what is being consumed has to be produced. Four elements define production:

* Manufacturing. Transformation of materials into intermediate and finished goods.
* Regulation. The way the production system is controlled and regulated. Mostly the role of governments, but increasingly of international multilateral agreements.
* Circulation. Activities that link the elements of the production system. Includes transport and communications.
* Distribution. Activities making goods and services available to the consumer, such as retailing.

With the emergence of logistics, the elements of circulation and distribution are increasingly embedded. Further, all these elements, especially manufacturing, are using inputs for their processes, also known as factors of production. They include land (including natural resources), capital and labor. The enterprise itself is often considered as the fourth factor as its main purpose is the organization of the other factors of production.

Commodity Growth Continues 1970-2012

Basilio Chen — Thu, 17 May 2012 12:24:06 +0000

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Peak Oil Status – World Oil Reserves

Basilio Chen — Thu, 17 May 2012 11:56:30 +0000

Here are statistics on World oil reserves and a depletion curve to 2057.

Assuming a 23 Billion Barrel/yr depletion period is around 2055-2057 (National Geographics).

This is the Depletion Curve.